Document:

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                                 LEASE AGREEMENT

                                    (N527MC)

                           DATED AS OF APRIL 25, 2000

                                     BETWEEN

                       ATLAS FREIGHTER LEASING III, INC.,
                                     Lessor

                                       and

                                ATLAS AIR, INC.,
                                     Lessee

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

                          One Boeing B747-2D7B Aircraft
                          U.S. Registration No. N527MC
                         Manufacturer's Serial No. 22471

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

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THE LESSOR HAS ASSIGNED TO THE AGENT CERTAIN OF ITS RIGHT, TITLE AND INTEREST IN
AND TO THIS LEASE. 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 ORIGINAL
EXECUTED COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE AGENT ON
THE SIGNATURE PAGE HEREOF.

<PAGE>

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS

                                                                                                     Page
                                                                                                     ----
<S>          <C>                                                                                     <C>
SECTION 1.     Definitions..............................................................................1

SECTION 2.     Acceptance and Lease....................................................................21

SECTION 3.     Term and Rent...........................................................................22
               (a)      Term and Basic Rent............................................................22
               (b)      Adjustments to Basic Rent......................................................22
               (c)      Supplemental Rent..............................................................22
               (d)      Payments in General............................................................23
               (e)      Minimum Rent...................................................................23
               (f)      Prepayment of Rent Payments....................................................24

SECTION 4.     Certain Representations and Warranties..................................................24

SECTION 5.     Lessee's Representations and Warranties.................................................25

SECTION 6.     Lessee's Affirmative Covenants..........................................................31

SECTION 7.     Lessee's Negative Covenants.............................................................38

SECTION 8.     Return of the Aircraft..................................................................50
               (a)      Condition Upon Return..........................................................50
               (b)      Overhaul and Repair............................................................51
               (c)      Repairs........................................................................51
               (d)      Modifications..................................................................51
               (e)      Airworthiness Directives.......................................................51
               (f)      Return of the Engines..........................................................51
               (g)      Deferred Maintenance...........................................................52
               (h)      Corrosion Treatment............................................................52
               (i)      Manuals........................................................................52
               (j)      Storage Upon Return............................................................52
               (k)      Severable Parts................................................................52
               (l)      Survival.......................................................................53
               (m)      Deregistration and Export......................................................53

SECTION 9.     Liens...................................................................................53
</TABLE>

                                      -i-

<PAGE>

<TABLE>
                                                                                                     Page
                                                                                                     ----
<S>          <C>                                                                                     <C>
SECTION 10.    Registration, Maintenance and Operation; Possession and Subleases; Insignia.............54
               (a)      Maintenance and Operation......................................................54
               (b)      Possession.....................................................................55
               (c)      Insignia.......................................................................58
               (d)      Holding Out....................................................................58
               (e)      No Pledging of Credit..........................................................58
               (f)      Title..........................................................................58
               (g)      Information and Records........................................................59

SECTION 11.    Replacement and Pooling of Parts; Alterations, Modifications and Additions..............60

SECTION 12.    Indemnities.............................................................................62

SECTION 13.    Event of Loss...........................................................................63

SECTION 14.    Insurance...............................................................................65

SECTION 15.    Assignment..............................................................................68

SECTION 16.    Events of Default.......................................................................68

SECTION 17.    Remedies................................................................................72

SECTION 18.    Lessee's Cooperation Concerning Certain Matters.........................................75

SECTION 19.    Notices.................................................................................76

SECTION 20.    Net Lease, True Lease, etc..............................................................76

SECTION 21.    Purchase Option.........................................................................77
               (a)      Purchase Option................................................................77
               (b)      Notice of Purchase.............................................................78

SECTION 22.    Lessor's Right to Perform for Lessee....................................................78

SECTION 23.    Miscellaneous...........................................................................78

SECTION 24.    Security for Lessor's Obligations.......................................................79

</TABLE>

                                     -ii-

<PAGE>

                                   SCHEDULES
                                   ---------

SCHEDULE 5(a)(iii)    Subsidiaries

SCHEDULE 7(a)(4)      Indebtedness

SCHEDULE 7(b)         Existing Liens

SCHEDULE 7(c)(v)      Investments

SCHEDULE 7(d)(4)      Contingent Obligations

                                    EXHIBITS
                                    --------

EXHIBIT A   Form of Lease Supplement

EXHIBIT B   Basic Rent Schedule

EXHIBIT C   Stipulated Loss Value Schedule

EXHIBIT D   Compliance Certificate

                                     -iii-

<PAGE>

                                 LEASE AGREEMENT

                        LEASE AGREEMENT dated as of April 25, 2000, between
ATLAS FREIGHTER LEASING III, INC., a Delaware corporation (the "Lessor"),

and ATLAS AIR, INC., a Delaware corporation (the "Lessee").

                             W I T N E S S E T H :

         WHEREAS, the Lessee desires to lease from the Lessor and the Lessor is
willing to lease to the Lessee the Aircraft upon the terms and subject to the
conditions of this Lease;

         WHEREAS, the Lessor and the Lessee desire that this be a net lease;

         WHEREAS, the Lessor has incurred certain Loans under the Credit
Agreement in connection with the Aircraft to be leased pursuant to the terms of
this Lease and other similar aircraft and spare engines to be leased pursuant to
the other Leases:

         WHEREAS, the Lessor and the Lessee desire that this Lease be, and be
treated as, a Lease for federal income tax purposes.

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the Lessor and the Lessee
hereby agree as follows:

         SECTION 1. All capitalized terms used herein shall have the respective
meanings set forth in this section.

         "ACCEPTABLE ALTERNATE AIRFRAME" means a Boeing 747-200 that is in a
cargo configuration capable of immediate operation in the business of the Lessee
and has a maximum gross takeoff weight of at least 800,000 pounds and is of the
equivalent or greater residual value, condition, utility, airworthiness, and
remaining useful life and that shall have been maintained, serviced, repaired
and overhauled in substantially the same manner as required under this Lease
without in any way discriminating against such airframe.

         "ACCEPTABLE ALTERNATE ENGINE" means a General Electric CF6-50E2 engine
or an engine of the same or another manufacturer of equivalent or greater
residual value, condition, utility, airworthiness, and remaining useful life and
suitable for installation and use on the Airframe; provided, that such engine
shall be of the same make, model and manufacturer as the other engines installed
on the Airframe, shall be an engine of a type then being utilized by Lessee on
other Boeing 747-200 aircraft operated by Lessee, and shall have been
maintained, serviced, repaired and overhauled in substantially the same manner
as required under this Lease without in any way discriminating against such
engine.
<PAGE>

         "ACMI CONTRACT" means (i) any contract entered into by the Lessee
pursuant to which the Lessee furnishes the aircraft, crew, maintenance and
insurance and customers bear all other operating expenses and (ii) any similar
contract in which the customer provides the flight crew, all substantially in
accordance with the Lessee's historical practices.

         "ACMI CONTRACTED AIRCRAFT" means an aircraft acquired by the Lessee or
its Subsidiaries and intended to be used in connection with an ACMI Contract
entered into at the time of the acquisition of such aircraft (which ACMI
Contract shall not represent a renewal or replacement of a prior ACMI Contract
unless the aircraft used pursuant to such prior ACMI Contract was operated under
an operating lease and returned to the lessor) which is in effect on the date of
calculation and has a remaining term of one year or more on the date such
aircraft was intended to be used in connection with such ACMI Contract (subject
to cancellation terms, which may include the right to cancel on six months
notice). When making any calculation on a Pro Forma Basis, effect shall be given
to the acquisition of an ACMI Contracted Aircraft by adding to the appropriate
components of Consolidated Adjusted EBITDA (i) the net projected annualized
revenues from the operation of the ACMI Contracted Aircraft under such ACMI
Contract for that portion of the period for which Consolidated Adjusted EBITDA
is being calculated prior to the acquisition of such aircraft, assuming
operation for the minimum guaranteed number of block hours (less any block hours
subject to cancellation) at the minimum guaranteed rate under such ACMI Contract
less (ii) the projected annualized cash operating expenses from such operation
for the same period for which the related projected revenues are determined in
clause (i) above; provided, that such projected cash operating expenses shall
not be less on a per block hour basis than the average historical per block hour
operating expenses of the Lessee for the four full fiscal quarters immediately
preceding the date of calculation; and provided further, that if such aircraft
is of a model other than a Boeing 747 freighter, such projected cash operating
expenses shall include maintenance costs which shall not be less than the
average for such aircraft type disclosed on the most recently available DOT
Forms 41 with respect to such aircraft type or any summary of such data as
reported in a nationally recognized industry publication. For purposes of this
definition, "ACMI CONTRACT" shall include contracts pursuant to which the Lessee
does not pay any crew costs, in which event pro forma effect shall be given as
described above but excluding from the projected annualized cash operating
expenses all crew costs. Cash operating expenses means for purposes of this
definition consolidated operating expenses, less consolidated depreciation and
amortization and Consolidated Rental Payments, to the extent included in
computing consolidated operating expenses.

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

                                      -2-
<PAGE>

and policies of that Person, whether through the ownership of voting securities
or by contract or otherwise.

         "AGENT" shall mean the Administrative Agent under the Credit Agreement.

         "AIRCRAFT" means the Airframe together with the four Engines, whether
or not such Engines are installed on the Airframe or any other airframe.

         "AIRCRAFT CHATTEL MORTGAGE" means each Security Agreement and Aircraft
Chattel Mortgage entered into in connection with the Credit Agreement.

         "AIRFRAME" means (i) the Boeing aircraft Model 747-200 (excluding
Engines or engines from time to time installed thereon) specified by the United
States Registration Number and manufacturer's serial number in the Lease
Supplement and (ii) any and all Parts that are from time to time incorporated or
installed in or attached thereto or that have been removed therefrom, but where
title to which remains vested in the Lessor in accordance with this Lease.

         "AMENDED AIRCRAFT CREDIT FACILITY" means the Fourth Amended and
Restated Credit Agreement dated as of April 25, 2000, among the Lessee, as
borrower, the lenders listed therein, and Bankers Trust Company, as
administrative agent, without giving effect to any amendments, modifications,
supplements or waivers thereof.

         "APPROVED APPRAISER" means any of AvSolutions, Inc., BK Associates,
Inc., Simat, Helliesen & Eichner, Inc., Morton Beyer & Agnew, Inc., AVITAS,
Inc., Airclaims, Ltd., Aircraft Information Services, Inc., or any other
nationally recognized firm of aircraft appraisers reasonably satisfactory to the
Agent.

         "ASSET SALE" means the sale (including any sale-leaseback transaction
other than sale-leaseback transactions permitted by subsections 7(i) and 7(j) of
this Lease) by the Lessee or any of its Subsidiaries to any other Person of (i)
any of the stock of any of the Lessee's Subsidiaries, (ii) substantially all of
the assets of any division or line of business of the Lessee or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of the
Lessee or any of its Subsidiaries outside of the ordinary course of business,
excluding (A) any such other assets to the extent that the aggregate value of
such assets sold in any single transaction or related series of transactions is
equal to $5,000,000 or less, (B) transactions related to aircraft engines,
components, parts or spare parts pursuant to customary pooling, exchange or
similar arrangements, (C) asset swaps involving aircraft engines, components,
parts or spare parts, provided that the assets received by the Lessee or any
Subsidiary have a fair market value at least equal to the assets transferred
(provided that with respect to any asset swap or series of related asset swaps
involving assets of the Lessee or any Subsidiary with a fair market value
exceeding $10,000,000, such determination shall be made by the Board of
Directors of the Lessee), (D) asset sales involving obsolete, worn-out, excess
or redundant

                                      -3-
<PAGE>

equipment as long as the proceeds therefrom are used to replace or to upgrade
the aircraft or the equipment installed thereon, (E) transactions permitted by
Section 9.21 of the Credit Agreement and (F) the sale by the Lessor of a single
aircraft pursuant to Section 6.6(ii) of the Credit Agreement.

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

         "BASIC RENT" means, for the Term, the rent payable for the Aircraft
pursuant to Section 3(a) of this Lease adjusted as provided in Section 3(b) of
this Lease.

         "BASIC RENT PAYMENT DATE" means each date set forth on Exhibit B.

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

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

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

         "CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or Moody's; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia that (a) is at least "adequately capitalized" (as defined
in the regulations of its primary Federal banking regulator) and (b) has Tier I
capital (as defined in such regulations) of not less than $100,000,000; and (v)
shares of any money market mutual fund that (a) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses (i) and
(ii) above, (b) has net assets of not less than $500,000,000, and (c) has the
highest rating obtainable from either S&P or Moody's.

                                      -4-
<PAGE>

         "CERTIFICATED AIR CARRIER" means a United States "air carrier" within
the meaning of the Federal Aviation Act, operating pursuant to a certificate
issued under Section 401 of such Act, or a carrier of comparable status under
any successor law or provision.

         "COMPLIANCE CERTIFICATE" means a certificate, substantially in the form
of Exhibit D annexed hereto, delivered to the Lessor, the Agent and the Lenders
by the Lessee pursuant to subsection 6(a)(3) hereunder.

         "CONSOLIDATED ADJUSTED EBITDA" means, for any period, (I) the sum of
the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) other non-cash items
reducing Consolidated Net Income less other non-cash items increasing
Consolidated Net Income less (II) all cash expenditures reducing reserves
appearing on the December 31, 1999, balance sheet of Atlas, all of the foregoing
as determined on a consolidated basis for the Lessee and its Subsidiaries in
conformity with GAAP.

         "CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of
(i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of the Lessee and
its Subsidiaries) by the Lessee and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of the Lessee and its Subsidiaries plus (ii) to the extent not covered by
clause (i) of this definition, the aggregate of all expenditures by the Lessee
and its Subsidiaries during that period to acquire (by purchase or otherwise)
the business, property or fixed assets of any Person, or the stock or other
evidence of beneficial ownership of any Person that, as a result of such
acquisition, becomes a Subsidiary of the Lessee.

         "CONSOLIDATED INTEREST EXPENSE" means, for any period, total net
interest expense (to be computed by reducing interest expense by the amount of
interest income) (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of the Lessee and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Lessee and its Subsidiaries, including, without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under Interest
Rate Agreements and Currency Agreements, but excluding, however, any amounts
referred to in subsection 2.3 of the Amended Aircraft Credit Facility on or
before the Fourth Restatement Date (as such term is defined in the Amended
Aircraft Credit Facility).

         "CONSOLIDATED LEVERAGE RATIO" means, as of the last day of any fiscal
quarter of the Lessee, the ratio of (i) Consolidated Total Debt as of such date
(less Cash and Cash Equivalents held by the Lessee in excess of $25 million as
of such date) plus seven times Consolidated Rental Payments (for the four fiscal
quarter period ending as of such date) to

                                      -5-
<PAGE>

(ii) Consolidated Adjusted EBITDA plus Consolidated Rental Payments for the four
fiscal quarter period ending as of such date.

         "CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of the Lessee and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP;
provided, that there shall be excluded (i) the income (or loss) of any Person
(other than a Subsidiary of the Lessee) in which any other Person (other than
the Lessee or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Lessee or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Lessee or is merged into or consolidated with the Lessee or any of its
Subsidiaries or that Person's assets are acquired by the Lessee or any of its
Subsidiaries, (iii) the income of any Subsidiary of the Lessee to the extent
that the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary, (iv) any
after-tax gains or losses attributable to Asset Sales or returned surplus assets
of any pension plan, and (v) (to the extent not included in clauses (i) through
(iv) above) any net extraordinary gains or net non-cash extraordinary losses.

         "CONSOLIDATED NET WORTH" means, as at any date of determination, the
sum of the capital stock and additional paid-in capital plus retained earnings
(or minus accumulated deficits) of the Lessee and its Subsidiaries on a
consolidated basis determined in conformity with GAAP.

         "CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents paid or payable by the Lessee and its Subsidiaries on a
consolidated basis (excluding rent paid pursuant to the Leases) during that
period under all Capital Leases and Operating Leases to which the Lessee or any
of its Subsidiaries is a party as lessee (net of sublease income other than
income from ACMI Contracts). For the avoidance of doubt, all rental payments to
the Lessor shall not be included in Consolidated Rental Payments.

         "CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of the Lessee and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.

         "CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter

                                      -6-
<PAGE>

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

         "CONTINUING DIRECTORS" shall mean the directors of a Person on the
Initial Borrowing Date and each other director, if such other director's
nomination for election to the Board of Directors of such Person is recommended
by a majority of the then Continuing Directors.

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

         "CONTRIBUTION" means the "Atlas Contribution" as defined in the Credit
Agreement.

         "CREDIT AGREEMENT" shall mean the Credit Agreement, dated as of April
25, 2000, by and among the Lessor, as borrower, the Lenders listed therein from
time to time and Bankers Trust Company, as Administrative Agent for the Lenders,
as such agreement may be amended, modified, waived, or supplemented from time to
time.

         "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect the Lessee or any of its
Subsidiaries against fluctuations in currency values.

         "DEFAULT" means any event that, with the giving of notice or the lapse
of time or both, would become a Lease Event of Default.

                                      -7-
<PAGE>

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

         "DESIGNATED INDEBTEDNESS" means Indebtedness incurred pursuant to the
FINOVA Agreement, the Pass Through Trust Documents, the NationsBanc/Banc of
America Agreement, the Senior Note Documents, any Permitted Extension
Indebtedness and any Other Permitted Indebtedness.

         "DETERMINATION DATE" has the meaning assigned to that term in
subsection 7(a)(6).

         "DOMESTIC AIR CARRIER" means any United States "domestic air carrier",
as defined in Part 121 of the Federal Aviation Regulations, that is operating in
accordance with the operating certificate and appropriate operations
specifications issued under Part 121 or any successor regulation.

         "ELIGIBLE AIRCRAFT" means a Boeing 747-200, 747-300 or 747-400 or MD-11
aircraft, including any engines installed thereon and any spare engines of the
same type and model, that (i) is in a cargo configuration capable of immediate
operation in the business of the Lessee or is eligible for delivery under a
modification agreement with a delivery slot available within a six month period
(or is leased for a period of longer than six months until a delivery slot is
available), and (ii) has a maximum gross take-off weight ("MTOW") of at least
800,000 pounds, in the case of any 747-200, 747-300, or 747-400 aircraft and
630,000 pounds in the case of any MD-11 aircraft.

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

         "ENGINE" means: (i) each of the four General Electric CF6-50E2 aircraft
engines listed in the initial Lease Supplement, whether or not from time to time
installed on the Airframe or any other airframe; (ii) any Acceptable Alternate
Engine that may from time to time be substituted for any of such four engines
pursuant to the terms of the Lease; and (iii) in any case, any and all Parts
that are from time to time incorporated or installed in or attached to any such
engine and any and all parts removed therefrom so long as title thereto remains
vested in the Lessor in accordance herewith. The term "Engines" means, as of any
date of determination, all Engines then leased under this Lease.

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

                                      -8-
<PAGE>

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

         "EQUIPMENT OBLIGATIONS" means the "Equipment Obligations" as defined in
the Credit Agreement.

         "EQUITY PROCEEDS" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) from
the issuance of any equity Securities of the Lessee.

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

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

         "EVENT OF DEFAULT" means an Event of Default under and as defined in
the Credit Agreement.

         "EVENT OF LOSS" means any of the following events with respect to the
Aircraft (whether the Airframe or an Engine of such Aircraft or both): (A) loss
of such Aircraft or the use thereof due to theft or disappearance of the
Aircraft that results in the loss of possession thereof for a period of 120 days
(or for a shorter period ending on the date on which there is an insurance
settlement for a total loss on the basis of the theft or disappearance of such
Aircraft, (B) the destruction, damage beyond repair or rendition of such
Aircraft permanently unfit for normal use for any reason whatsoever, (C) the
condemnation, confiscation or seizure of, or requisition of title to, or adverse
use or possession (other than use by the United States Government if the Lessee
obtains adequate compensation from the United States Government) of such
Aircraft, (D) as a result of any rule, regulation, order or any other action by
the FAA or any other governmental body having jurisdiction, the use of such
Aircraft in the normal course of interstate air transportation of persons or
cargo shall have been prohibited for a period of more than nine consecutive
months unless the Lessee, prior to the expiration of such nine month period,
shall have undertaken and shall be diligently carrying forward all steps

                                      -9-
<PAGE>

that are necessary or desirable to permit the normal use of such property by the
Lessee or, in any event, if such use shall have been prohibited for a period of
twelve consecutive months, (E) the operation or location of such Aircraft, while
under requisition for use by the United States or any instrumentality or agency
thereof, in any area excluded from coverage by any insurance policy in effect
with respect to such Aircraft, if the Lessee shall be unable to obtain indemnity
or "war-risk" insurance in lieu thereof from the United States, (F) any damage
that results in an insurance settlement with respect to such Aircraft on the
basis of an actual or constructive total loss or (G) a divestiture of such
Airframe as described in Section 4(d)(iii) or Section 4(d)(vi) of any Aircraft
Chattel Mortgage under the Credit Agreement. An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if an Event of Loss occurs with
respect to the Airframe of the Aircraft.

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

         "FAIR MARKET SALES VALUE" of the Airframe or any Engine or Spare Engine
shall mean the value that would be obtained in an arm's-length transaction
between an informed and willing lessee-user or buyer-user (other than a lessee
currently in possession or a used equipment dealer) under no compulsion to lease
or buy, as the case may be, and an informed and willing lessor or seller, as the
case may be, under no compulsion to lease or sell, as the same shall be
specified by agreement between the Lessor and the Lessee or, if not agreed to by
the Lessor and the Lessee within a period of 15 days after either party requests
a determination, then as specified in an appraisal prepared and delivered in New
York City by a recognized independent aircraft appraiser, mutually agreed to by
the Agent and the Lessee, or, if such appraiser cannot be agreed to within 20
days, then either party may apply to the American Arbitration Association (or
any successor organization thereto) in New York City for the appointment of an
appraiser, whose determinations shall be final and binding upon the parties
hereto. In determining Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 8 of this Lease, that all modifications and
improvements shall be taken into account, that the Lessee has removed all Parts
that it is entitled to remove pursuant to Section 11 of this Lease and that the
Aircraft is not encumbered by this Lease. Except as otherwise expressly provided
in the Lease, all appraisal costs will be shared equally by the Lessor and the
Lessee.

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

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

                                      -10-
<PAGE>

         "FINAL MATURITY DATE" means April 25, 2006.

         "FINANCED AIRCRAFT" means all "Financed Aircraft" as defined in the
Amended Aircraft Credit Facility.

         "FINOVA AGREEMENT" means that certain Secured Loan Agreement dated as
of April 11, 1996, between FINOVA and the Lessee, as amended, restated,
supplemented or otherwise modified from time to time in accordance with this
Lease.

         "FOREIGN AIR CARRIER" means any "foreign air carrier" as defined in the
Act, as to which there is in force a permit issued pursuant to Section 402 of
said Act or operators of aircraft operating under or governed by the provisions
of Parts 121, 123 or 129 of the Federal Aviation Regulations, in each case that
are certificated in a country that is a signatory to the Convention on
International Civil Aviation and are operating in conformity with the Annexes
thereunder and that fly routes into the United States on a regularly scheduled
basis.

         "FUNDING AND PAYMENT OFFICE" means the office of the Agent located at
130 Liberty Street, New York, New York 10006, Attention: Marguerite Sutton.

         "GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1 hereunder, generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession. Financial statements and other information required
to be delivered by the Lessee to the Lessor, the Agent and the Lenders pursuant
to clauses (1), (2), (3) and (12) of subsection 6(a) hereunder shall be prepared
in accordance with GAAP as in effect as of the date of such preparation.
Calculations in connection with the definitions, covenants and other provisions
of this Lease shall utilize accounting principles and policies in conformity
GAAP as in effect as of the date of this Lease.

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

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

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

                                      -11-
<PAGE>

         "HOLDING COMPANY" has the meaning assigned to that term in the
definition of "Holding Company Reorganization."

         "HOLDING COMPANY REORGANIZATION" means the acquisition, in one
transaction or a series of related transactions, of all of the outstanding
Securities of the Lessee that are entitled to vote in the election of directors,
other than Securities having such power only by reason of the happening of a
contingency, (and all other Securities convertible into such Securities) by
another corporation (the "Holding Company"); provided, that the Holding Company
Reorganization may involve more than one holding company of the Lessee, so long
as the ultimate Holding Company directly or indirectly owns 100% of the Lessee;
and provided further, that in connection with the Holding Company Reorganization
the Lessee and its Subsidiaries shall not incur any material obligations or
liabilities of any type other than those permitted to be paid without causing a
Lease Event of Default under Section 16(v).

         "HOLDING COMPANY SUBSIDIARY" means any Subsidiary of a Holding Company
other than the Lessee and its Subsidiaries.

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

         "INDEMNIFIED LIABILITIES" has the meaning assigned to that term in
subsection 12(b) hereunder.

         "INDEMNITEE" has the meaning assigned to that term in subsection 12(b)
hereunder.

         "INITIAL BORROWING DATE" means the date on which the Lessor effects its
borrowing of Loans pursuant to the Credit Agreement.

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

                                      -12-
<PAGE>

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

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

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

         "LEASE EVENT OF DEFAULT" has the meaning specified in Section 16 of
this Lease.

         "LEASE SUPPLEMENT" means a Lease Supplement, substantially in the form
of Exhibit A to this Lease, to be entered into between the Lessor and the Lessee
for the purpose of leasing the Aircraft under and pursuant to the terms of the
Lease, and any subsequent Lease Supplement entered into in accordance with the
terms of the Lease.

         "LEASES" means the Lease Agreements, dated as of April 25, 2000,
between the Lessor and the Lessee, as the same may be amended, modified or
supplemented from time to time (including this Lease). The term "Lease" shall
include any Lease Supplement entered into pursuant to the respective Lease.

         "LENDER" or "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of the Credit Agreement, together with their
successors and permitted assigns.

         "LESSEE" means Atlas Air, Inc., as lessee under the Lease, and its
permitted successors and assigns.

                                      -13-
<PAGE>

         "LESSOR" means Atlas Freighter Leasing III, Inc., as Lessor under the
Lease, and its permitted successors and assigns.

         "LESSOR TAX" means (where the Lessor is the indemnitee) any Tax that
is:

         (a)         imposed solely as the result of activities of the Lessor
                     in the jurisdiction imposing the Tax that is unrelated to
                     the Lessor's dealings with the Lessee or the transactions
                     contemplated by this Lease or the operation of the
                     Aircraft by the Lessee; or

         (b)         imposed on the net income, profits or gains of the Lessor
                     by the United States of America or the state or political
                     subdivision thereof, but excluding any Tax imposed by any
                     such government or taxing authority of any jurisdiction if
                     and to the extent that such Tax results from (i) the use,
                     operation, presence or registration of the Aircraft, the
                     Airframe, any Engine or any Part in the jurisdiction
                     imposing the Tax, or (ii) the situs of organization, any
                     place of business or any activity of the Lessee or any
                     other Person having use, possession or custody of the
                     Aircraft, the Airframe, any Engine or any Part in the
                     jurisdiction imposing the Tax; or

         (c)         imposed solely as the result of an event that occurs after
                     the expiration or other termination of this Lease and that
                     is unrelated to the Lessor's dealings with the Lessee or
                     to the transactions contemplated by this Lease.

         "LESSOR'S LIEN" means any Lien over the Aircraft (i) arising as a
result of any act or omission of the Lessor that constitutes a breach of any of
the terms of this Lease, (ii) arising as a result of any indebtedness, liability
or other obligation arising by through or under the Lessor, including, without
limitation, any Tax, that is not indemnified against by the Lessee or (iii)
resulting from the Credit Agreement or any other Lien from time to time created
by or through the Lessor in connection with the financing of the Aircraft.

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

         "LOAN" or "LOANS" means the term loans made under the Credit Agreement.

                                      -14-
<PAGE>

         "LOAN DOCUMENTS" means the Credit Agreement, the promissory notes
thereunder, the Leases, the Aircraft Chattel Mortgages and any other security
agreement entered into in connection with the Credit Agreement.

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

         "MATERIAL ADVERSE EFFECT" means a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Lessee and its Subsidiaries on a consolidated basis.

         "MATERIAL AGREEMENT" means any or all of the Amended Aircraft Credit
Facility, the Pass Through Trust Documents, the FINOVA Agreement, the
NationsBanc/Banc of America Agreement, the Senior Note Documents and agreements
in respect of Permitted Extension Indebtedness and Other Permitted Indebtedness.

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

         "NATIONSBANC/BANC OF AMERICA AGREEMENT" means the Loan Agreement, dated
as of March 28, 1997, between Atlas Air, Inc., as borrower, and NationsBanc
Leasing Corporation/Banc of America Leasing & Capital LLC, as lender, and as
further amended, supplemented and modified in accordance with this Lease and all
other related documents.

         "OBLIGATIONS" means all obligations of the Lessor to pay all amounts
due from time to time under the Credit Agreement and the other Loan Documents to
the Agent, the Lenders or any of them, whether for principal, interest, fees,
expenses, indemnification or otherwise.

         "OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer.

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

         "OTHER PERMITTED INDEBTEDNESS" means Indebtedness incurred for the
purpose of financing the acquisition of aircraft so long as (i) any such
Indebtedness bears interest at a rate that does not exceed 15% per annum, (ii)
such Indebtedness has a final stated maturity later than the end of the Term and
(iii) the amortization and the other terms, provisions, conditions, covenants
and events of default thereof taken as a whole shall be no more onerous

                                      -15-
<PAGE>

or restrictive from the perspective of the Lessee and its Subsidiaries or any
less favorable, from the perspective of the Lessor or the Lenders, than any
other Designated Indebtedness.

         "PART" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature other than
complete Engines, Spare Engines or engines, that are from time to time
incorporated or installed in or attached to the Airframe or any Engine, and all
such items that are subsequently removed therefrom so long as title thereto
shall vest in the Lessor in accordance with this Lease.

         "PASS THROUGH TRUST DOCUMENTS" means, collectively, (i) those six
certain Pass Through Trust Agreements, dated as of February 9, 1998, between
Atlas Air, Inc., and Wilmington Trust Company, as trustee (the "1998 Pass
Through Trust Agreements") and any related agreements, notes, guaranties,
indentures, security documents or other documents, including, without
limitation, documents relating to the equipment notes to be held in trust
pursuant to the 1998 Pass Through Trust Agreements and all related documents, as
the same may be amended, restated, supplemented or otherwise modified from time
to time in accordance with this Lease, (ii) that certain Pass Through Trust
Agreement, dated as of April 1, 1999, between Atlas Air, Inc., and Wilmington
Trust Company, as trustee (the "1999 Pass Through Trust Agreement") and any
related agreements, trust supplements, notes, guaranties, indentures, security
documents or other documents, including, without limitation, documents relating
to the equipment notes to be held in trust pursuant to the 1999 Pass Through
Trust Agreement and all related documents, as the same may be amended, restated,
supplemented or otherwise modified from time to time in accordance with this
Lease and (iii) that certain Pass Through Trust Agreement dated as of January
28, 2000, between Atlas Air, Inc., and Wilmington Trust Company, as trustee (the
"2000 Pass Through Trust Agreement") and any related agreements, trust
supplements, notes, guaranties, indentures, security documents or other
documents, including, without limitation, documents relating to the equipment
notes to be held in trust pursuant to the 2000 Pass Through Trust Agreement and
all related documents, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with this Lease.

         "PAST DUE RATE" shall mean the default rate of interest as determined
from time to time in accordance with subsection 2.2D of the Credit Agreement.

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

         (i)  Liens for taxes, assessments or governmental charges or claims the
     payment of which is not, at the time, required by subsection 6(c)
     hereunder;

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

                                      -16-
<PAGE>

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

         (iii)  Liens incurred or deposits made in the ordinary course of
     business in connection with workers' compensation, unemployment insurance
     and other types of social security, or to secure the performance of
     tenders, statutory obligations, surety and appeal bonds, bids, leases,
     government contracts, trade contracts, performance and return-of-money
     bonds and other similar obligations (exclusive of obligations for the
     payment of borrowed money);

         (iv)  easements, rights-of-way, restrictions, minor defects,
     encroachments or irregularities in title and other similar charges or
     encumbrances not interfering in any material respect with the ordinary
     conduct of the business of the Lessee or any of its Subsidiaries;

         (v)  any (a) interest or title of a lessor or sublessor under any lease
     permitted by subsection 7.(i), (b) restriction or encumbrances that the
     interest or title of such lessor or sublessor may be subject to, or (c)
     subordination of the interest of the lessee or sublessee under such lease
     to any restriction or encumbrance referred to in the preceding clause (b);

         (vi) Liens arising from filing UCC financing statements relating solely
     to leases permitted by this Agreement;

         (vii) Liens in favor of customs and revenue authorities arising as a
     matter of law to secure payment of customs duties in connection with the
     importation of goods;

         (viii) the rights of others under agreements or arrangements to the
     extent expressly permitted by the terms of: (I) Sections 4(d) and 4(e) of
     the Aircraft Chattel Mortgages and (II) Sections 4(d) and 4(e) of the
     aircraft chattel mortgages entered into in connection with the Amended
     Aircraft Credit Facility;

         (ix) Liens described in Schedule 7(b) annexed hereto;

         (x) Liens securing Indebtedness incurred in accordance with Section
     7(a)(11);

         (xi) Liens granted pursuant to the Transaction Documents;

         (xii) Liens arising pursuant to the Amended Aircraft Credit Facility;
     and

         (xiii) extensions, modifications, replacements and refinancings of any
     of the foregoing.

                                      -17-
<PAGE>

         "PERMITTED EXTENSION INDEBTEDNESS" means renewals, extensions,
substitutions, refinancings or replacements (each an "extension") by the Lessee
of any Indebtedness of the Lessee, including any such successive transactions by
the Lessee, so long as (i) any such Indebtedness bears interest at a rate that
does not exceed 15% per annum, (ii) any such Permitted Extension Indebtedness
shall be in a principal amount that does not exceed the principal amount
immediately prior to such extension, plus the amount of any premium required to
be paid in connection with such extension pursuant to the terms of such
Indebtedness, plus the amount of expenses of the Lessee reasonably incurred in
connection with such extension, (iii) in the case of any extension of
subordinated Indebtedness, such Permitted Extension Indebtedness is made
subordinate to the obligations of the Lessee hereunder at least to the same
extent as the Indebtedness immediately prior to such extension, (iv) such
Permitted Extension Indebtedness has a final stated maturity later than the end
of the stated maturity of the Indebtedness being extended immediately prior to
such extension and (v) the amortization and the other terms, provisions,
conditions, covenants and events of default thereof taken as a whole shall be no
more onerous or restrictive from the perspective of the Lessee and its
Subsidiaries or any less favorable, from the perspective of the Lessor and the
Lenders than those contained in the Indebtedness immediately prior to such
extension.

         "PERMITTED HOLDERS" means Michael A. Chowdry, his spouse, his
descendant(s) or any entity controlled by any of the foregoing, or any trust
solely for the benefit of any of the foregoing.

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

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

         "PRICING CERTIFICATE" shall have the meaning assigned to that term in
Section 6(a)(13).

         "PRO FORMA BASIS" means, with respect to compliance with any covenant
hereunder, compliance with such covenant after giving effect to any proposed
incurrence of Indebtedness by the Lessee or any of its Subsidiaries and the
application of the proceeds thereof, the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business or any asset (including any ACMI Contracted
Aircraft) by the Lessee or any of its Subsidiaries or any other related action
that requires compliance on a Pro Forma Basis. In making any determination of
compliance on a Pro Forma Basis, such determination shall be performed after
good faith consultation

                                      -18-
<PAGE>

with the Lessor and the Agent using the consolidated financial statements of the
Lessee and its Subsidiaries, which shall be reformulated as if any such
incurrence of Indebtedness and the application of proceeds, acquisition,
disposition or other related action had been consummated at the beginning of the
period specified in the covenant with respect to which Pro Forma Basis
compliance is required.

         "PROCEEDINGS" has the meaning assigned to that term in subsection
6(a)(10).

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

         "RENT" means Basic Rent and Supplemental Rent, collectively.

         "RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of the Lessee now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of the Lessee now
or hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of the Lessee now or hereafter outstanding, and
(iv) any payment or prepayment of principal of, premium, if any, or interest on,
or redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Designated
Indebtedness.

         "S&P" means Standard & Poor's Ratings Services.

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

         "SENIOR NOTE DOCUMENTS" means (i) the Indenture, dated as of August 13,
1997, between Atlas Air, Inc., and State Street Bank and Trust Company, relating
to the 10 3/4% $150 million Senior Notes due 2005 of the Lessee (the "10 3/4%
Senior Notes"), and any and all related agreements, as the same may be amended,
restated, supplemented or oth

                                      -19-
<PAGE>

erwise modified from time to time in accordance with this Lease, (ii) the
Indenture, dated as of April 9, 1998, between Atlas Air, Inc., and State Street
Bank and Trust Company, relating to the 9 1/4% $175 million Senior Notes due
2008 of the Lessee (the "9 1/4% Senior Notes"), and any and all related
agreements, as the same may be amended, restated, supplemented or otherwise
modified from time to time in accordance with this Lease and (iii) the
Indenture, dated as of November 18, 1998, between Atlas Air, Inc., and State
Street Bank and Trust Company, relating to the 9 3/8% $150 million Senior Notes
due 2006 of the Lessee (the "9 3/8% Senior Notes," and together with the 10 3/4%
Senior Notes and the 9 1/4% Senior Notes, the "Senior Notes"), and any and all
related agreements, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with this Lease.

         "SERVICES AGREEMENT" means a Services Agreement between the Lessor and
the Lessee dated as of April 25, 2000.

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

         "SPARE ENGINES" means each "Spare Engine" as defined in the Credit
Agreement.

         "SPECIAL PURPOSE SUBSIDIARY" means a Subsidiary of the Lessee formed
solely for the purpose of refinancing Indebtedness associated with a Financed
Aircraft or acquiring or refinancing other aircraft with Permitted Extension
Indebtedness or Other Permitted Indebtedness the only assets of which are such
financed aircraft, leases of such aircraft and contracts related to the
modification of such aircraft and contributions to capital of such Subsidiary,
which together with all other contributions to capital made to other such
Subsidiaries, are not in excess of 15% of the consolidated book value of the
assets of the Lessee and its Subsidiaries, and the only liability of which is
the Permitted Extension Indebtedness or Other Permitted Indebtedness incurred to
refinance such Indebtedness; provided, that the Lessee beneficially owns and
controls at least 95% of the issued and outstanding capital stock of such
Subsidiary.

                                      -20-
<PAGE>

         "STIPULATED LOSS DETERMINATION DATE" means each date referenced on the
schedule of Stipulated Loss Values set forth in Exhibit C to this Lease.

         "STIPULATED LOSS VALUE" with respect to the Aircraft shall mean, as of
any date, the amount set forth on Exhibit C opposite the Stipulated Loss
Determination Date immediately prior to such date, as such amount may be reduced
in accordance with Section 3(f), plus all accrued and unpaid interest on the
Loans relating to the Aircraft on the date of determination.

         "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof. For all purposes of
this Lease other than the financial covenants set forth in subsection 7(f) and
the definitions related thereto, the Lessor shall not be considered a Subsidiary
of the Lessee.

         "SUPPLEMENTAL RENT" means all amounts, liabilities and obligations
(other than Basic Rent) that the Lessee assumes or agrees to pay to the Lessor
or others under any of the Transaction Documents, including payments of
Stipulated Loss Value and other amounts referred to in Section 3(c) of this
Lease.

         "TAX" or "TAXES" shall have the meaning assigned to that term in
Section 12(a) hereunder.

         "TECHNICAL RECORDS" shall have the meaning assigned to that term in
Section 8(i).

         "TERM" means the term for which the Aircraft is leased hereunder
pursuant to Section 3(a) of this Lease, beginning on the Initial Borrowing Date
and ending on the Final Maturity Date, or such earlier date as this Lease may be
terminated in accordance with the terms hereof.

         "TRANSACTION" means, collectively, (i) the Contribution, (ii) the
Transfers, (iii) the leasing by the Lessor to the Lessee of the Aircraft and
certain other aircraft and spare engines pursuant to the Leases, (iv) the
repayment of the Equipment Obligations and (v) the release and termination of
all security interests and Liens encumbering the Aircraft and any part thereof
and any other assets of the Lessor.

                                      -21-
<PAGE>

         "TRANSACTION DOCUMENTS" means the Amended Aircraft Credit Facility, any
bills of sale or certificates of transfer for each Aircraft and each Spare
Engine leased pursuant to the Leases (including bills of sale on AC Form 8050-2)
delivered in connection with the Transaction, the Leases, all documents relating
to the repayment of the Equipment Obligations, the Loan Documents and all other
agreements and documentation executed and delivered in connection with the
Transaction, including, without limitation, in connection with the Atlas
Contribution and the Transfers.

         "TRANSFERS" mean the "Transfers" as defined in the Credit Agreement.

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

         SECTION 2. Acceptance and Lease. Subject to the satisfaction or waiver
of the conditions precedent contained in the Credit Agreement and the occurrence
of the Initial Borrowing Date, the Lessor hereby agrees to lease to the Lessee
hereunder, and the Lessee hereby agrees to accept on the Initial Borrowing Date
from the Lessor hereunder, the Aircraft as evidenced by the execution by the
Lessor and the Lessee of a Lease Supplement leasing the Aircraft hereunder. The
Lessee agrees to appoint in writing one or more of its employees as its
authorized representative to accept delivery of the Aircraft pursuant to the
terms hereof. The Lessee hereby agrees that acceptance of delivery by such
employee or employees shall, without further act, irrevocably constitute
acceptance by the Lessee of the Aircraft for all purposes of this Lease
Agreement.

         SECTION 3. Term and Rent

         (a) Term and Basic Rent. The Term shall commence on the Initial
Borrowing Date and end on the Final Maturity Date or such earlier date as this
Lease may be terminated in accordance with the provisions hereof. Basic Rent
shall accrue during the Term in accordance with Exhibit B hereto. The Lessee
shall pay to the Lessor on each Basic Rent Payment Date an amount of Basic Rent
specified opposite each Basic Rent Payment Date on Exhibit B hereto as such
amounts may be adjusted pursuant to Section 3 plus accrued interest on Basic
Rent previously accrued but unpaid as specified on Exhibit B.

         (b) Adjustments to Basic Rent. The Basic Rent shall be adjusted upwards
on each Basic Rent Payment Date by an amount, determined by the Agent and
notified to the Lessor and the Lessee prior to the Basic Rent Payment Date, that
represents the amount of interest due and payable on the Loans relating to the
Aircraft on such Basic Rent Payment Date and determined in accordance with the
Credit Agreement.

         (c) Supplemental Rent. The Lessee shall pay (or cause to be paid) to
the Lessor, or to whomsoever shall be entitled thereto, any and all Supplemental
Rent constituting Stipulated Loss Value as the same shall become due and owing
and all other amounts of Sup-

                                      -22-
<PAGE>

plemental Rent within 10 days after demand, and in the event of any failure on
the part of the Lessee to pay any Supplemental Rent when due, the Lessor shall
have all rights, powers and remedies provided for herein or by law or equity or
otherwise in the case of nonpayment of Basic Rent. The Lessee also will pay to
the Lessor, or to whomsoever shall be entitled thereto, as assignee of the
Lessor, on demand, as Supplemental Rent, (i) all amounts of interest payable by
the Lessor pursuant to subsection 2.2(C) of the Credit Agreement that (I) are
payable on the Loans relating to the Aircraft and (II) fall due on any day which
is not a Basic Rent Payment Date, (ii) interest at the Past Due Rate with
respect to any part of any installment of Basic Rent not paid when due for any
period for which the same shall be overdue and on any payment of Supplemental
Rent not paid when due for the period and, to the extent permitted by law, on
interest accrued on Basic Rent which itself was accrued and not paid to the
extent that such accrued interest was not paid when due until the same shall be
paid and on any other amounts payable hereunder that are not paid when due and
(iii) all amounts payable by the Lessor pursuant to subsections 2.6D, 2.7, 9.2
and 9.3 of the Credit Agreement; provided, however, that, to the extent that any
Supplemental Rent required to be paid pursuant to clause (iii) of this
subsection 2(c) has been paid by the Lessee pursuant to the terms of another
Lease, then the Lessee's obligations hereunder shall be deemed to be satisfied
by the payments made pursuant to such other Lease.

         (d) Payments in General. All payments of Rent shall be made directly by
the Lessee prior to 12:00 p.m. (New York time), to the Lessor at its office at
538 Commons Drive, Golden, CO 80401, Attention: Richard H. Shuyler (or such
other office of the Lessor in the continental United States or such other
account as the Lessor shall direct in a notice to the Lessee at least 10
Business Days prior to the date when such payment of Rent is due); provided,
that, so long as any Obligations remain outstanding, all Rent shall be paid
directly to the Agent at the Funding and Payment Office; and provided further,
that to the extent the amount of Rent paid directly to the Agent is in excess of
the amount of principal and interest on the Loans relating to the Aircraft and
other unpaid Obligations (other than principal and interest on other Loans
relating to other aircraft or spare engines leased pursuant to the other Leases
and after taking into account all other payments of rent pursuant to the other
Leases on such date), then such excess amounts shall be paid by the Agent to the
Lessor at its above-referenced office.

         Notwithstanding anything to the contrary contained herein, if any date
on which a payment of Rent becomes due and payable is not a Business Day, then
such payment shall be made on the next succeeding Business Day; provided,
however, that if any date on which a payment of Rent becomes due is not a
Business Day and is a day of the month after which no further Business Day
occurs in such month, then the payment of Rent shall be made on the next
preceding Business Day. No interest shall accrue on the amount of any payment
made on the Business Day next succeeding the regularly scheduled Basic Rent
Payment Date, if such payment is made on such next succeeding Business Day
because the original date of

                                      -23-
<PAGE>

         payment was not a Business Day (it being understood that the amount of
Basic Rent includes Rent for such day).

         (e) Minimum Rent. Anything herein to the contrary notwithstanding,

         (i) each installment of Basic Rent, whether or not such installment has
     been adjusted pursuant to Section 3(b), together with all prior Basic Rent
     due and payable on such date and all accrued interest thereon shall be,
     under all circumstances and in any event, in an amount at least sufficient
     for the Lessor to pay in full principal and interest on the Loans relating
     to the Aircraft required to be paid by the Lessor on or within five
     Business Days of the due date of such installment of Basic Rent; and

         (ii) payments of Stipulated Loss Value shall be, under any
     circumstances and in any event, in an amount that (when taken together with
     any other Basic Rent due and payable in connection therewith) is at least
     equal to, as of the date of payment, the sum of the aggregate unpaid
     principal of and accrued interest on the Loans relating to the Aircraft and
     all other unpaid Obligations of the Lessor (other than principal and
     interest on Loans relating to other aircraft or spare engines and after
     taking into account all other payments of Stipulated Loss Value pursuant to
     the other Leases on such date).

         (f) Prepayment of Rent Payments:

         (i) In the event that the Lessor is at any time required to repay Loans
     relating to the Aircraft pursuant to Section 2.4C(ii) of the Credit
     Agreement, the Lessor shall notify the Lessee of such required prepayment
     and the Lessee shall immediately prepay an amount of Basic Rent equal to
     the amount of such required prepayment less any required payments of the
     Loans relating to the Aircraft actually made by the Lessor from Insurance
     Proceeds or Condemnation Proceeds (as each such term is defined in the
     Credit Agreement) received directly by the Lessor.

         (ii) The Lessee shall also be permitted to prepay Basic Rent
     voluntarily at any time and from time to time, without premium or penalty,
     upon not less than three Business Days' prior written or telephonic notice
     to the Lessor and the Agent.

         (iii) In the event of any prepayment pursuant to this Section 3(f), the
     schedules of Basic Rent and Stipulated Loss Value shall be adjusted so as
     to preserve the after tax yield and after tax cash flows of the Lessor and,
     to the extent consistent therewith, to minimize the net present value of
     Basic Rent payments. All such computations shall be made on the basis of
     the same assumptions and the method of computations employed in the
     original calculations of Basic Rent and Stipulated Loss Values (except to
     the extent that such assumptions have been changed as a result of such
     prepayment or any prior such adjustment). At the Lessee's written request,
     independ-

                                      -24-
<PAGE>

     ent public accountants mutually selected by the Lessor and the
     Lessee shall confirm the required adjustments. The final determination of
     any adjustment hereunder shall be set forth in amendments to this Lease,
     executed and delivered by the Lessor, the Lessee and consented to by the
     Agent. The reasonable fees, costs and expenses of the verifying accounting
     firm shall be paid by the Lessee.

         Anything contained in the foregoing to the contrary notwithstanding,
after giving effect to the foregoing adjustments, the revised Basic Rent and
Stipulated Loss Values shall permit the Lessee to comply with Section 3(e)
hereof.

         SECTION 4. Certain Representations and Warranties.  THE LESSEE
ACKNOWLEDGES AND AGREES THAT, AS BETWEEN THE LESSOR AND THE LESSEE (A) THE
AIRFRAME AND EACH ENGINE ARE OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE
SELECTED BY AND ACCEPTABLE TO THE LESSEE AND THE LESSEE TAKES THE SAME "AS IS,"
(B) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE ARE SUITABLE FOR
ITS PURPOSES, (C) THE LESSOR IS NOT A MANUFACTURER OR A DEALER IN PROPERTY OF
SUCH KIND, AND (D) NEITHER THE LESSOR NOR THE AGENT NOR ANY LENDER MAKES, HAS
MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY
DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER
PROPRIETARY RIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN
TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that the Lessor
covenants that it will not, through its own actions or inactions, in such
capacity, interfere in the Lessee's quiet enjoyment of the Aircraft unless this
Lease shall have been declared or deemed to have been declared in default
pursuant to Section 17 hereof. None of the provisions of this Section 4 or any
other provision of this Lease shall be deemed to amend, modify or otherwise
affect the representations, warranties or other obligations (express or implied)
of any manufacturer, any affiliate thereof, any subcontractor or supplier of any
manufacturer or any affiliate thereof, with respect to the Airframe, Engines or
any Parts, or to release the manufacturer, any affiliate thereof, or any such
subcontractor or supplier from any such representation, warranty or obligation.
Unless a Default or Lease Event of Default shall have occurred and be
continuing, the Lessor agrees to make available to the Lessee such rights as the
Lessor may have under any warranty with respect to the Aircraft made by the
manufacturer or any affiliate thereof or any of its subcontractors or suppliers
and any other claims against the manufacturer or any affiliate thereof, or

                                      -25-
<PAGE>

any such subcontractor or supplier with respect to the Aircraft, all pursuant to
and in accordance with the terms of any applicable purchase agreements or
warranty agreements.

         SECTION 5. Lessee's Representations and Warranties. In order to induce
the Lessor to enter into this Lease and the Agent and the Lenders to make the
Loans under the Credit Agreement, the Lessee represents and warrants to the
Lessor, the Agent and each Lender on the date of this Lease that the following
statements are true, correct and complete:

         (a) Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.

         (i) Organization and Powers. The Lessee is a corporation duly
     organized, validly existing and in good standing under the laws of the
     State of Delaware. The Lessee has all requisite corporate power and
     authority to own and operate its properties, to carry on its business as
     now conducted and as proposed to be conducted, to enter into this Lease and
     the other Transaction Documents and to carry out the transactions
     contemplated hereby and thereby.

         (ii) Qualification and Good Standing. The Lessee is qualified to do
     business and in good standing in every jurisdiction where its assets are
     located and wherever necessary to carry out its business and operations,
     except in jurisdictions where the failure to be so qualified or in good
     standing has not had and will not have a Material Adverse Effect.

         (iii) Subsidiaries. All of the Subsidiaries of the Lessee as of the
     Initial Borrowing Date are identified on Schedule 5(a)(iii) annexed hereto.
     The capital stock of each of the Subsidiaries of the Lessee identified in
     Schedule 5(a)(iii) annexed hereto (as so supplemented) is duly authorized,
     validly issued, fully paid and nonassessable and none of such capital stock
     constitutes Margin Stock. Each of the Subsidiaries of the Lessee identified
     in Schedule 5(a)(iii) annexed hereto is a corporation duly organized,
     validly existing and in good standing under the laws of its respective
     jurisdiction of incorporation set forth therein, has all requisite
     corporate power and authority to own and operate its properties and to
     carry on its business as now conducted and as proposed to be conducted, and
     is qualified to do business and in good standing in every jurisdiction
     where its assets are located and wherever necessary to carry out its
     business and operations, in each case except where failure to be so
     qualified or in good standing or a lack of such corporate power and
     authority has not had and will not have a Material Adverse Effect. Schedule
     5(a)(iii) annexed hereto correctly sets forth the ownership interest of the
     Lessee and each of its Subsidiaries in each of the Subsidiaries of the
     Lessee identified therein.

                                      -26-
<PAGE>

         (b) Authorization of Transaction Documents, etc.

         (i) Authorization of Transaction Documents. The execution, delivery and
     performance of this Lease and the other Transaction Documents have been
     duly authorized by all necessary corporate action on the part of the Lessee
     or its Subsidiaries, as the case may be.

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

         (iii) Governmental Consents. The execution, delivery and performance by
     the Lessee and its Subsidiaries, as the case may be, of this Lease and the
     other Transaction Documents and the consummation of the transactions
     contemplated by this Lease and the other Transaction Documents do not and
     will not require any registration with, consent or approval of, or notice
     to, or other action to, with or by, any federal, state or other
     governmental authority or regulatory body that has not been obtained or
     made on or prior to the date required to be obtained or made.

         (iv) Binding Obligation. This Lease and each of the other Transaction
     Documents has been duly executed and delivered by the Lessee and its
     Subsidiaries, as the case may be, to the extent that it is a party thereto,
     and is the legally valid and binding obligation of each such Person,
     enforceable against each such Person in accordance with its respective
     terms, except as may be limited by bankruptcy, insolvency, reorganization,
     moratorium or similar laws relating to or limiting creditors' rights
     generally or by equitable principles relating to enforceability.

         (c) Financial Condition.

                                      -27-
<PAGE>

         (A) The Lessee has heretofore delivered to the Lessor, the Agent and
     the Lenders, the following financial statements and information: the
     audited consolidated and consolidating balance sheets of the Lessee and its
     Subsidiaries as at December 31, 1999, and the related consolidated and
     consolidating statements of income, stockholders' equity and cash flows of
     the Lessee and its Subsidiaries for the fiscal year then ended. All such
     statements were prepared in conformity with GAAP and fairly present the
     financial position (on a consolidated and, where applicable, consolidating
     basis) of the entities described in such financial statements as at the
     respective dates thereof and the results of operations and cash flows (on a
     consolidated and, where applicable, consolidating basis) of the entities
     described therein for each of the periods then ended, subject, in the case
     of any such unaudited financial statements, to changes resulting from audit
     and normal year-end adjustments. Neither the Lessee nor any of its
     Subsidiaries has (and will not, following the Initial Borrowing Date, have)
     any Contingent Obligation, contingent liability or liability for taxes,
     long-term lease or unusual forward or long-term commitment that is not
     reflected in the foregoing financial statements or the notes thereto and
     which in any such case is material in relation to the business, operations,
     properties, assets, condition (financial or otherwise) or prospects of the
     Lessee or any of its Subsidiaries.

         (B) Except as fully disclosed in the financial statements delivered
     pursuant to Section 5(c)(A), there were as of the Initial Borrowing Date no
     liabilities or obligations with respect to the Lessee and its Subsidiaries
     of any nature whatsoever (whether absolute, accrued, contingent or
     otherwise and whether or not due) which, either individually or in
     aggregate, could reasonably be expected to be material to the Lessee and
     its Subsidiaries taken as a whole. As of the Initial Borrowing Date, the
     Lessee does not know of any basis for the assertion against it of any
     liability or obligation of any nature whatsoever that is not fully
     disclosed in the financial statements delivered pursuant to Section 5(c)(A)
     which, either individually or in the aggregate, could reasonably be
     expected to be material to the Lessee and its Subsidiaries taken as a
     whole.

         (d) No Material Adverse Change; No Restricted Junior Payments. Since
December 31, 1999, no event or change has occurred that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect. Since
December 31, 1999, neither the Lessee nor any of its Subsidiaries has directly
or indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so, except as permitted by
subsection 7(e) hereunder.

         (e) Title to Properties, Liens. The Lessee and its Subsidiaries have
(i) good, sufficient and legal title to (in the case of fee interests in real
property), (ii) valid leasehold interests in (in the case of leasehold interests
in real or personal property), or (iii) good title to (in the case of all other
personal property), all of the properties and assets reflected in the financial
statements referred to in subsection 5(c) or in the most recent financial
state-

                                      -28-
<PAGE>

ments delivered pursuant to subsection 6(a), in each case except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 7(g). Except as permitted
by this Lease, all such properties and assets are free and clear of Liens.

         (f) Litigation, Adverse Facts. There are no actions, suits,
proceedings, arbitrations or governmental investigations (whether or not
purportedly on behalf of the Lessee or any of its Subsidiaries) at law or in
equity or in admiralty or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, pending or, to the knowledge of the Lessee, threatened
against or affecting the Lessee or any of its Subsidiaries or any property of
the Lessee or any of its Subsidiaries that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. Neither the
Lessee nor any of its Subsidiaries is (i) in violation of any applicable laws
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect or (ii) subject to or in default with respect to
any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

         (g) Payment of Taxes. Except to the extent permitted by subsection
6(c), all tax returns and reports of the Lessee and its Subsidiaries required to
be filed by any of them have been timely filed, and all taxes, assessments, fees
and other governmental charges upon the Lessee and its Subsidiaries and upon
their respective properties, assets, income, businesses and franchises that are
due and payable have been paid when due and payable. The Lessee does not know of
any proposed tax assessment against the Lessee or any of its Subsidiaries that
is not being actively contested by the Lessee or such Subsidiary in good faith
and by appropriate proceedings; provided, that such reserves or other
appropriate provisions, if any, for liabilities for taxes as shall be required
in conformity with GAAP shall have been made or provided in the financial
statements of the Lessee. There are no agreements with respect to taxes between
the Lessee and any tax agency or authority.

         (h) Performance of Agreements. Neither the Lessee nor any of its
Subsidiaries is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default, except where the
consequences, direct or indirect, of such default or defaults, if any, would not
have a Material Adverse Effect.

         (i) Governmental Regulation. Neither the Lessee nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940 or under any other federal or state statute or
regulation that may limit its ability to incur Indebted-

                                      -29-
<PAGE>

ness or that may otherwise render all or any portion of its obligations under
the Transaction Documents unenforceable.

         (j) Employee Benefit Plans. The Lessee maintains a qualified retirement
plan under Section 401(k) of the Internal Revenue Code and a medical benefit
plan. The Lessee's 401(k) Plan has no unfunded liabilities in excess of
$10,000,000, and the Lessee is in compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan and has performed all of
its obligations under such Employee Benefit Plan in all material respects. The
Lessee has no Employee Benefit Plans, other than its 401(k) Plan and the medical
benefit plan. The Lessee has no ERISA Affiliates that sponsor, maintain,
contribute to or are liable with respect to any Employee Benefit Plans.

         (k) Certain Fees. No broker's or finder's fee or commission will be
payable with respect to this Lease or any other Transaction Documents or any of
the transactions contemplated hereby.

         (l) Environmental Protection.

         (i) All facilities and operations of the Lessee and its Subsidiaries
     are, and have been to the best of the Lessee's knowledge, in compliance in
     all material respects with all applicable Environmental Laws.

         (ii) There are no, and have been no, conditions, occurrences, or
     Hazardous Materials Activity, (a) arising at any facilities owned or
     operated by the Lessee or (b) arising in connection with the operations of
     the Lessee or any of its Subsidiaries (including the transportation of
     Hazardous Materials), which conditions, occurrences or Hazardous Materials
     Activity could reasonably be expected to form the basis of an Environmental
     Claim against the Lessee and which, individually or in the aggregate, could
     reasonably be expected to have a Material Adverse Effect.

         (iii) To the best of the Lessee's knowledge, there are no pending or
     threatened Environmental Claims against the Lessee or any of its
     Subsidiaries, and neither the Lessee nor any of its Subsidiaries has
     received any written notices, inquiries, or requests for information with
     respect to any Environmental Claims.

         (m) Employee Matters. There is no strike or work stoppage in existence
or threatened involving the Lessee or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.

         (n) Solvency. The Lessee and each of its Subsidiaries is and, upon the
incurrence of any obligations by the Lessee under the Leases, will be, after
giving effect to the transactions contemplated hereby, Solvent.

                                      -30-
<PAGE>

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

         (p) Registration and Filing; Chief Executive Office.

         (1) Except for the registration of this Lease and the Lease Supplement
     with the FAA and the filing of a financing statement under the Uniform
     Commercial Code in Colorado, it is not necessary or advisable under
     Colorado law or the law of the State of New York in order to ensure the
     validity, effectiveness or enforceability of this Lease or to protect the
     rights of the Lessor in the Aircraft or any part thereof that any other
     instrument be filed, registered or recorded or that any action be taken,
     and, under Colorado law or the law of the State of New York, the rights of
     the Lessor in the Aircraft will have priority in all respects over the
     claims of all creditors of the Lessee other than certain claims by
     landlords of hangars, materialmen, mechanics and warehousemen in respect of
     the Aircraft that have priority under Colorado law.

         (2) The Lessee's chief executive office (as that term is defined in
     Article 9 of the Uniform Commercial Code as in effect in Colorado) is
     located at 538 Commons Drive, Golden, Colorado 80401, and the records of
     the Lessee concerning the Aircraft are maintained at such chief executive
     office or at the operations center at JFK International Airport, Building
     151, Jamaica, New York 11430, where the Lessee normally maintains aircraft
     records.

         SECTION 6. Lessee's Affrimative Covenants.  The Lessee covenants and
agrees that, so long as any amounts under this Lease remain unpaid, the Lessee
shall perform, and will cause each of its Subsidiaries to perform, all covenants
in this Section 6.

                                      -31-
<PAGE>

         (a) Financial Statements and Other Reports. The Lessee will maintain,
and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP. The Lessee
will deliver to the Lessor, the Agent and the Lenders:

         (1) Quarterly Financials: as soon as available and in any event within
     45 days after the end of each fiscal quarter of each fiscal year, (a) the
     consolidated and consolidating balance sheets of the Lessee and its
     Subsidiaries as at the end of such fiscal quarter and the related
     consolidated and consolidating statements of income, stockholders' equity
     and cash flows of the Lessee and its Subsidiaries for such fiscal quarter
     and for the period from the beginning of the then current fiscal year to
     the end of such fiscal quarter, setting forth in each case in comparative
     form the corresponding figures for the corresponding periods of the
     previous fiscal year, all in reasonable detail and certified by the chief
     financial officer of the Lessee that they fairly present the financial
     condition of the Lessee and its Subsidiaries as at the dates indicated and
     the results of their operations and their cash flows for the periods
     indicated, subject to changes resulting from audit and normal year-end
     adjustments, and (b) a narrative report describing the operations of the
     Lessee and its Subsidiaries in the form prepared for presentation to senior
     management for such fiscal quarter and for the period from the beginning of
     the then current fiscal year to the end of such fiscal quarter; provided,
     that delivery of the Lessee's Form 10-Q for such fiscal quarter shall be
     deemed to satisfy the requirements of this subsection 6(a)(1);

         (2) Year-End Financials: as soon as available and in any event within
     90 days after the end of each fiscal year, (a) the consolidated and
     consolidating balance sheets of the Lessee and its Subsidiaries as at the
     end of such fiscal year and the related consolidated and consolidating
     statements of income, stockholders' equity and cash flows of the Lessee and
     its Subsidiaries for such fiscal year, setting forth in each case in
     comparative form the corresponding figures for the previous fiscal year,
     all in reasonable detail and certified by the chief financial officer of
     the Lessee that they fairly present the financial condition of the Lessee
     and its Subsidiaries as at the dates indicated and the results of their
     operations and their cash flows for the periods indicated, (b) a narrative
     report describing the operations of the Lessee and its Subsidiaries in the
     form prepared for presentation to senior management for such fiscal year,
     and (c) in the case of such consolidated financial statements, a report
     thereon of Arthur Andersen LLP or other independent certified public
     accountants of recognized national standing selected by the Lessee and
     satisfactory to the Lessor and the Agent, which report shall be
     unqualified, shall express no doubts about the ability of the Lessee and
     its Subsidiaries to continue as a going concern, and shall state that such
     consolidated financial statements fairly present the consolidated financial
     position of the Lessee and its Subsidiaries as at the dates indicated and
     the results of their operations

                                      -32-
<PAGE>
         and their cash flows for the periods indicated in conformity with GAAP
         applied on a basis consistent with prior years (except as otherwise
         disclosed in such financial statements) and that the examination by
         such accountants in connection with such consolidated financial
         statements has been made in accordance with generally accepted auditing
         standards; provided, that delivery of the Lessee's Form 10-K for such
         fiscal year shall be deemed to satisfy the requirements of clauses (a)
         and (b) of this subsection 6(a)(2);

                  (3) Officers' and Compliance Certificates: together with each
         delivery of financial statements of the Lessee and its Subsidiaries
         pursuant to subdivisions (1) and (2) above after the Initial Borrowing
         Date, (a) an Officers' Certificate of the Lessee stating that the
         signers have reviewed the terms of this Lease and have made, or caused
         to be made under their supervision, a review in reasonable detail of
         the transactions and condition of the Lessee and its Subsidiaries
         during the accounting period covered by such financial statements and
         that such review has not disclosed the existence during or at the end
         of such accounting period, and that the signers do not have knowledge
         of the existence as at the date of such Officers' Certificate, of any
         condition or event that constitutes a Default or Lease Event of
         Default, or, if any such condition or event existed or exists,
         specifying the nature and period of existence thereof and what action
         the Lessee has taken, is taking and proposes to take with respect
         thereto; and (b) a Compliance Certificate demonstrating in reasonable
         detail compliance during and at the end of the applicable quarterly and
         annual accounting periods with the restrictions contained in Section 7;

                  (4) Reconciliation Statements: if, as a result of any change
         in accounting principles and policies from those used in the
         preparation of the audited financial statements referred to in
         subsection 5(c), the consolidated financial statements of the Lessee
         and its Subsidiaries delivered pursuant to subdivision (1) or (2) of
         this subsection 6(a) will differ in any material respect from the
         consolidated financial statements that would have been delivered
         pursuant to such subdivisions had no such change in accounting
         principles and policies been made, then (a) together with the first
         delivery of financial statements pursuant to subdivision (1) or (2) of
         this subsection 6(a) following such change, consolidated financial
         statements of the Lessee and its Subsidiaries for (y) the current
         fiscal year to the effective date of such change and (z) the two full
         fiscal years immediately preceding the fiscal year in which such change
         is made, in each case prepared on a pro forma basis as if such change
         had been in effect during such periods, and (b) together with each
         delivery of financial statements pursuant to subdivision (1) or (2) of
         this subsection 6(a) following such change, a written statement of the
         chief accounting officer or chief financial officer of the Lessee
         setting forth the differences that would have resulted if such
         financial statements had been prepared without giving effect to such
         change;

                                      -33-
<PAGE>

                  (5) Environmental Audits and Reports: as soon as practicable
         following receipt thereof, copies of all environmental audits and
         reports, whether prepared by personnel of the Lessee or any of its
         Subsidiaries or by independent consultants, with respect to significant
         environmental matters at any facility or that relate to an
         Environmental Claim that could result in a Material Adverse Effect;

                  (6) Accountants' Certification: together with each delivery of
         consolidated financial statements of the Lessee and its Subsidiaries
         pursuant to subdivision (2) above, a written statement by the
         independent certified public accountants giving the report thereon (a)
         stating that their audit examination has included a review of the terms
         of this Lease and the other Transaction Documents as they relate to
         accounting matters, (b) stating whether, in connection with their audit
         examination, any condition or event that constitutes a Default or Lease
         Event of Default has come to their attention and, if such a condition
         or event has come to their attention, specifying the nature and period
         of existence thereof; provided, that such accountants shall not be
         liable by reason of any failure to obtain knowledge of any such Default
         or Lease Event of Default that would not be disclosed in the course of
         their audit examination, and (c) stating that based on their audit
         examination nothing has come to their attention that causes them to
         believe either or both that the information contained in the
         certificates delivered therewith pursuant to subdivision (3) above is
         not correct or that the matters set forth in the Compliance
         Certificates delivered therewith pursuant to clause (b) of subdivision
         (3) above for the applicable fiscal year are not stated in accordance
         with the terms of this Lease;

                  (7) Accountants' Reports: promptly upon receipt thereof
         (unless restricted by applicable professional standards), copies of all
         reports submitted to the Lessee by independent certified public
         accountants in connection with each annual, interim or special audit of
         the financial statements of the Lessee and its Subsidiaries made by
         such accountants, including, without limitation, any comment letter
         submitted by such accountants to management in connection with their
         annual audit;

                  (8) SEC Filings and Press Releases: promptly upon their
         becoming available, copies of (a) all financial statements, reports,
         notices and proxy statements sent or made available generally by the
         Lessee to its security holders, (b) all regular and periodic reports
         and all registration statements (other than on Form S-8 or a similar
         form) and prospectuses, if any, filed by the Lessee or any of its
         Subsidiaries with any securities exchange or with the Securities and
         Exchange Commission or any governmental or private regulatory
         authority, and (c) all press releases and other statements made
         available generally by the Lessee or any of its Subsidiaries to the
         public concerning material developments in the business of the Lessee
         or any of its Subsidiaries;

                  (9) Lease Events of Default, etc.: promptly upon any officer
         of the Lessee obtaining knowledge (a) of any condition or event that
         constitutes a Default or Lease

                                      -34-
<PAGE>

         Event of Default, (b) that any Person has given any notice to the
         Lessee or any of its Subsidiaries or taken any other action with
         respect to a claimed default or event or condition of the type
         referred to in subsection 16(1), (c) of any condition or event
         that would be required to be disclosed in a current report filed
         by the Lessee with the Securities and Exchange Commission on Form
         8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
         hereof) if the Lessee were required to file such reports under the
         Exchange Act, or (d) of the occurrence of any event or change that
         has caused or evidences, either in any case or in the aggregate, a
         Material Adverse Effect, an Officers' Certificate specifying the
         nature and period of existence of such condition, event or change,
         or specifying the notice given or action taken by any such Person
         and the nature of such claimed Lease Event of Default, Default,
         default, event or condition, and what action the Lessee has taken,
         is taking and proposes to take with respect thereto;

                 (10) Litigation or Other Proceedings: (a) promptly upon any
         officer of the Lessee obtaining knowledge of (X) the institution of, or
         non-frivolous threat of, any action, suit, proceeding (whether
         administrative, judicial or otherwise), governmental investigation or
         arbitration against or affecting the Lessee or any of its Subsidiaries
         or any property of the Lessee or any of its Subsidiaries (collectively,
         "PROCEEDINGS") not previously disclosed in writing by the Lessee to the
         Lessor and the Lenders or (Y) any material development in any
         Proceeding that, in any case:

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

                          (II) seeks to enjoin or otherwise prevent the
                  consummation of, or to recover any damages or obtain relief as
                  a result of, the transactions contemplated hereby and under
                  the other Transaction Documents;

         written notice thereof together with such other information as may be
         reasonably available to the Lessee to enable the Lessor and the Lenders
         and their counsel to evaluate such matters; and (b) within twenty days
         after the end of each fiscal quarter of the Lessee, a schedule of all
         Proceedings involving an alleged liability of, or claims against or
         affecting, the Lessee or any of its Subsidiaries equal to or greater
         than $1,000,000 and promptly after request by the Lessor and the Agent
         such other information as may be reasonably requested by the Lessor and
         the Agent to enable the Agent and its counsel to evaluate any of such
         Proceedings;

                 (11) ERISA Notices: with reasonable promptness, copies of (a)
         each annual report (Form 5500 Series) filed by the Lessee or any of its
         ERISA Affiliates with the Internal Revenue Service with respect to each
         Employee Benefit Plan, (b) any notices received by the Lessee or any of
         its ERISA Affiliates with respect to a "multiemployer plan," within the
         meaning of Section 4001(a)(3) of ERISA, (c) such other documents or
         governmental reports or filings relating to any Employee Benefit Plan
         as the Lessor

                                      -35-
<PAGE>

         or the Agent shall reasonably request and (d) promptly upon becoming
         aware of the occurrence of or forthcoming occurrence of any material
         and adverse event with respect to any of the Lessee's Employee Benefit
         Plans, a written notice specifying the nature thereof, what action the
         Lessee has taken, is taking or proposes to take with respect thereto,
         and, when known, any action taken or threatened by the Internal Revenue
         Service, the Department of Labor or the Pension Benefit Guaranty
         Corporation;

                 (12) Insurance: as soon as practicable and in any event by the
         last day of each fiscal year, a report in form and substance
         satisfactory to the Lessor and the Agent outlining all material
         insurance coverage maintained as of the date of such report by the
         Lessee and its Subsidiaries and all material insurance coverage planned
         to be maintained by the Lessee and its Subsidiaries in the immediately
         succeeding fiscal year;

                 (13) Pricing Certificates: (a) together with each delivery of
         financial statements of the Lessee and its Subsidiaries pursuant to
         subdivisions (1) and (2) above, (b) within one Business Day after any
         public release by S&P or Moody's lowering the Lessee's "Senior Secured
         Debt Rating" or "Senior Secured Rating," as applicable, and (c) at such
         additional times as the Lessee may elect, a certificate setting forth
         its "Senior Secured Debt Rating" and "Senior Secured Rating," as
         assigned by S&P or Moody's, as applicable (each, a "Pricing
         Certificate");

                 (14) Holding Company: at least 5 Business Days prior to the
         consummation thereof, the terms of the Holding Company Reorganization,
         and, on and after the consummation of the Holding Company
         Reorganization, in addition to the information requirements in this
         Section 6(a) with respect to the Lessee, the same information shall be
         delivered (and at the same times) with respect to the Holding Company
         and its Subsidiaries; and

                 (15) Other Information:  with reasonable promptness, such other
         information and data with respect to the Lessee or any of its
         Subsidiaries as from time to time may be reasonably requested by the
         Lessor or the Agent or any Lender.

                  (b) Corporate Existence. Except as permitted under subsection
7(g) hereunder, the Lessee will, and will cause each of its Subsidiaries to, at
all times preserve and keep in full force and effect its corporate existence and
all rights and franchises material to its business; provided, however, that the
corporate existence of any such Subsidiary may be terminated if such termination
is in the interests of the Lessee and its Subsidiaries and is not materially
disadvantageous to the Lessor or to any assignee of the Lease. The Lessee will
at all times maintain its corporate existence as a United States Citizen.

                  (c) Payment of Taxes and Claims; Tax Consolidation.

                                      -36-
<PAGE>

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

                 (ii) The Lessee will not, and will not permit any of its
         Subsidiaries to, file or consent to the filing of any consolidated
         income tax return with any Person (other than any Subsidiary of the
         Lessor or the Lessee and other than the Holding Company and its
         Subsidiaries).

                  (d) Maintenance of Properties; Insurance. The Lessee will, and
will cause its Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear excepted, all
material properties used or useful in the business of the Lessee and its
Subsidiaries and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof. The Lessee will maintain or cause to
be maintained, with insurers of recognized responsibility and reputation,
insurance with respect to its properties and business and the properties and
businesses of its Subsidiaries against loss or damage (including, without
limitation, flood insurance, if necessary or advisable) of the kinds customarily
carried or maintained under similar circumstances by corporations engaged in
similar businesses.

                  (e) Inspection; Lender Meeting. The Lessee will, and will
cause its Subsidiaries to, permit any authorized representatives designated by
the Lessor, the Agent or any Lender to visit and inspect any of the properties
of the Lessee or any of its Subsidiaries, including the Aircraft or any part
thereof and any Engine, and its and their financial and accounting records, and,
with the permission of the Lessee, which shall not be unreasonably withheld, to
make copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants (provided, that the Lessee may, if it so chooses, be present at or
participate in any such discussion), all upon reasonable notice and at such
reasonable times during normal business hours and as often as may be reasonably
requested, provided, so long as no Lease Event of Default shall have occurred
and be continuing, that such inspection is not disruptive to the Lessee's
business, as reasonably determined by the Lessee. The cost of any such
inspection shall be borne by the Lessee if an Event of Default has occurred and
is continuing or if the Lessee is thereby shown

                                      -37-
<PAGE>

to be in material breach of any of its obligations hereunder, and otherwise by
the party making the inspection. Neither the Lessor, the Agent nor any Lender
shall have any obligation to make any inspection. Without limiting the
foregoing, the Lessor (or its authorized representative) may attend any Airframe
maintenance visit, APU shop visit, landing gear shop visit or Engine shop visit.
The Lessee shall provide the Lessor not less than twenty days' prior written
notice of any such scheduled visit; provided, that if a scheduled visit is to
occur less than twenty days after the scheduling thereof, the Lessee shall
provide written notice of such scheduled visit promptly upon the scheduling
thereof. Without in any way limiting the foregoing, the Lessee will, upon the
request of the Lessor or the Agent, participate in a meeting of the Agent and
the Lenders once during each fiscal year to be held at the Lessee's corporate
offices (or such other location as may be agreed to by the Lessee, the Lessor
and the Agent) at such time as may be agreed to by the Lessee, the Lessor and
the Agent.

                  (f) Compliance with Laws, etc. The Lessee will, and will cause
its Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority (including, without
limitation, Environmental Laws), noncompliance with which could reasonably be
expected to cause a Material Adverse Effect or prevent the Lessee from
performing its obligations hereunder. The Lessee shall not conduct, and shall
not permit the conduct of, any Hazardous Materials Activity at any facility or
at any other location that could reasonably be expected to form the basis of an
Environmental Claim against the Lessee and that could reasonably be expected to
have a Material Adverse Effect.

                  (g) Lessee's Remedial Action Regarding Hazardous Materials.
The Lessee will promptly take, and will cause each of its Subsidiaries promptly
to take, any and all necessary remedial action in connection with the presence,
storage, use, disposal, transportation or Release of any Hazardous Materials on,
under or about any facility in order to comply with all applicable Environmental
Laws and Governmental Authorizations. In the event that the Lessee or any of its
Subsidiaries undertakes any remedial action with respect to any Hazardous
Materials on, under or about any facility, the Lessee or such Subsidiary will
conduct and complete such remedial action in compliance with all applicable
Environmental Laws, and in accordance with the policies, orders and directives
of all federal, state and local governmental authorities except when, and only
to the extent that, the Lessee's or such Subsidiary's liability for such
presence, storage, use, disposal, transportation or discharge of any Hazardous
Materials is being contested in good faith by the Lessee or such Subsidiary.
Notwithstanding anything to the contrary contained in this Lease, the Lessee and
its Subsidiaries may engage in the transportation of Hazardous Materials in the
ordinary course of business so long as such is conducted in compliance with all
applicable Environmental Laws, and all other applicable laws, policies, orders,
directives and regulations.

                  (h) Employee Benefit Plans. The Lessee will not establish or
permit to be established any Employee Benefit Plans for the Lessee or any of its
employees and will not permit any ERISA Affiliate to establish any Employee
Benefit Plan that, in either case, could

                                      -38-
<PAGE>

reasonably be expected to result in a liability for the Lessee, under Title IV
of ERISA or the minimum funding standards of Part 3 of Subtitle B of Title I of
ERISA, in excess of $20 million.

                  (i) Corporate Separateness. The Lessee will take all such
action as is necessary to keep its operations separate and apart from those of
the Holding Company or any of its Affiliates, including, without limitation,
ensuring that all customary corporate formalities, including the maintenance of
separate corporate records and documents and holding regular meetings, are
followed. Any financial statements distributed to any creditors of the Lessee
shall clearly establish the corporate separateness of the Lessee from the
Holding Company and each of the Holding Company's other Subsidiaries. The Lessee
shall not take any action or conduct its affairs in a manner that is likely to
result in the corporate existence of the Lessee on the one hand and of the
Holding Company or any Subsidiary of the Holding Company on the other hand being
disregarded, or in the assets and liabilities of the Holding Company or any
Subsidiary of the Holding Company being substantively consolidated with those of
the Lessee in a bankruptcy, reorganization or other insolvency proceeding.

                  SECTION 7. Lessee's Negative Covenants. The Lessee covenants
and agrees that, so long as any amounts remain owing under this Lease, the
Lessee shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.

                  (a) Indebtedness. The Lessee shall not, and shall not permit
any of its Subsidiaries, directly or indirectly, to create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except that:

                  (1) the Lessee may become and remain liable with respect to
         the obligations under the Amended Aircraft Credit Facility;

                  (2) the Lessee and its Subsidiaries may become and remain
         liable with respect to Contingent Obligations permitted by subsection
         7(d) and, upon any matured obligations actually arising pursuant
         thereto, the Indebtedness corresponding to the Contingent Obligations
         so extinguished;

                  (3) the Lessee and its Subsidiaries may become and remain
         liable with respect to Indebtedness in respect of Capital Leases;
         provided, that such Capital Leases are permitted under the terms of
         subsection 7(i);

                  (4) the Lessee and its Subsidiaries, as applicable, may remain
         liable with respect to Indebtedness described in Schedule 7(a) (4)
         annexed hereto;

                  (5) the Lessee may become and remain liable with respect to
         transaction in which Permitted Extension Indebtedness is incurred with
         respect to any Financed Aircraft, the

                                      -39-
<PAGE>

         cash proceeds from such Permitted Extension Indebtedness are sufficient
         to repay in full the Indebtedness associated with such Financed
         Aircraft;

                  (6) so long as no Default or Lease Event of Default shall have
         occurred and be continuing or would result therefrom and the Lessee
         delivers an Officers' Certificate to the Lessor, the Agent and the
         Lenders, in form and substance reasonably satisfactory to the Lessor
         and the Agent, confirming that, on a Pro Forma Basis after giving
         effect to such incurrence of Indebtedness, (i) the ratio of
         Consolidated Total Debt (less Cash and Cash Equivalents held by the
         Lessee in excess of $25 million) as of the last day of the most
         recently ended fiscal quarter (the "Determination Date") plus seven
         times Consolidated Rental Payments for the four fiscal quarter period
         ending on such Determination Date to Consolidated Adjusted EBITDA plus
         Consolidated Rental Payments for the four fiscal quarter period ending
         on such Determination Date does not exceed the ratio set forth in
         subsection 7(f)(ii) for the fiscal quarter in which such Indebtedness
         is to be incurred, (ii) the ratio of Consolidated Adjusted EBITDA for
         such four fiscal quarter period to Consolidated Interest Expense for
         such four fiscal quarter period is not less than the ratio set forth in
         subsection 7(f)(i) for the fiscal quarter in which such Indebtedness is
         to be incurred, and (iii) the Lessee will be in compliance with all
         covenants set forth in subsection 7(f) hereof, the Lessee and its
         Subsidiaries may incur Other Permitted Indebtedness;

                  (7) the Lessee may become and remain liable with respect to
         Indebtedness under the NationsBanc/Banc of America Agreement;

                  (8) the Lessee may become and remain liable with respect to
         the Senior Notes;

                  (9) the Lessee and its Subsidiaries may become and remain
         liable with respect to other Indebtedness in an aggregate principal
         amount not to exceed, without duplication, when added to the maximum
         aggregate liability, contingent or otherwise, of the Lessee and its
         Subsidiaries outstanding in accordance with Section 7(d)(6), $50
         million at any time outstanding; and

                 (10) the Lessee may become and remain liable with respect to
         Indebtedness in respect of the Leases; provided that, notwithstanding
         the foregoing, the Lessee may not become or remain liable, directly or
         indirectly, for any Indebtedness of any Holding Company Subsidiary.

                  (b) Liens and Related Matters.

                  A.  Prohibition on Liens. The Lessee shall not, and shall not
permit any of its Subsidiaries, directly or indirectly, to create, incur, assume
or permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in

                                      -40-
<PAGE>

respect of goods or accounts receivable) of the Lessee or any of its
Subsidiaries, whether now owned or hereafter acquired, or any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any such
property, asset, income or profits under the Uniform Commercial Code of any
state or under any similar recording or notice statute, except:

                  (i) Permitted Encumbrances;

                 (ii) Liens in respect of Permitted Extension Indebtedness and
         Other Permitted Indebtedness, provided that such Liens encumber only
         assets subject to purchase money Liens securing such Indebtedness and
         do not encumber any assets subject to the Aircraft Chattel Mortgages;
         and

                (iii) other Liens, securing Indebtedness in an aggregate amount
         not to exceed $10 million at any time outstanding, that do not encumber
         any assets subject to the Aircraft Chattel Mortgages.

                  Notwithstanding anything to the contrary contained above, in
no event shall the Lessee create, incur, assume or permit to exist Liens on or
with respect to any assets subject to the Aircraft Chattel Mortgages except for
Permitted Encumbrances of the type described in clauses (i), (ii) or (viii) of
the definition thereof.

                  B.  No Restrictions on Subsidiary Distributions to Lessee or
Other Subsidiaries. Except (i) as provided herein, (ii) as described on Schedule
7(b) annexed hereto and (iii) with respect to Special Purpose Subsidiaries, the
Lessee will not, and will not permit any of its Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary's
capital stock (i) to pay dividends or make any other distributions on any of
such Subsidiary's capital stock owned by the Lessee or any other Subsidiary of
the Lessee, (ii) to repay or prepay any Indebtedness owed by such Subsidiary to
the Lessee or any other Subsidiary of the Lessee, (iii) to make loans or
advances to the Lessee or any other Subsidiary of the Lessee, or (iv) to
transfer any of its property or assets to the Lessee or any other Subsidiary of
the Lessee.

                  (c) Investments; Joint Ventures.  The Lessee shall not, and
         shall not permit any of its Subsidiaries, directly or indirectly, to
         make or own any Investment in any Person, including any Joint Venture,
         except:

                  (i) the Lessee may make and own Investments in Cash
         Equivalents;

                 (ii) the Lessee and its Subsidiaries may continue to own the
         Investments owned by them as of the Initial Borrowing Date in any
         Subsidiaries of the Lessee;

                                      -41-
<PAGE>

                (iii) the Lessee may make and own Investments in Special Purpose
         Subsidiaries, provided that the Lessee delivers to the Lessor and the
         Agent an Officer's Certificate in form and substance satisfactory to
         the Lessor and the Agent demonstrating that such Special Purpose
         Subsidiary meets the requirements set forth in the definition thereof;

                 (iv) the Lessee may make Investments in Joint Ventures in an
         aggregate amount not to exceed (A) $50 million plus (B) 20% of
         cumulative Consolidated Net Income for each fiscal year commencing with
         fiscal year 2000 and ending before the date of determination less (C)
         the sum of (x) the aggregate amount of Restricted Junior Payments with
         respect to the Common Stock of the Lessee declared or paid in each such
         fiscal year (excluding Restricted Junior Payments made in accordance
         with Section 7(e)(4)) and (y) the aggregate amount contributed to
         capital of Special Purpose Subsidiaries in each such fiscal year;
         provided, that the Lessee shall not incur liabilities related to any
         such Joint Venture in excess of the Lessee's Investment therein;

                  (v) the Lessee and its Subsidiaries may continue to own the
         Investments owned by them and described in Schedule 7(c)(v) annexed
         hereto and Investments made in compliance with subsection 7(c)(iv); and

                 (vi) the Lessee and its Subsidiaries may make and own other
         Investments in an aggregate amount not to exceed $15 million at any
         time outstanding.

                  (d) Contingent Obligations.  The Lessee shall not, and shall
         not permit any of its Subsidiaries to, directly or indirectly, create
         or become or remain liable with respect to any Contingent Obligation,
         except:

                  (1) any Subsidiary may become and remain liable with respect
         to Contingent Obligations arising under their guaranties of the
         obligations under any Material Agreement;

                  (2) the Lessee may become and remain liable with respect to
         Contingent Obligations under Interest Rate Agreements and Currency
         Agreements arising under any Material Agreement;

                  (3) the Lessee and its Subsidiaries may become and remain
         liable with respect to Contingent Obligations in respect of customary
         indemnification and purchase price adjustment obligations incurred in
         connection with Asset Sales or other sales of assets or securities;

                  (4) the Lessee and its Subsidiaries, as applicable, may remain
         liable with respect to Contingent Obligations described in Schedule
         7(d)(4) annexed hereto;

                                      -42-
<PAGE>

                  (5) the Lessee and its Subsidiaries may become and remain
         liable with respect to Contingent Obligations to the extent that such
         Contingent Obligations are permitted pursuant to subsections 7(i) and
         7(j); and

                  (6) the Lessee and its Subsidiaries may become and remain
         liable with respect to other Contingent Obligations; provided, that the
         maximum aggregate liability, contingent or otherwise, of the Lessee and
         its Subsidiaries in respect of all such Contingent Obligations when
         added, without duplication, to the aggregate principal amount of
         Indebtedness outstanding in accordance with Section 7(a)(9) shall at no
         time exceed $50 million.

                  (e) Restricted Junior Payments. The Lessee shall not, and
shall not permit any of its Subsidiaries, directly or indirectly, to declare,
order, pay, make or set apart any sum for any Restricted Junior Payment;
provided, that the Lessee may make scheduled payments of principal, mandatory
prepayments of principal (including through the exercise of remedies) and
payment of interest from time to time on Designated Indebtedness; and provided
further, that, so long as no Default or Lease Event of Default has occurred and
is continuing, or would result therefrom:

                  (1) the Lessee may prepay Designated Indebtedness from the
         proceeds of Permitted Extension Indebtedness or Other Permitted
         Indebtedness;

                  (2) the Lessee may make Restricted Junior Payments with
         respect to its Common Stock in an amount not to exceed, in any fiscal
         year, the lesser of 20% of Consolidated Net Income for such fiscal year
         and $15 million;

                  (3) the Lessee may apply Equity Proceeds to prepay Designated
         Indebtedness;

                  (4) the Lessee may repurchase its Common Stock in an amount
         not to exceed in any fiscal year $15 million for purposes of
         establishing or contributing to an employee benefit plan; provided,
         that any such repurchased Common Stock resold to employees of the
         Lessee shall, to the extent of the price paid for such Common Stock by
         such employee, be excluded from the calculation of the $15 million
         limit set forth above;

                  (5) the Lessee shall be permitted to consummate the
         Transaction; and

                  (6) the Lessee may repurchase or redeem all or any portion of
         the Senior Notes for aggregate cash consideration, when aggregated with
         any "change of control" put payments arising as a result of the Holding
         Company Reorganization, not to exceed $75,000,000, provided that (A)
         after giving effect to the proposed repurchase or redemption, the
         Lessee shall have not less than $150,000,000 in Cash or Cash

                                      -43-
<PAGE>

         Equivalents on its balance sheet and (B) its Consolidated Leverage
         Ratio (calculated on a pro forma basis as if the proposed repurchase or
         redemption had been consummated on the last day of the most recent four
         fiscal quarter period) shall not exceed the lower of 4.25:1.00 or the
         ratio required to be met in accordance with Section 7(f)(ii) for the
         immediately succeeding fiscal quarter end.

                  (f) Financial Covenants.

                  (i) Minimum Interest Coverage Ratio. The Lessee shall not
         permit the ratio of (i) Consolidated Adjusted EBITDA to (ii)
         Consolidated Interest Expense for the four fiscal quarter period ending
         as of the last day of any fiscal quarter of the Lessee set forth below
         to be less than the correlative ratio indicated:

<TABLE>
<CAPTION>
=========================================================
       FISCAL QUARTER              MINIMUM INTEREST
           ENDING                   COVERAGE RATIO
----------------------------- ---------------------------
<S>                           <C>
March 31, 2000                        2.10:1.00
----------------------------- ---------------------------
June 30, 2000                         2.10:1.00
----------------------------- ---------------------------
September 30, 2000                    2.20:1.00
----------------------------- ---------------------------
December 31, 2000                     2.20:1.00
----------------------------- ---------------------------
March 31, 2001                        2.40:1.00
----------------------------- ---------------------------
June 30, 2001                         2.40:1.00
----------------------------- ---------------------------
September 30, 2001                    2.50:1.00
----------------------------- ---------------------------
December 31, 2001                     2.50:1.00
----------------------------- ---------------------------
March 31, 2002                        2.50:1.00
----------------------------- ---------------------------
June 30, 2002                         2.50:1.00
----------------------------- ---------------------------
September 30, 2002                    2.50:1.00
----------------------------- ---------------------------
December 31, 2002                     2.50:1.00
----------------------------- ---------------------------
March 31, 2003                        2.50:1.00
----------------------------- ---------------------------
June 30, 2003                         2.75:1.00
----------------------------- ---------------------------
December 31, 2003                     2.75:1.00
----------------------------- ---------------------------
March 31, 2004                        2.75:1.00
----------------------------- ---------------------------
June 30, 2004                         2.75:1.00
----------------------------- ---------------------------
</TABLE>

                                      -44-
<PAGE>

<TABLE>
<CAPTION>
=========================================================
       FISCAL QUARTER              MINIMUM INTEREST
           ENDING                   COVERAGE RATIO

September 30, 2004                    2.75:1.00
----------------------------- ---------------------------
<S>                           <C>

December 31, 2004                     2.75:1.00
----------------------------- ---------------------------
March 31, 2005                        2.75:1.00
----------------------------- ---------------------------
June 30, 2005                         2.75:1.00
----------------------------- ---------------------------
September 30, 2005                    2.75:1.00
----------------------------- ---------------------------
December 31, 2005                     2.75:1.00
----------------------------- ---------------------------
March 31, 2006                        2.75:1.00
----------------------------- ---------------------------
June 30, 2006                         2.75:1.00
----------------------------- ---------------------------
September 30, 2006                    2.75:1.00
----------------------------- ---------------------------
December 31, 2006                     2.75:1.00
----------------------------- ---------------------------
</TABLE>

                 (ii) Maximum Leverage Ratio. The Lessee shall not permit the
         ratio of (i) Consolidated Total Debt at the end of any four fiscal
         quarter period ending during one of the periods set forth below (less
         Cash and Cash Equivalents held by the Lessee in excess of $25 million
         as of such date) plus seven times Consolidated Rental Payments for such
         four fiscal quarter period to (ii) Consolidated Adjusted EBITDA plus
         Consolidated Rental Payments for such four fiscal quarter period to
         exceed the correlative ratio indicated below:

<TABLE>
<CAPTION>
==========================================================
       FISCAL QUARTER                   MAXIMUM
           ENDING                    LEVERAGE RATIO
============================== ===========================
<S>                            <C>
March 31, 2000                         4.75:1.00
------------------------------ ---------------------------
June 30, 2000                          4.75:1.00
------------------------------ ---------------------------
September 30, 2000                     4.75:1.00
------------------------------ ---------------------------
December 31, 2000                      4.75:1.00
------------------------------ ---------------------------
March 31, 2001                         4.75:1.00
------------------------------ ---------------------------
June 30, 2001                          4.50:1.00
------------------------------ ---------------------------
September 30, 2001                     4.50:1.00
------------------------------ ---------------------------
December 31, 2001                      4.50:1.00
------------------------------ ---------------------------
March 31, 2002                         4.50:1.00
------------------------------ ---------------------------
</TABLE>

                                      -45-
<PAGE>

<TABLE>
<CAPTION>
==========================================================
       FISCAL QUARTER                   MAXIMUM
           ENDING                    LEVERAGE RATIO
============================== ===========================
<S>                            <C>
June 30, 2002                          4.50:1.00
------------------------------ ---------------------------
September 30, 2002                     4.50:1.00
------------------------------ ---------------------------
December 31, 2002                      4.25:1.00
------------------------------ ---------------------------
March 31, 2003                         4.25:1.00
------------------------------ ---------------------------
June 30, 2003                          4.25:1.00
------------------------------ ---------------------------
September 30, 2003                     4.25:1.00
------------------------------ ---------------------------
December 31, 2003                      4.00:1.00
------------------------------ ---------------------------
March 31, 2004                         4.00:1.00
------------------------------ ---------------------------
June 30, 2004                          4.00:1.00
------------------------------ ---------------------------
September 30, 2004                     4.00:1.00
------------------------------ ---------------------------
December 31, 2004                      3.75:1.00
------------------------------ ---------------------------
March 31, 2005                         3.75:1.00
------------------------------ ---------------------------
June 30, 2005                          3.75:1.00
------------------------------ ---------------------------
September 30, 2005                     3.75:1.00
------------------------------ ---------------------------
December 31, 2005                      3.50:1.00
============================== ===========================
March 31, 2006                         3.50:1.00
------------------------------ ---------------------------
June 30, 2006                          3.50:1.00
------------------------------ ---------------------------
September 30, 2006                     3.50:1.00
------------------------------ ---------------------------
December 31, 2006                      3.50:1.00
============================== ===========================
</TABLE>

                (iii) Minimum Consolidated Net Worth. The Lessee shall not
         permit Consolidated Net Worth at any time during any of the periods set
         forth below to be less than the correlative amount indicated:

<TABLE>
<CAPTION>
=============================== ================================
                                     MINIMUM CONSOLIDATED
            PERIOD                         NET WORTH
=============================== ================================
<S>                             <C>
March 31, 2000                           $300 million
------------------------------- --------------------------------
June 30, 2000                            $300 million
------------------------------- --------------------------------
</TABLE>

                                      -46-
<PAGE>

<TABLE>
<CAPTION>
=============================== ================================
                                     MINIMUM CONSOLIDATED
            PERIOD                         NET WORTH
=============================== ================================
<S>                             <C>
September 30, 2000                       $325 million
------------------------------- --------------------------------
December 31, 2000                        $325 million
------------------------------- --------------------------------
March 31, 2001                           $350 million
------------------------------- --------------------------------
June 30, 2001                            $350 million
------------------------------- --------------------------------
September 30, 2001                       $350 million
------------------------------- --------------------------------
December 31, 2001                        $350 million
------------------------------- --------------------------------
March 31, 2002                           $400 million
------------------------------- --------------------------------
June 30, 2002                            $400 million
------------------------------- --------------------------------
September 30, 2002                       $400 million
------------------------------- --------------------------------
December 31, 2002                        $400 million
=============================== ================================
March 31, 2003                           $450 million
------------------------------- --------------------------------
June 30, 2003                            $450 million
------------------------------- --------------------------------
September 30, 2003                       $450 million
------------------------------- --------------------------------
December 31, 2003                        $450 million
------------------------------- --------------------------------
March 31, 2004                           $450 million
------------------------------- --------------------------------
June 30, 2004                            $450 million
------------------------------- --------------------------------
September 30, 2004                       $450 million
------------------------------- --------------------------------
December 31, 2004                        $450 million
------------------------------- --------------------------------
March 31, 2005                           $450 million
------------------------------- --------------------------------
June 30, 2005                            $450 million
------------------------------- --------------------------------
September 30, 2005                       $450 million
------------------------------- --------------------------------
December 31, 2005                        $450 million
------------------------------- --------------------------------
March 31, 2006                           $450 million
------------------------------- --------------------------------
June 30, 2006                            $450 million
------------------------------- --------------------------------
September 30, 2006                       $450 million
------------------------------- --------------------------------
December 31, 2006                        $450 million
=============================== ================================
</TABLE>

                                      -47-
<PAGE>

                  (g) Restriction on Fundamental Changes; Asset Sales and
Acquisitions; New Subsidiaries. The Lessee shall not, and shall not permit any
of its Subsidiaries to, enter into any transaction of merger or consolidation,
or liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any part of its
business, property or fixed assets, whether now owned or hereafter acquired, or
acquire by purchase or otherwise all or any portion of the business, property or
fixed assets of, or stock or other evidence of beneficial ownership of, any
Person or any division or line of business of any Person, except that:

                  (1) any Subsidiary of the Lessee may be merged with or into
         the Lessee or any wholly-owned Subsidiary of the Lessee, or be
         liquidated, wound up or dissolved, or all or any part of its business,
         property or assets may be conveyed, sold, leased, transferred or
         otherwise disposed of, in one transaction or a series of transactions,
         to the Lessee or any such wholly-owned Subsidiary of the Lessee;
         provided, that, in the case of such a merger, the Lessee or such
         wholly-owned Subsidiary shall be the continuing or surviving
         corporation;

                  (2) the Lessee and its Subsidiaries may sell or otherwise
         dispose of assets in transactions that do not constitute Asset Sales;
         provided, that the consideration received for such assets shall be in
         an amount at least equal to the fair market value thereof;

                  (3) subject to subsection 7(m), the Lessee and its
         Subsidiaries may make Asset Sales of assets having a fair market value
         not in excess of $100 million in any fiscal year or $500 million in the
         aggregate; provided, that (x) the consideration received for such
         assets shall be in an amount at least equal to the fair market value
         thereof, (y) the consideration received shall be at least 75% cash, and
         (z) the proceeds of such Asset Sales shall be applied to repay
         permanently senior bank debt or prepay Basic Rent;

                  (4) the Lessee may lease or transfer any Financed Aircraft to
         the extent expressly permitted by the mortgages encumbering such
         Financed Aircraft as in effect on the date of this Lease;

                  (5) the Lessee may make acquisitions of the capital stock of
         another Person or all or substantially all of the assets of a division
         or line of business of another Person, provided that (a) the
         acquisition primarily involves the acquisition of assets to be used in
         the business of the Lessee, (b) if such acquisition is structured as a
         merger or a stock or other equity acquisition, then either (i) the
         Person so acquired becomes a wholly-owned Subsidiary of the Lessee or
         (ii) such Person is merged with and into the Lessee or a wholly-owned
         Subsidiary of the Lessee (with the Lessee or such wholly-owned
         Subsidiary being the surviving corporation of such merger), (c) if such
         acquisi-

                                      -48-
<PAGE>

         tion is structured as an asset acquisition, then such assets are
         acquired either by the Lessee directly or by a wholly-owned Subsidiary
         of the Lessee, (d) immediately before and after giving effect thereto,
         no Default or Lease Event of Default shall have occurred and be
         continuing, (e) immediately after giving effect to the acquisition, the
         Lessee shall be in compliance on a Pro Forma Basis with the financial
         covenants in subsection 7(f) and such compliance shall be evidenced by
         an Officer's Certificate demonstrating such compliance, (f) the Lessor
         and the Agent shall have reviewed and be reasonably satisfied with the
         nature and amount of all contingent liabilities or other liabilities
         not on the balance sheet of the Lessee assumed in connection with such
         acquisition and (g) the aggregate amount of cash payments made in
         connection with all such acquisitions other than with the proceeds from
         sales or issuances of equity by the Lessee does not exceed
         $100,000,000;

                  (6) the Lessee and its Subsidiaries may make Consolidated
         Capital Expenditures in connection with the purchase of up to twelve
         Eligible Aircraft during each fiscal year, such number of Eligible
         Aircraft permitted during any fiscal year to be increased by any number
         of Eligible Aircraft permitted to be purchased, but not purchased,
         during the previous fiscal year (but in no event shall any such number
         of Eligible Aircraft once carried forward to the next fiscal year be
         carried forward to any fiscal year thereafter) together with
         Consolidated Capital Expenditures with respect to the acquisition, in
         the normal course of business, of spare parts and spare engines
         associated with such Eligible Aircraft;

                  (7) the Lessee and its Subsidiaries may make Consolidated
         Capital Expenditures with respect to maintenance of aircraft in the
         normal course of business;

                  (8) the Lessee and its Subsidiaries may make other
         Consolidated Capital Expenditures not in excess of $10 million during
         any fiscal year; provided, that any amount of such other Consolidated
         Capital Expenditures permitted, but not made, in any fiscal year may be
         carried forward to and made during the immediately succeeding fiscal
         year (but no amount once carried forward to the next fiscal year may be
         carried forward to any fiscal year thereafter);

                  (9) the Lessee shall be permitted to dispose of or acquire
         assets pursuant to the consolidation and relocation of its offices and
         operations to Colorado; provided, that the aggregate consideration paid
         with respect to the acquisition of assets shall be in an amount not to
         exceed $20 million; and

                 (10) the Holding Company Reorganization and any transaction
         effected in accordance with subsection 10(b) of this Lease or Section
         6.6(ii) or Section 9.21 of the Credit Agreement shall be permitted.

                                      -49-
<PAGE>

                  (h) Amendments of Material Agreements. The Lessee shall not
permit (i) its certificate or articles of incorporation or bylaws to be amended
or otherwise modified in any manner that could reasonably be expected to have a
Material Adverse Effect or (ii) any Material Agreement to be amended or
otherwise modified in any manner with respect to any provision providing
material representations and warranties to the Lessee, indemnification rights to
the Lessee, or limiting the Lessee's remedies or rights upon the other party to
such agreements failing to perform.

                  (i) Restriction on Leases. The Lessee shall not, and shall not
permit any of its Subsidiaries to, become liable in any way, whether directly or
by assignment or as a guarantor or other surety, for the obligations of the
lessee under any lease, whether an Operating Lease or a Capital Lease (other
than intercompany leases between the Lessee and its wholly-owned Subsidiaries,
including the Lessor); provided, however, that the Lessee may become so
obligated to the extent that, and only to the extent that, immediately after
giving effect to the incurrence of liability with respect to such lease, the
Consolidated Rental Payments at the time in effect during the then current
fiscal year do not exceed $35 million plus the amount of Consolidated Rental
Payments made during such fiscal year in respect of up to eight 747-400F
aircraft subject to Operating Leases as of the Initial Borrowing Date plus the
amount of Consolidated Rental Payments in respect of up to two 747-400F aircraft
per year, subject to the agreement dated June 9, 1997, between the Lessee and
The Boeing Company regarding the purchase of twelve new 747-400F aircraft and
the option to purchase eight additional new 747-400F aircraft, plus an amount,
not to exceed $15 million during any fiscal year, equal to Consolidated Rental
Payments incurred in connection with sale and leaseback transactions described
in subsection 7(j), plus Consolidated Rental Payments assumed pursuant to
acquisitions permitted under subsection 7(g)(5).

                  (j) Sales and Lease-Backs. The Lessee shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as a guarantor or other surety with respect to any lease,
whether an Operating Lease or a Capital Lease, of any property (whether real,
personal or mixed), whether now owned or hereafter acquired, (i) that the Lessee
or any of its Subsidiaries has sold or transferred or is to sell or transfer to
any other Person (other than the Lessee or any of its Subsidiaries) or (ii) that
the Lessee or any of its Subsidiaries intends to use for substantially the same
purpose as any other property that has been or is to be sold or transferred by
the Lessee or any of its Subsidiaries to any Person (other than the Lessee or
any of its Subsidiaries) in connection with such lease; provided, that the
Lessee and its Subsidiaries may become and remain liable as lessee, guarantor or
other surety with respect to any such lease if and to the extent that the Lessee
or any of its Subsidiaries would be permitted to enter into, and remain liable
under, such lease under subsection 7(i).

                  (k) Transactions with Shareholders and Affiliates. The Lessee
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to

                                      -50-
<PAGE>

exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with any holder of
10% or more of any class of equity Securities of the Lessee or with any
Affiliate of the Lessee or of any such holder, on terms that are less favorable
to the Lessee or that Subsidiary, as the case may be, than those that might be
obtained at the time from Persons who are not such holders or Affiliates;
provided, that the foregoing restriction shall not apply to (i) reasonable and
customary fees paid to and indemnification of members of the Boards of Directors
of the Lessee and its Subsidiaries, (ii) reasonable and customary salaries,
bonuses and other compensation paid to and indemnification of employees of the
Lessee or any of its Subsidiaries in accordance with past practice or approved
by the compensation committee of the Lessee, (iii) performance by the Lessee of
its obligations under and in accordance with the Services Agreement or (iv) the
Holding Company Reorganization.

                  (l) Disposal of Subsidiary Stock.  The Lessee shall not:

                  (1) directly or indirectly sell, assign, pledge or otherwise
         encumber or dispose of any shares of capital stock or other equity
         Securities of any of its Subsidiaries, except to qualify directors if
         required by applicable law or to a wholly-owned Subsidiary of the
         Lessee; or

                  (2) permit any of its Subsidiaries directly or indirectly to
         sell, assign, pledge or otherwise encumber or dispose of any shares of
         capital stock or other equity Securities of any of its Subsidiaries
         (including such Subsidiary), except to the Lessee, another wholly-owned
         Subsidiary of the Lessee, or to qualify directors if required by
         applicable law.

                  Notwithstanding the foregoing, the Lessor shall be permitted
to issue preferred stock in an amount not to exceed $100,000 to a third party.

                  (m) Conduct of Business. From and after the Initial Borrowing
Date, the Lessee shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than the businesses engaged in by the Lessee and
its Subsidiaries on the Initial Borrowing Date and similar or related
businesses.

                  (n) Change of Chief Executive Office. The Lessee shall not,
and shall not permit any of its Subsidiaries to, change its chief executive
office without giving 30 days' prior written notice to the Lessor and the Agent.

                  SECTION 8. Return of the Aircraft.

                  (a) Condition Upon Return. Unless the Aircraft has been sold
pursuant to Section 21, if at any time the Lessee shall return the Aircraft to
the Lessor hereunder, the Lessee, at its own expense, will return the Aircraft
to the Lessor at a location specified by the

                                      -51-
<PAGE>

Lessor to the Lessee in writing. At the time of such return, (i) the Lessee will
cause the Aircraft to be in compliance with the maintenance covenants contained
in this Lease and (ii) the Airframe will be fully equipped with the Engines
installed thereon.

                  At the time of such return, such Airframe and Engines (A)
shall have an airworthiness certificate from the Federal Aviation Administration
and shall be in full compliance with the provisions of Federal Aviation
Regulations, Part 121 (or successor regulation), and shall be in material
compliance with all applicable FAA noise, corrosion, environmental and aging
aircraft requirements, (B) shall be free and clear of all Liens and (C) in the
case of the Aircraft, shall be in a full freighter configuration and in as good
condition as when originally delivered to the Lessee, ordinary wear and tear
excepted, and otherwise in the condition required to be maintained under the
Lessee's FAA-approved maintenance plan; and in all such cases the Aircraft shall
not have been discriminated against as compared to other aircraft owned or
leased by the Lessee whether by reason of its leased status or otherwise in
maintenance, use, operation or in any other manner whatsoever.

                  (b) Overhaul and Repair. The Airframe, Engines and all Parts
shall have been, and shall be properly documented to have been, repaired or
overhauled by certified repair stations acceptable to the FAA.

                  (c) Repairs. The Lessee shall ensure that all repairs
performed since the Initial Borrowing Date on the Aircraft are eligible to
receive approval by the FAA (or its designee), if so required. All such repairs
shall be accompanied by all data and documentation necessary to substantiate
their certification, approval and methods of compliance, as required.

                  (d) Modifications. All modifications performed since the
Initial Borrowing Date that deviate from the certified configuration and that
are still in existence on the Aircraft shall have approval or certification by
the FAA (or its designee) or certification if required. All such modifications
shall be accompanied by complete data and documentation necessary to
substantiate their certification and approval and methods of compliance.

                  (e) Airworthiness Directives. All FAA Airworthiness Directives
and amendments or changes to the Federal Aviation Regulations applicable to the
Airframe, Engines (or Acceptable Alternate Engines) or Parts, as well as all
mandatory service bulletins applicable to any of the foregoing, shall have been
accomplished by terminating action in compliance with the issuing agency's or
the manufacturer's specific instructions, as the case may be, taking into
account, any waiver, deferral or deviation from such directives, regulations or
bulletins.

                  (f) Return of the Engines. In the event that an Acceptable
Alternate Engine shall be delivered with the returned Airframe, the Lessee,
concurrently with such delivery, will, at no cost to the Lessor, furnish, or
cause to be furnished, to the Lessor a full warranty (as to title) bill of sale
with respect to each such Acceptable Alternate Engine, in form

                                      -52-
<PAGE>

and substance reasonably satisfactory to the Lessor (together with an opinion of
counsel to the effect that such full warranty bill of sale has been duly
authorized and delivered and is enforceable in accordance with its terms and
that such Acceptable Alternate Engines are free and clear of all Liens) against
receipt from the Lessor of a bill of sale evidencing the transfer, without
recourse or warranty by the Lessor to the Lessee or its designee of all of the
Lessor's right, title and interest in and to any Engine not installed on the
Airframe at the time of the return of the Airframe.

                  (g) Deferred Maintenance. There shall be no open, outstanding
or deferred maintenance items, scheduled or unscheduled, against the Aircraft
including those identified in pre-delivery inspections or test flights.

                  (h) Corrosion Treatment. At the time of return, the Aircraft
shall have been maintained by cleaning and treating all mild and moderate
corrosion and correcting of all severe or exfoliate corrosion in accordance with
the Lessee's approved maintenance program or manufacturer's structural repair
manual.

                  (i) Manuals. Upon the return of the Aircraft upon any
termination of this Lease, the Lessee shall deliver or cause to be delivered to
the Lessor all logs, manuals and data and maintenance, inspection, modification
and overhaul records and similar records required to be maintained with respect
to the Aircraft and Parts under FAA rules and the Aircraft maintenance program
(the "Technical Records"). If any such logs, manuals, records or other data are
missing, incomplete or otherwise not in accordance with FAA standards applicable
to the Lessee, the Lessee shall re-accomplish the maintenance tasks necessary to
produce such records in accordance with its approved maintenance program prior
to delivery of the Aircraft or otherwise perform all necessary acts (without
regard to any applicable waivers or deferrals) to obtain such records in a
manner satisfactory to the FAA and the Lessor.

                  (j) Storage Upon Return. If, at least 15 days prior to
termination of this Lease at the end of the Term or pursuant to Section 17, the
Lessee receives from the Lessor a written request for storage of the Aircraft
upon its return hereunder, the Lessee will provide the Lessor, or cause the
Lessor to be provided, with storage facilities for the Aircraft at the Lessee's
risk and at the Lessee's expense for a period not exceeding 30 days, and
thereafter at the Lessor's risk and at the Lessor's cost for insurance,
maintenance and the Lessee's out-of-pocket expenses for such storage for a
period not exceeding 90 days (provided, that if such termination occurs as a
result of a Lease Event of Default hereunder, such storage shall be at the cost
of the Lessee), commencing on the date when the Aircraft is returned
substantially in the condition required under this Section 8, at a location in
the continental United States selected by the Lessee and used by the Lessee as a
location for the long-term parking or storage of aircraft.

                  (k) Severable Parts. At any time that the Aircraft is to be
returned to the Lessor, the Lessee shall, at the Lessor's request, advise the
Lessor of the nature and condition

                                      -53-
<PAGE>

of all severable nonproprietary Parts (other than Parts otherwise required by
Sections 10 or 11 to be maintained on the Aircraft) owned by the Lessee have
been used by the Lessee during the prior six months and that the Lessee has or
intends to remove from the Aircraft in accordance with Section 11 hereof. The
Lessor may, at its option, upon 30 days notice to the Lessee, purchase any or
all of such nonproprietary Parts from the Lessee upon the expiration of the Term
at their fair market value.

                  (l) Survival. The obligations of the Lessee to comply with the
terms of this Section 8 shall survive the expiration or other termination of
this Lease.

                  (m) Deregistration and Export. At such time as the Lessee is
obligated to redeliver the Aircraft to the Lessor pursuant to this Lease, the
Lessee shall at its expense upon the request of the Lessor:

                  (i) promptly take all such steps (not including procuring the
         discharge of any Lessor's Liens) as may be necessary to cancel the
         existing registration of the Aircraft (subject to the Lessor giving, or
         procuring that any mortgagee of the Aircraft gives, such notices and/or
         required consents to the cancellation of such registration) and obtain
         and deliver to the Lessor all certificates relating to the Aircraft
         required by applicable law on any transfer of or alteration to the
         registration thereof;

                 (ii) provide to the Lessor all assistance as the Lessor may
         reasonably request so as to enable the Lessor to obtain any documents
         (including, without limitation, any export certificate of
         airworthiness) required by applicable law in relation to the export of
         the Aircraft from the state of registration or such other country in
         which the Aircraft is for the time being located and shall re-assign or
         otherwise confirm to the Lessor the benefit of any indemnities or
         warranties available to the Lessee from the manufacturer or any other
         supplier or manufacturer of the Airframe, Engines or any Part; and

                (iii) provide to the Lessor such assistance with respect to
         information and documentation as the Lessor may reasonably require so
         as to enable the Aircraft to be registered and certified as to
         airworthiness under any applicable laws and/or regulations of any
         country other than the state of registration; provided, that the Lessor
         shall reimburse, the Lessee for its reasonable out-of-pocket expenses
         incurred in providing such assistance.

                  SECTION 9. Liens. The Lessee will not directly or indirectly
create, incur, assume or suffer to exist any Lien, on or with respect to the
Aircraft, title thereto or any interest therein, except the lien of the Aircraft
Chattel Mortgage and Permitted Encumbrances. The Lessee will promptly, at its
own expense, take such action as may be necessary to duly discharge any such
Lien not excepted above if the same shall arise at any time.

                                      -54-
<PAGE>

                  SECTION 10. Registration, Maintenance and Operation;
Possession and Subleases; Insignia.

                  (a) Maintenance and Operation. The Lessee, at its own cost and
expense, until the expiration or earlier termination of this Lease, (i) will be
a "citizen of the United States" as defined in Section 40102(15) of Title 49 of
the United States Code and will be an air carrier certificated under Sections
401 and 609 of the Federal Aviation Act and hold all necessary air carrier
operating certificates; (ii) will cause ownership of the Aircraft to be duly
registered and remain duly registered with the FAA in the name of the Lessor in
accordance with the Federal Aviation Act and otherwise registered under all
applicable laws of the United States so as to be eligible to operate in
commercial air service under the Federal Aviation Act; and (iii) will service,
repair, inspect, test, maintain and overhaul the Airframe and each Engine,
install replacement equipment and parts on the Airframe and each Engine and
maintain the Technical Records (A) so as to keep the Airframe and each Engine in
such operating condition as may be required to permit the Airframe and each
Engine to be utilized in commercial operations in the United States, (B) so as
to enable the airworthiness certification of the Airframe to be maintained in
good standing at all times under the Federal Aviation Act, except when aircraft
of the same type, model or series as the Airframe (powered by engines of the
same type as those with which the Airframe shall be equipped at the time of
grounding) registered in the United States have been grounded by the FAA;
provided, however, that if, following its issuance, the United States FAA
airworthiness certificate of the Aircraft shall be withdrawn, then, subject to
the provisions of Section 13 hereof, so long as the Lessee is diligently taking
or causing to be taken all necessary action promptly to correct the condition
that caused such withdrawal, no Lease Event of Default shall arise from such
withdrawal, (C) in accordance with the Lessee's FAA-approved maintenance,
inspection and maintenance control programs, and in the same manner and with the
same care used by the Lessee with respect to the same or similar aircraft and
engines owned or operated by the Lessee so as to keep the same in as good
operating condition as when originally leased hereunder, ordinary wear and tear
excepted, which practices shall at all times be at or above the standard of the
industry in the United States for prudent maintenance of similar equipment, (D)
in such manner as may be necessary to maintain in full force all warranties of
the manufacturers thereof, and (E) to enable the Lessee to deliver the Aircraft
to the Lessor in accordance with Section 8. The Lessee shall maintain all
records, logs and other materials that may be required to permit the Airframe
and each Engine to be so utilized.

                  The Lessee will comply in all material respects with all
airworthiness directives, mandatory notes or modifications or similar
requirements affecting the same (including those issued by the manufacturer or
supplier) in such condition so as to comply with this Lease and the rules and
regulations of the FAA from time to time in force and applicable to the Aircraft
and Engines. Neither the Airframe nor any Engine will be maintained, used or
operated in violation of any law or any rule, regulation or order of any
government or governmental authority having jurisdiction (domestic or foreign),
or in violation of any airworthi-

                                      -55-
<PAGE>

ness certificate, license or registration relating to the Airframe or such
Engine issued by any such authority, and in the event that such laws, rules,
regulations or orders require alteration of the Airframe or any Engine, the
Lessee, at its own cost and expense, will conform thereto or obtain conformance
therewith and will maintain the same in proper operating condition under such
laws, rules, regulations and orders, provided, however, that the Lessee may, in
good faith (after having delivered to the Lessor and the Agent an Officers'
Certificate stating the facts with respect thereto), contest the validity or
application of any such law, rule, regulation or order in any reasonable manner
that does not, in the Lessor's and the Agent's opinion (in their sole
discretion), adversely affect the interests of the Lessor, the Agent or any
Lender.

                  The Lessee covenants and agrees with the Lessor that, the
better to ensure the availability of the benefits of Section 1110 of the
Bankruptcy Code, the Lessee shall not object to any motion, petition or
application filed by the Lessor with any bankruptcy court having jurisdiction
over the Lessee, solely as to the portion thereof that seeks, and to the extent
that such motion, petition or application seeks, a determination that such
Section 1110 of the Bankruptcy Code applies to the lease of the Aircraft
hereunder. In the event that Section 1110 is amended, or if it is repealed and
another statute is enacted in lieu thereof, the Lessor and the Lessee (at the
Lessee's expense) agree to amend this Lease and take such other action not
inconsistent with this Lease as the Lessor reasonably deems necessary so as to
afford to the Lessor the rights and benefits as such amended or substituted
statute confers upon owners, lessors and conditional vendors of aircraft
similarly situated to the Lessor.

                  The Lessee will not operate, use or locate the Airframe or any
Engine, (I) in any area in which any insurance required to be maintained
pursuant to Section 14 shall not be at the time in full force and effect, or in
any area excluded from coverage by an insurance policy in effect with respect to
the Airframe or such Engine, except in the case of a requisition for use by the
United States of America, and then only if the Lessee obtains indemnity in lieu
of such insurance from the United States of America against the risks and in the
amounts required by said Section covering such area, or (II) in any recognized
or threatened area of hostilities unless the Airframe or such Engine is operated
or used under contract with the Government of the United States of America under
which contract that Government assumes liabilities for any damages, loss,
destruction or failure to return possession of the Airframe or such Engine at
the end of the term of such contract and for injury to persons or damage to
property of others.

                  The Lessee shall not use the Aircraft nor suffer it to be used
in any manner or for any purpose excepted from any of the insurance on or in
respect of the Aircraft or for the purpose of carriage of goods of any
description excepted from such insurance nor do, or permit to be done, anything
which, or omit to do anything the omission of which, may invalidate any of such
insurance.

                  (b) Possession. The Lessee will not, without the prior written
consent of the Agent and the Lessor, sell, assign, lease or otherwise in any
manner deliver, transfer or

                                      -56-
<PAGE>

relinquish possession or control of, or transfer the right, title or interest of
the Lessee in, the Airframe or any Engine except that, unless a Default or Lease
Event of Default shall have occurred and be continuing, the Lessee may, without
the prior written consent of the Agent and the Lessor, take the following
actions so long as the actions to be taken shall not deprive the Agent of the
first priority Lien under the Aircraft Chattel Mortgage in the assets subject
thereto and so long as the actions to be taken shall not deprive the Lessor of
the protections of Section 1110 of the Bankruptcy Code with respect to the
Aircraft and shall not deprive the Agent of the protections of Section 1110 of
the Bankruptcy Code with respect to the Aircraft as assignee of the Lessee's
rights under this Lease pursuant to the Aircraft Chattel Mortgage:

                  (i) transfer possession of the Airframe or any Engine other
         than by lease to the United States of America or any instrumentality
         thereof pursuant to the Civil Reserve Air Fleet Program (as
         administered pursuant to Executive Order 12656, or any substitute
         order) or any similar or substitute programs;

                 (ii) transfer possession of the Airframe or any Engine to the
         manufacturer thereof for testing or other similar purposes or any other
         organization for service, repairs, maintenance or overhaul or, to the
         extent permitted by Section 11 hereof, for alterations or
         modifications;

                (iii) subject any Engine to normal interchange or pooling
         agreements or arrangements of the type customary in the United States
         airline industry and entered into by the Lessee in the ordinary course
         of business that do not contemplate or require the transfer of title
         to, use for the remainder of its useful life, or registration of the
         Airframe or title to or use for the remainder of its useful life of
         such Engine; provided, however, that if the Lessee's title to or use
         for the remainder of its useful life of the Airframe or any Engine
         shall be divested under any such agreement or arrangement, such
         divesture shall be deemed to be an Event of Loss with respect to the
         Airframe or such Engine and the Lessee shall comply with Section 13 in
         respect thereof;

                 (iv) install an Engine on an airframe that is owned by the
         Lessee free and clear of all Liens except (A) those permitted under
         clauses (i) or (ii) of the definition of Permitted Encumbrances in the
         Credit Agreement, (B) those that apply only to the engines (other than
         the Engines), appliances, parts, instruments, appurtenances,
         accessories, furnishings and other equipment (other than Parts)
         installed on such airframe (but not to the airframe as an entirety),
         and (C) the rights of any Domestic Air Carrier, under normal
         interchange agreements that are customary in the airline industry and
         do not contemplate or require the transfer of title to such airframe or
         the engines installed thereon;

                  (v) install an Engine on an airframe leased to the Lessee or
         owned by the Lessee subject to a conditional sale or other security
         agreement, provided that: (A) such airframe is free and clear of all
         Liens, except for the rights of the parties to the

                                      -57-
<PAGE>

         lease or conditional sale or other security agreement covering such
         airframe and except for Liens of the type permitted by clause (iv)
         above; and (B) the Agent and the Lessor shall have received from the
         lessor, conditional vendor or secured party and each of the purchasers,
         mortgagees and encumbrancers of such lessor, conditional vendor or
         secured party of such airframe a written agreement (which may be the
         lease, conditional sale agreement or mortgage covering such airframe),
         whereby such lessor, conditional vendor or secured party and each of
         the purchasers, mortgagees and encumbrancers of such lessor,
         conditional vendor or secured party expressly and effectively
         agrees that neither it nor its successors and assigns will acquire
         or claim any right, title or interest in any Engine by reason of
         such Engine being installed on such airframe at any time when such
         Engine is subject to the Aircraft Chattel Mortgage;

                 (vi) install an Engine on an airframe owned by the Lessee,
         leased by the Lessee or owned by the Lessee subject to a conditional
         sale or other security agreement under circumstances where neither
         clause (iv) nor clause (v) above is applicable; provided, that any
         divesture of title to such Engine resulting from such installation
         shall be deemed to be an Event of Loss with respect to such Engine and
         the Lessee shall comply with Section 13 in respect thereof;

                (vii) enter into an ACMI Contract or wet lease for the Airframe
         and the Engines or engines installed thereon with any third party
         pursuant to which the Lessee has operational control of the Airframe
         and any Engines installed thereon, such operation to be performed
         solely by individuals under the operational control of the Lessee
         possessing all current certificates and licenses that would be required
         under the applicable laws of the United States for the performance by
         such employees of similar functions within the United States; provided,
         that the Lessee's obligations hereunder shall continue in full force
         and effect notwithstanding any such ACMI Contract or wet lease; and

               (viii) sell the Aircraft in accordance with Section 6.6(ii) of
         the Credit Agreement or replace the Airframe or any Engine in
         accordance with Section 9.21 of the Credit Agreement;

provided, however, that the rights of any transferee (other than with respect to
any transactions referred to in paragraph (viii) above) who receives possession
of the Airframe or any Engine permitted by the terms hereof shall be made
subject and subordinate to, and any lease permitted by this Section 10(b) shall
be made expressly subject and subordinate to, the Lease and the lien and
security interest of the Aircraft Chattel Mortgage and all of the Agent's rights
thereunder and the Lessee shall remain primarily liable hereunder for the
performance of all the terms of the Lease to the same extent as if such transfer
had not occurred, and any such instrument of transfer shall include appropriate
provisions for the maintenance and insurance of the Airframe or such Engine, and
any such instrument of transfer shall expressly prohibit any further transfer of
the Airframe or such Engine or any assignment of the rights thereunder;

                                      -58-
<PAGE>

and provided further, that no such lease, pooling arrangement or other transfer
or relinquishment of the possession of the Airframe or any Engine shall in any
way discharge or diminish any of the Lessee's obligations to the Lessor
hereunder.

                  (c) Insignia. The Lessee shall, at its own cost and expense,
cause the Airframe and each Engine to be legibly marked (in a reasonably
prominent location, which in the case of the Airframe shall be adjacent to the
airworthiness certificate) with such a plate, disk, or other marking of
customary size, and bearing the legend "Owned by Atlas Freighter Leasing III,
Inc., and Mortgaged to Bankers Trust Company, as the Agent" or such other
legend, as shall in the opinion of the Lessor and the Agent be appropriate or
desirable to evidence the fact that it is subject to the ownership of the Lessor
and the lien and security interest created by the Aircraft Chattel Mortgage. The
Lessee shall not remove or deface, or permit to be removed or defaced, any such
plate, disk, or other marking or the identifying manufacturer's serial number,
and, in the event of such removal or defacement, shall promptly cause such
plate, disk, or other marking or serial number to be promptly replaced. Except
as provided above, the Lessee shall not allow the name of any person,
association or corporation to be placed on the Airframe or any Engine as a
designation that might be interpreted as a claim of ownership or of any security
interest therein, except that the Lessee or any permitted lessee may place its
customary colors and insignia or the insignia of the manufacturer on the
Airframe or any Engine.

                  (d) Holding Out. The Lessee agrees that it will not at any
time represent or hold out the Lessor, the Agent, any Lender or any Affiliate of
any of them (and will use its best efforts to ensure that none of the Lessor,
the Agent, any Lender or any Affiliate of any of them is not at any time
represented or held out) as being in any way connected or associated with any
operation of the Airframe, any Engine or any Part or any other operations or
carriage undertaken by the Lessee.

                  (e) No Pledging of Credit. The Lessee is not authorized to,
and agrees that it will not purport to, pledge the credit of the Lessor, any
Lender or the Agent for any maintenance, service, repairs, or overhauls of,
modifications to, or changes or alterations in, the Airframe, any Engine or any
Part, or for any other purpose whatsoever.

                  (f) Title. Title to the Aircraft shall remain vested in the
Lessor subject to the Aircraft Chattel Mortgage and any assignments, charges or
other disposals that the Lessor may make in accordance with this Lease. The
Lessee shall not do or knowingly permit to be done anything that would
jeopardize the rights of the Lessor as owner of, or the rights of any Lender in,
the Aircraft and shall cause to be taken all actions necessary or reasonably
requested by the Lessor to prevent the rights of the Lessor and the Lenders in
the Aircraft from being jeopardized. The Lessee shall not hold itself out to any
third party as the owner of the Aircraft or any part of it, and when any third
party inquires as to ownership of the Aircraft or any Engine or any part
thereof, it will make clear to such third party that title to the same is held
by the Lessor and that the Aircraft is mortgaged to the Lenders. Without
limiting the

                                      -59-
<PAGE>

foregoing, if at any time subsequent to the initial registration of the
Aircraft, any filing, recording or act is necessary or reasonably requested by
the Lessor to perfect, protect and preserve the rights and interests of the
Lessor in the Aircraft and the rights and interests of any Lender under the
Aircraft Chattel Mortgage, the Lessee, at its own cost and expense, will procure
that such filings, recordings and acts are done pursuant to applicable laws. At
the reasonable request of the Lessor, the Lessee shall furnish to the Lessor an
opinion of counsel or other evidence satisfactory to the Lessor of each such
filing, recordation and act. The Lessor will reimburse the Lessee for its
reasonable out-of-pocket expenses incurred in complying with its obligations
under this Section 10(f) insofar as they relate to any Lender; provided, that,
to the extent that such expenses relate to (i) any reregistration of the
Aircraft under Section 8 or any sublease of the Aircraft, (ii) any Event of
Default or (iii) any substitution of Parts or Engines pursuant to the terms
hereof, the Lessor shall not be obligated to reimburse the Lessee for such
increase in expense.

                  (g) Information and Records. The Lessee shall:

                  (i) promptly furnish to the Lessor all such information as the
         Lessor may from time to time reasonably request regarding the Aircraft,
         any Engine or any part thereof, its use, location and condition;

                 (ii) keep, or procure that there are kept, the Technical
         Records and shall keep as part thereof accurate, complete and current
         records of all flights made by the Aircraft, of all Flight Hours and
         Cycles of the Airframe, each Engine, the APU, the landing gear and the
         Parts, and of all maintenance and repairs carried out on the Aircraft
         and each Engine and every Part;

                (iii) procure that the Technical Records shall be kept and
         maintained in English and in such manner, form and location as the FAA
         and any applicable law may from time to time require and shall disclose
         the location of all Engines and Parts not installed on the Aircraft,
         which Technical Records, unless otherwise required by applicable law,
         shall be the property of the Lessor;

                 (iv) make the Technical Records available to the Lessor (or any
         authorized representative of the Lessor) for examination during normal
         business hours (or at such other time as the Lessee and the Lessor
         shall mutually agree) upon giving reasonable written notice, provided
         that, so long as no Event of Default shall have occurred and be
         continuing, such examination does not impede the normal commercial
         operation of the Aircraft, and provided further that the cost of any
         such inspection shall be borne by the Lessee if the Lessee is thereby
         shown to be in breach of its material obligations hereunder, and
         otherwise by the party making the inspection; and

                  (v) promptly on, but in no event later than three Business
         Days after, becoming aware of the same, notify the Lessor of: (I) any
         Total Loss with respect to the

                                      -60-
<PAGE>

         Aircraft or any Engine, (II) any loss, theft, damage or destruction to
         the Aircraft or any Engine or any part thereof if the potential cost of
         repairs or replacement may exceed $5,000,000, (III) any loss, arrest,
         hijacking, confiscation, seizure, requisitioning, impounding, taking in
         execution, detention or forfeiture of the Aircraft or any part thereof
         and (IV) any event in respect of the Aircraft that might reasonably be
         expected to involve the Lessor, the Lessee, the Agent or any Lender in
         any loss or liability.

                  SECTION 11. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Except as otherwise provided in Section 11(d),
the Lessee, at its own cost and expense, will promptly replace all Parts, which
may from time to time be incorporated or installed in or attached to the
Airframe or any Engine and 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 or testing, the Lessee at its own cost
and expense may remove any Parts, whether or not worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use; provided, that, except as otherwise provided in Section 11(d),
the Lessee at its own cost and expense shall replace such Parts as promptly as
practicable. All replacement Parts shall be owned by the Lessor free and clear
of all Liens (except Permitted Encumbrances and for pooling arrangements to the
extent permitted by Section 11(b)), and shall be in as good operating condition
as, and shall have a value and utility at least equal to, the Parts replaced,
assuming that such parts were in the condition and repair required to be
maintained by the terms hereof.

                  All Parts at any time removed from the Airframe or any Engine
shall remain the property of the Lessor and shall remain subject to the lien and
security interest of the Aircraft Chattel Mortgage, no matter where located,
until such time as such Parts shall be replaced by parts that have been
incorporated or installed in or attached to the Airframe or any Engine and that
meet the requirements for replacement parts specified above. Immediately upon
any replacement Part becoming incorporated or installed in or attached to the
Airframe or any Engine as above provided, without further act, (A) title to such
replacement Part shall vest in and such replacement part shall become the
property of the Lessor and shall become subject to this Lease and the lien and
security interest of the Aircraft Chattel Mortgage and shall be deemed part of
the Airframe or such Engine for all purposes hereof to the same extent as the
property originally comprising, or installed on, such Airframe or such Engine,
and (B) title to the replaced part shall no longer be the property of the Lessor
and shall thereupon become free and clear of all rights of the Lessor hereunder
and all rights derivative of the Lessor's and shall no longer be deemed a Part
hereunder.

                  (b) Any Part removed from the Airframe or any Engine as
provided in Section 11(a) may be subjected by the Lessee to a normal pooling
arrangement of the type customary in the airline industry entered into by the
Lessee in the ordinary course of its business and entered into with Domestic Air
Carriers that are not the subject of any bankruptcy,

                                      -61-
<PAGE>

insolvency, or similar proceeding, voluntary or involuntary; provided, that the
Part replacing such removed Part shall be incorporated or installed in or
attached to the Airframe or such Engine in accordance with Section 11(a) as
promptly as possible after the removal of such removed part. In addition, any
replacement Part when incorporated or installed in or attached to the Airframe
or any Engine in accordance with Section 11(a) may be owned by any third party
subject to such a pooling arrangement, provided that the Lessee, at its expense,
as promptly thereafter as possible, either (A) causes such replacement Part to
become property of the Lessor and subject to the lien and security interest of
the Aircraft Chattel Mortgage in accordance with Section 11(a) free and clear of
all Liens (except Permitted Encumbrances and the Aircraft Chattel Mortgage
relating to the Aircraft) or (B) replaces such replacement Part by incorporating
or installing in or attaching to the Airframe or such Engine a further
replacement Part owned by the Lessee which shall become the property of the
Lessor subject to the lien and security interest of the mortgage free and clear
of all Liens (except Permitted Encumbrances and the Aircraft Chattel Mortgage
relating to the Aircraft).

                  (c) The Lessee, at its own cost and expense, shall make or
cause to be made such alterations and modifications in and additions to the
Airframe and the Engines as may be required from time to time to meet the
standards of the FAA or other governmental authority having jurisdiction;
provided, that the Lessee may, in good faith, contest the validity or
application of any such standard in any reasonable manner that shall not
adversely affect the Lessor's or the Agent's respective interests. The Lessee
also agrees, at its own cost and expense, to make or cause to be made such
alterations and modifications in and additions to the Airframe and the Engines
as may be required from time to time to meet the standards or requirements of
any directive issued by a manufacturer relating to the Airframe or any Engine.
In addition, so long as no Default or Lease Event of Default shall have occurred
and be continuing, the Lessee, at its own cost and expense, may from time to
time make such alterations and modifications in and additions to the Airframe
and any Engine as the Lessee may deem desirable in the proper conduct of its
business, provided that no such alteration, modification or addition diminishes
the value or utility or impairs the condition or airworthiness of the Airframe
or such Engine below the value, utility, condition or airworthiness thereof
immediately prior to such alteration, modification or addition, assuming that
the Airframe or such Engine were then in the condition and airworthiness
required to be maintained by the terms of this Lease.

                  (d) All Parts incorporated or installed in or attached to or
added to the Airframe or any Engine as the result of such alteration,
modification or addition shall, without further act, become the property of, and
title to such parts shall vest in the Lessor and shall be subject to the lien
and security interest of the Aircraft Chattel Mortgage; provided, that, so long
as no Default or Lease Event of Default shall have occurred and be continuing,
the Lessee may remove and not replace any such Part if it (A) is in addition to,
and not in replacement of or in substitution for, any Part incorporated or
installed in or attached to the Airframe or such Engine on the date hereof, or
any Part in replacement of or substitution for any such

                                      -62-
<PAGE>

Part, (B) is not required to be incorporated or installed in or attached or
added to the Airframe or such Engine pursuant to the terms of Section 10(a)
hereof or any other provision of this Lease or the Aircraft Chattel Mortgage and
(C) can be removed from the Airframe or such Engine without diminishing or
impairing the value, utility or airworthiness that the Airframe or such Engine
would have had at such time had such alteration, modification or addition not
occurred, assuming that the Airframe or such Engine was otherwise in the
condition required by this Lease and the Aircraft Chattel Mortgage. Upon the
removal by the Lessee of any such Part, as above provided, title thereto shall,
without further act, be free and clear of the interests of the Lessor and all
rights derivative of the Lessor's and such Part shall no longer be deemed a Part
hereunder.

                  (e) In no event shall the Lessor bear any liability or cost
whatsoever for (i) any alteration or modification of, or addition to, the
Airframe or any Engine, (ii) any grounding of the Aircraft, (iii) suspension of
certification of the Aircraft, or (iv) loss of revenue suffered by the Lessee
for any reason whatsoever.

                  SECTION 12. Indemnities. (a) The Lessee will pay, and hereby
indemnifies, on an after-tax basis, the Lessor and its assignees, if any, from
and against, any and all fees and taxes, levies, imposts, duties, charges or
withholdings, together with any penalties, fines or interest thereon (any of the
foregoing for the purposes of this Section 12 being called a "TAX"), that may
from time to time be imposed on or asserted against the Lessor and its
assignees, if any, or the Airframe or any Engine or any part thereof or interest
therein by any federal, state or local government or other taxing authority in
the United States or by any foreign government or subdivision thereof or by any
foreign taxing authority in connection with, relating to or resulting from: (i)
the Airframe or any Engine or any part thereof or interest therein, (ii) the
manufacture, purchase, ownership, mortgaging, lease, sublease, use, storage,
maintenance, sale or other disposition of the Airframe or any Engine, (iii) any
rentals or other earnings therefor or arising therefrom or the income or other
proceeds received with respect thereto, or (iv) this Lease or the Aircraft
Chattel Mortgage; provided, however, that there shall be excluded from any
indemnification under this Section 12(a) any Lessor Tax unless the payment of
any such Tax shall be a condition to the enforceability of the Aircraft Chattel
Mortgage or the perfection of the lien thereof or unless proceedings shall have
been commenced to foreclose any lien that may have attached as security for such
Tax, nothing in this Section shall require the payment of any Tax so long as and
to the extent that the validity thereof shall be contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
the Lessee shall have set aside on its books adequate reserves with respect
thereto in accordance with generally accepted accounting principles.

                  (b) The Lessee agrees to defend, indemnify, pay and hold
harmless the Lessor, the Agent and each Lender, and the officers, directors,
partners, employees, agents and affiliates of the Lessor, the Agent and each
Lender, (collectively called the "INDEMNITEES") from and against any and all
liabilities, obligations, losses, damages, penal-

                                      -63-
<PAGE>

ties, actions, judgments, suits, claims, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including, without limitation, securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable or other cause or on contract or otherwise, that may be imposed on,
incurred by, or asserted against any such Indemnitee, in any manner relating to
or arising out of this Lease or the other Transaction Documents or the
transactions contemplated hereby or thereby (including, without limitation, the
Lenders' agreement to make the Loans to the Lessor or the use or intended use of
the proceeds of any of the Loans) (collectively called the "INDEMNIFIED
LIABILITIES"); provided, that the Lessee shall not have any obligation to any
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
that such Indemnified Liabilities arise solely from the gross negligence or
willful misconduct of that Indemnitee as determined by a final judgment of a
court of competent jurisdiction. To the extent that the undertaking to defend,
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Lessee
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them.

                  SECTION 13. Event of Loss. (a) If an Event of Loss shall occur
with respect to an Airframe or an Engine, the Lessee will promptly notify the
Lessor and the Agent thereof in writing (in any event within five (5) days of
such occurrence) and will, not later than 180 days after the occurrence of such
Event of Loss, convey or cause to be conveyed to the Lessor, free of all Liens
(other than Permitted Encumbrances) title to an Acceptable Alternate Airframe or
Acceptable Alternate Engine, as the case may be. Prior to or at the time of any
such conveyance, the Lessee, at its own expense, will, as conditions to such
transfer, (i) furnish the Lessor with a warranty (as to title) bill of sale,
from a person and in form and substance reasonably satisfactory to the Lessor,
with respect to such Acceptable Alternate Airframe or Acceptable Alternate
Engine, (ii) cause a Lease Supplement to be filed for recording pursuant to
Title 49 of the United States Code, as amended, (iii) furnish the Lessor with
such evidence of the Lessee's title to such Acceptable Alternate Airframe or
Acceptable Alternate Engine and of compliance with the insurance provisions of
Section 14 hereof with respect to such Acceptable Alternate Airframe or
Acceptable Alternate Engine as the Lessor may reasonably request, (iv) furnish
the Lessor with an opinion of the Lessee's counsel to the effect that title to
such Acceptable Alternate Airframe or Acceptable Alternate Engine has been duly
conveyed to the Lessor free and clear of all Liens except Permitted Encumbrances
and the Lessor and the Agent continue to have 1110 protection with respect to
such Aircraft. Upon satisfaction of the foregoing conditions, the Lessor shall
transfer to or at the direction of the Lessee without recourse or warranty all
of the Lessor's right, title and interest, if any, in and to

                                      -64-
<PAGE>

(A) the Airframe or Engine with respect to which such Event of Loss occurred and
furnish to or at the direction of the Lessee, at the Lessee's expense, a bill of
sale without warranty other than to the absence of a Lessor Lien in form and
substance reasonably satisfactory to the Lessee, evidencing such transfer and
(B) all claims, if any, against third parties, for damage to or loss of the
Airframe or Engine subject to such Event of Loss, and such Airframe or Engine
shall thereupon cease to be an Airframe or Engine leased hereunder. The Lessee
shall cooperate with the Lessor and take all such actions as shall be requested
by the Lessor so that the Lessor complies with Section 4(f) of the Aircraft
Chattel Mortgage. For all purposes hereof, each such Acceptable Alternate
Airframe or Acceptable Alternate Engine shall, after such conveyance, be deemed
part of the property leased hereunder, and shall be deemed an "Airframe" or
"Engine," as the case may be. No Event of Loss under the circumstance
contemplated by the terms of this paragraph (a) shall result in any reduction in
Basic Rent or any other obligation of the Lessee hereunder.

                  (b) With respect to the Airframe or any Engine, as between the
Lessor and the Lessee, any payments on account of an Event of Loss (other than
insurance proceeds or other payments the application of which is provided for in
Section 14 below) received from any governmental authority or other person shall
be applied as follows:

                  (A) if such payments are received with respect to an Event of
         Loss to an Airframe or Engine that has been or is being replaced by the
         Lessee pursuant to the terms hereof, so long as there shall exist no
         Default or Lease Event of Default, such payment shall be paid over to
         or retained by the Lessee upon satisfaction of the conditions for
         replacement contained in paragraph (a) above and until such time shall
         be held by the Lessor as security for the obligations of the Lessee
         under the Lease; and

                  (B) if such payments are received with respect to an Event of
         Loss with respect to which no replacement is being effected, so much of
         such payments as shall not exceed (A) the Stipulated Loss Value as of
         the date of payment plus (B) all unpaid Supplemental Rent due through
         the date of payment, plus (C) all unpaid Basic Rent for the period
         ending on the date of payment shall be paid by the Lessee to the Lessor
         and following the foregoing application, the balance, if any, of such
         payments shall be distributed between the Lessee and the Lessor as
         their respective interests may appear;

                  (c) In the event of a requisition for use by the United States
Government of the Airframe or any Engine, the Lessee shall promptly notify the
Lessor and the Agent of such requisition and all of the Lessee's obligations
under the Lease shall continue to the same extent as if such requisition had not
occurred. Any payments received by the Lessor or the Lessee from the United
States Government for the use of the Airframe or such Engine, to the extent
allocable to the Term, shall be paid over to, or retained by, the Lessee.

                  (d) Any amount referred to in this Section 13 that is payable
to or retained by the Lessee shall not be paid to the Lessee or retained by the
Lessee, if at the time of such

                                      -65-
<PAGE>

payment or retention any Default or Lease Event of Default shall have occurred
and be continuing, but shall be held by or paid over to the Lessor as security
for the obligations of the Lessee under the Lease and shall be applied against
the Lessee's obligations hereunder as and when due. At such time as there shall
not be continuing any such Default or Lease Event of Default, such amount shall
be paid to the Lessee to the extent not previously applied in accordance with
the preceding sentence.

                  SECTION 14. Insurance. (a) The Lessee will at all times carry
and maintain on or with respect to the Aircraft, at its own cost and expense,
public liability (including, without limitation, contractual liability, cargo
liability, passenger legal liability, bodily injury and product liability, but
excluding manufacturer's product liability) and property damage insurance with
insurers of recognized responsibility and reputation in amounts, of the type and
covering the risks customarily carried with respect to similar aircraft by
corporations engaged in the same or similar business and similarly situated with
the Lessee but in no event in an amount less than $500,000,000 per occurrence
(which shall include war risk, governmental confiscation and expropriation and
allied perils coverage). During any period when the Aircraft is on the ground
and not in operation, the Lessee may carry or cause to be carried, in lieu of
insurance required by this Section, insurance otherwise conforming with the
provisions of this Section except that the amounts of coverage shall not be
required to exceed the amounts of comprehensive airline liability insurance, and
the scope of risk covered and type of insurance shall be the same, as are
customarily carried with respect to similar aircraft on the ground by
corporations engaged in the same or similar business and similarly situated with
the Lessee. Any policies of insurance carried in accordance with this Section 14
and any policies taken out in substitution or replacement of any such policies
(A) shall be amended to name the Agent, the Lenders and the Lessor and their
respective shareholders, directors, officers, members, partners, servants,
employees and agents as additional named insureds, (B) shall be primary without
right of contribution from any other insurance that is carried by the Lessee,
(C) shall expressly provide that all provisions thereof, except the limits of
the liability, shall operate in the same manner as if there were a separate
policy covering each insured, and (D) shall provide that the insurer shall waive
any right of subrogation against the Agent, the Lenders and the Lessor.

                  (b) The Lessee will at all times carry and maintain with
insurers of recognized responsibility and reputation on or with respect to the
Aircraft, at its own cost and expense, aircraft ground and flight all-risk hull
insurance as well as fire and extended coverage insurance on the Engines and
other equipment while removed from the Airframe, which shall include war risk,
governmental confiscation and expropriation (other than by the United States
Government) and allied perils (if and to the extent that the same shall be
maintained by the Lessee with respect to similar aircraft owned or operated by
the Lessee on the same routes or if the Aircraft or another aircraft is operated
on routes where the custom is for Domestic Air Carriers similarly situated with
the Lessee flying comparable routes with similar aircraft to carry such
insurance, of the type usually carried by corporations engaged in the same or
simi-

                                      -66-
<PAGE>

lar business and similarly situated with the Lessee) including (A) strikes,
riots, civil commotions or labor disturbances, (B) any malicious act or act of
sabotage and (C) hijacking (air piracy) or any unlawful seizure or wrongful
exercise of control of the Aircraft or crew in flight (including any attempt at
such seizure or control) made by any person or persons aboard the Aircraft or
another aircraft acting without the consent of the insured; provided, that such
insurance (including any self-insurance to the extent permitted below) shall at
all times be for an agreed value not less than the greater of the Stipulated
Loss Value as of the closest Stipulated Loss Determinate Date and $50,000,000.
During any period when the Aircraft is on the ground and not in operation, the
Lessee may carry or cause to be carried, in lieu of the insurance required by
this Section, insurance otherwise conforming hereto except that the scope of
risk covered and type of insurance shall be the same as are from time to time
customarily carried with respect to similar aircraft by corporations engaged in
the same or similar business and similarly situated with the Lessee for aircraft
on the ground in an amount at least equal to the applicable amount provided
above. All such insurance shall name the Agent, the Lenders and the Lessor as
additional insureds and loss payees to the extent that their interest may appear
and shall provide that any loss to the Airframe or an Engine in excess of
$2,000,000 (and, if a Default or Lease Event of Default has occurred and is
continuing, any such loss) shall be payable to the Lessor and to the Agent for
the benefit of the Lenders; and shall be primary without right of contribution
from any other insurance that is carried by the Lessor or the Agent with respect
to its interest therein. In the event that the Lessee arranges separate
insurances to cover the all-risk hull insurance and the war and perils hull
insurance, the Lessee shall ensure that the insurers subscribing to such
insurances shall agree to a 50/50 claims funding arrangement in the event of any
dispute as to which insurance is applicable.

                  The Lessee may self-insure, by way of deductible or equivalent
provisions in insurance policies, the risks required to be insured against
pursuant to this Section 14(b) in such reasonable amounts as are then applicable
to other similar aircraft or spare engines in the Lessee's fleet that are of a
value comparable to the Aircraft, and as are not substantially greater than
amounts self-insured by corporations engaged in the same or similar business and
similarly situated with the Lessee; provided, however, that the Lessee may not
self-insure in an amount in excess of $1,000,000 without the prior written
consent of the Lessor and the Agent.

                  (c) Any policies of insurance required pursuant to either
paragraph (a) or paragraph (b) above shall: (A) be amended to name the Lessor,
the Agent and the Lenders as additional named insureds, but without the Lessor,
the Agent or the Lenders being thereby liable for premiums (and the insurance
companies waiving their right with respect thereto), (B) provide that in respect
of the interest of (x) the Lessor or (y) the Agent or the Lenders in such
policies the insurance shall not be invalidated by any action or inaction of (x)
the Lessee or (y) the Lessee or the Lessor, respectively, and shall insure the
interests of the Agent and the Lenders regardless of any breach or violation by
the Lessee, the Lessor or any Person (other than the Agent) of any warranty,
declaration, condition or exclusion from coverage contained

                                      -67-
<PAGE>

in such policies, (C) provide that if such insurance is cancelled, or if any
material change is made in the coverage that affects the interest of the Lessor,
the Agent or any Lender, or if such insurance is allowed to lapse for nonpayment
of premium, such cancellation, change or lapse shall not be effective as to the
Lessor, the Agent or any Lender for thirty (30) days (seven (7) days, or such
shorter or longer period as may from time to time be customarily available in
the industry, in the case of any war risk and allied perils coverage) after
receipt by the Agent and the Lessor of written notice from such insurers of such
cancellation, change or lapse, (D) be in full force and effect throughout any
geographical areas at any time traversed by the Aircraft and shall be payable in
U.S. dollars, (E) waive any right of the insurers to any setoff or counterclaim
or any other deduction, whether by attachment or otherwise in respect of any
liability of the Lessee, the Lessor or the Agent except in respect of
outstanding premium due for the Aircraft, (F) waive all rights of subrogation
against the Lessor and the Agent and (G) include a year 2000 date recognition
writeback.

                  (d) In the case of a lease or contract with the United States
or any agency or instrumentality thereof in respect of the Airframe or any
Engine, a valid agreement by the United States or such agency or instrumentality
to indemnify the Lessee against the same risks against which the Lessee is
required hereunder to insure shall be considered adequate insurance with respect
to the Airframe or such Engine to the extent of the risks and in the amounts
that are the subject of any such agreement to indemnify.

                  (e) On or prior to the date hereof, and annually thereafter on
or prior to January 31, the Lessee will furnish to the Lessor and the Agent (A)
a report signed by a firm of independent aircraft insurance brokers, appointed
by the Lessee and not objected to by the Lessor or the Agent, describing in
reasonable detail acceptable to the Lessor and the Agent the insurance then
carried and maintained on or with respect to the Aircraft and the Engines and
stating that in the opinion of such firm such insurance complies with the terms
of this Section 14 and is adequate to protect the interests of the Lessee, the
Lessor and the Agent, and (B) certificates of the insurer or insurers evidencing
the insurance covered by the report. The Lessee will cause such brokers to
advise the Agent in writing (x) promptly of any default in the payment of any
premium and of any other act or omission on the part of the Lessee of which such
firm has knowledge and that might invalidate or render unenforceable, in whole
or in part, any insurance on the Aircraft or any Engine and (y) at least thirty
(30) days prior to the expiration or termination date, or date of effectiveness
of any material change, of any insurance carried and maintained on the Aircraft
hereunder.

                  (f) All insurance payments and other payments received by the
Agent, the Lessor or the Lessee from insurance referred to in paragraph (b)
above shall be, if received by the Lessor or the Lessee, immediately paid to the
Agent, as agent for itself and the Lessor and shall be paid to the Lessee upon
compliance by the Lessee with the terms of Section 13, provided that no Default
or Lease Event of Default shall have occurred and be continuing.

                                      -68-
<PAGE>

                  (g) The Lessee shall not create or permit to exist any Lien
over the insurances required by this Lease, or its interest therein, save as
constituted by this Lease and the Credit Agreement.

                  (h) If at any time the Lessee fails to maintain in full force
and effect insurances in compliance with any provision of this Article 14, the
Lessor shall be entitled but not bound (without prejudice to any other rights
that it may have or acquire under this Lease by reason of such failure) (i) to
pay any premiums due or to effect or maintain insurances satisfactory to the
Lessor or otherwise remedy such failure in such manner as the Lessor considers
appropriate, and the Lessee shall immediately reimburse the Lessor in full for
any amount so expended by the Lessor and/or (ii) at any time while such failure
is continuing, to require the Aircraft to remain at any airport, or to proceed
to and remain at any airport designated by the Lessor, the Agent or the Lenders,
until such failure is remedied.

                  (i) Nothing in this Section 14 shall prohibit the Agent, or
any Lender or the Lessor from obtaining insurance with respect to the Aircraft
for its own account. The Lessee may, at its own expense, carry insurance with
respect to its interest in the Aircraft in amounts in excess of that required to
be maintained by this Section 14. No insurance maintained by the Agent, the
Lessor or any Lender shall prevent the Lessee from carrying the insurance
required or permitted by this Section. Proceeds of any such insurance carried by
the Lessee, the Agent or any Lender shall be paid as provided in the insurance
policy relating thereto and no such Person shall have any duty to obtain any
such insurance.

                  SECTION 15. Assignment. Except as permitted in accordance with
Section 10, the Lessee will not, without the prior written consent of the
Lessor, assign any of its rights hereunder or in the Aircraft. The Lessor agrees
that it will not assign or convey its right, title or interest in or to this
Lease or the Aircraft except in accordance with the Credit Agreement. Subject to
the foregoing, the terms and provisions of this Lease shall be binding upon and
inure to the benefit of the Lessor and the Lessee and their respective
successors and permitted assigns and shall inure to the direct benefit of, and
shall also be enforceable by, the Agent and the Lenders, and their respective
successors, as assignees of the Lessor.

                  SECTION 16. Events of Default. Each of the following events
shall constitute a Lease Event of Default (whether any such event shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and
each such Lease Event of Default shall continue so long as, but only as long as,
it shall not have been remedied:

                  (a) the Lessee shall fail to pay any installment of Rent,
         Stipulated Loss Value or any other amounts owing pursuant to this Lease
         within 5 days after the due date thereof;

                                      -69-
<PAGE>

                  (b) the Lessee shall fail (i) to comply in any material
         respect with the maintenance standards or (ii) to procure insurance
         coverage as prescribed herein or (iii) to operate the Aircraft or any
         Engine at a time or in a place where insurance described in Article 14
         shall not be in effect;

                  (c) there shall exist a Lease Event of Default under, and as
         defined in, any other Lease or the Lessee shall fail to perform or
         observe any other covenant or condition set forth in this Lease or any
         other Transaction Document, which failure shall remain unremedied for a
         period of 10 Business Days after written notice from the Lessor or the
         Agent, unless action has been taken within 15 Business Days to remedy
         such breach and such action is being diligently pursued, provided such
         breach is capable of being remedied;

                  (d) any representation or warranty of the Lessee in any
         Transaction Document or in any certificate furnished pursuant to any
         Transaction Document is found to be incorrect in any material respect
         at the time it was made and such breach shall remain unremedied for a
         period of 15 Business Days after written notice thereof;

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

                  (f) (i) the Lessee or any of its Subsidiaries shall have an
         order for relief entered with respect to it or commence a voluntary
         case under the Bankruptcy Code or under any other applicable
         bankruptcy, insolvency or similar law now or hereafter in effect, or
         shall consent to the entry of an order for relief in an involuntary
         case, or to the conversion of an involuntary case to a voluntary case,
         under any such law, or shall consent to the appointment of or taking
         possession by a receiver, trustee or other custodian for all or a
         substantial part of its property; or the Lessee or any of its
         Subsidiaries shall make any assignment for the benefit of creditors; or
         (ii) the Lessee or any of

                                      -70-
<PAGE>

         its Subsidiaries shall be unable, or shall fail generally, or shall
         admit in writing its inability, to pay its debts as such debts become
         due; or the Board of Directors of the Lessee or any of its Subsidiaries
         (or any committee thereof) shall adopt any resolution or otherwise
         authorize any action to approve any of the actions referred to in
         clause (i) above or this clause (ii);

                  (g) any order, judgment or decree shall be entered against the
         Lessee or any of its Subsidiaries decreeing the dissolution or split up
         of the Lessee or any of its Subsidiaries and such order shall remain
         undischarged or unstayed for a period in excess of 30 days;

                  (h) registration of the Aircraft is canceled and is not cured
         within 15 Business Days;

                  (i) the Aircraft is arrested or detained in exercise of any
         lien and the Lessee does not procure the release of the Aircraft within
         15 business days;

                  (j) there shall have occurred an Event of Default or Potential
         Event of Default under the Amended Aircraft Credit Facility (whether or
         not such Event of Default or Potential Event of Default is thereafter
         waived by the requisite lenders);

                  (k) the Lessee shall not be a Certificated Air Carrier within
         the meaning of Title 49 of the  United States Code, as amended;

                  (l) the Lessee or any of its Subsidiaries shall fail to pay
         when due following applicable grace periods (a) any principal of or
         interest on any Indebtedness in an individual principal amount of $5
         million or more or any items of Indebtedness with an aggregate
         principal amount of $10 million or more or (b) any Contingent
         Obligation in an individual principal amount of $5 million or more or
         any Contingent Obligations with an aggregate principal amount of $10
         million or more, in each case beyond the end of any grace period
         provided therefor; or (ii) there shall exist a breach by the Lessee or
         any of its Subsidiaries with respect to any other material term of (a)
         any evidence of any Indebtedness in an individual principal amount of
         $5 million or more or any items of Indebtedness with an aggregate
         principal amount of $10 million or more or any Contingent Obligation in
         an individual principal amount of $5 million or more or any Contingent
         Obligations with an aggregate principal amount of $10 million or more
         or (b) any loan agreement, mortgage, indenture or other agreement
         relating to such Indebtedness or Contingent Obligation(s), if the
         effect of such breach or default is to cause, or to permit the holder
         or holders of that Indebtedness or Contingent Obligation(s) (or a
         trustee on behalf of such holder or holders) to cause, that
         Indebtedness or Contingent Obligation(s) to become or be declared due
         and payable prior to its stated maturity or the stated maturity of any
         underlying obligations, as the case may be (upon the giving or
         receiving of notice, lapse of time, both, or otherwise);

                                      -71-
<PAGE>

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

                  (n) (i) (a) Permitted Holders shall cease to own beneficially
         and control shares of capital stock of the Lessee representing at least
         30% of the combined voting power of all Securities of the Lessee
         entitled to vote in the election of directors, other than Securities
         having such power only by reason of the happening of a contingency, or
         (b) any Person or any two or more Persons acting in concert (in any
         such case, excluding Permitted Holders) shall have acquired beneficial
         ownership (within the meaning of Rule 13d-3 of the Securities and
         Exchange Commission under the Exchange Act), directly or indirectly, of
         Securities of the Lessee (or other Securities convertible into such
         Securities) representing 20% or more of the combined voting power of
         all Securities of the Lessee entitled to vote in the election of
         directors, other than Securities having such power only by reason of
         the happening of a contingency, or (c) the Board of Directors of the
         Lessee shall not consist of a majority of Continuing Directors or (ii)
         a "Change of Control" shall occur under any of the Pass Through Trust
         Documents, any of the Senior Note Documents or any other Material
         Agreement (as in effect on the date of such occurrence); provided,
         however, that, following the consummation of the Holding Company
         Reorganization, references in clause (i) above to the Lessee shall be
         deemed to be references to the Holding Company, and, after the
         consummation of the Holding Company Reorganization, it shall also be a
         Lease Event of Default if, at any time, the Holding Company ceases to
         own directly or indirectly 100% of the outstanding Securities of the
         Lessee; provided further, however, that a "Lease Event of Default"
         under clause (ii) above arising as a result of the Holding Company
         Reorganization shall not constitute a "Lease Event of Default;"
         provided further, however, that, in the event that Permitted Holders
         cease to own 30% of the combined voting power of all Securities of the
         Lessee (or the Holding Company, as the case may be) because of the
         issuance of Securities of the Lessee, or the Holding Company, as the
         case may be, (as opposed to the Permitted Holders selling Securities),
         then the failure to maintain the 30% ownership level shall not
         constitute a Lease Event of Default unless the Permitted Holders shall
         cease to own shares of capital stock constituting 25% of the combined
         voting power of all Securities of the Lessee (or the Holding Company,
         as the case may be);

                  (o) if any consent, authorization, license or approval of, or
         registration with or declaration to any governmental entity required by
         the Lessee to authorize, or re-

                                      -72-
<PAGE>

         quired by the Lessee in connection with, the execution, delivery,
         validity, enforceability or admissibility in evidence of this Lease or
         any other Transaction Document or the performance by the Lessee of its
         obligations hereunder or thereunder is modified in a manner unaccept-
         able to the Lessor or is withheld, or is revoked, suspended, canceled,
         withdrawn or terminated or expires and is not renewed, or otherwise
         ceases to be in full force and effect and the Lessor reasonably
         determines that such modification, withholding revocation, suspension,
         cancellation, withdrawal, termination or non-renewal or cessation may
         significantly prejudice its rights under or in connection with this
         Lease, may have a material adverse effect on the Lessee's ability to
         perform its obligations hereunder or jeopardize the respective
         interests of the Lessor or any Lender in the Aircraft or may give rise
         to criminaliability of or the Lessor;

                  (p) if any event occurs, circumstance arises or proceeding is
         taken with respect to the Lessee in any jurisdiction to which the
         Lessee is subject that has an effect equivalent or similar to any of
         the events mentioned in Sections 16(e) or (f);

                  (q) if the Lessee suspends or ceases or threatens to suspend
         or cease to carry on its business;

                  (r) if the Lessee disposes, threatens to dispose or takes any
         action to dispose of all or a material part of its assets, whether by
         one or a series of transactions, related or not, and such disposal or
         action will have a material adverse effect on its ability to perform
         its obligations under this Lease or any other Transaction Document;

                  (s) if the existence, validity, enforceability or priority of
         the rights of the Lessor in respect of the Aircraft hereunder, or the
         rights of any Lender, as mortgagee, of the Aircraft or the Lender as
         assignee of the insurances are challenged by the Lessee or any other
         person claiming through the Lessee;

                  (t) if the Lessee sells or executes any bill of sale affecting
         the Aircraft or any interest therein or agrees or purposes to do any of
         the same, or contests in any legal proceedings the Lessor's ownership
         of the Aircraft;

                  (u) if any governmental authority shall have condemned, seized
         or appropriated all or substantially all of the property of the Lessee;
         or

                  (v) if the Lessee becomes obligated to make any "change of
         control" put payments in connection with the Holding Company
         Reorganization that, when aggregated with all payments made under
         Section 7(e)(6), exceed $75,000,000 or if, after giving effect to such
         "change of control" put payments, (A) the Lessee shall have less than
         $150,000,000 in Cash or Cash Equivalents on its balance sheet or (B)
         its Consolidated Leverage Ratio (calculated on a pro forma basis as if
         the proposed payment had been consummated on the last day of the most
         recent four fiscal quarter period)

                                      -73-
<PAGE>

         shall exceed the lower of 4.25:1.00 or the ratio to be met in
         accordance with Section 7(f)(ii) for the immediately succeeding fiscal
         quarter end.

                  SECTION 17. Remedies. Upon the occurrence of any Lease Event
of Default and at any time thereafter so long as the same shall be continuing,
the Lessor may, at its option, declare, by written notice to the Lessee, this
Lease to be in default, except that upon the occurrence of a Lease Event of
Default referred to in clauses (e), (f) or (g) of Section 16, this Lease shall
be deemed declared in default without any further act or notice, and at any time
thereafter, the Lessor may do one or more of the following with respect to all
or any part of the Aircraft, Airframe and any or all of the Engines as the
Lessor in its sole discretion shall elect:

                  (a) upon the written demand of the Lessor and at the Lessee's
         expense, promptly return the Aircraft, Airframe or any Engine as the
         Lessor may so demand to the Lessor or its order in the manner and
         condition required by, and otherwise in accordance with all the
         provisions of, Section 8 hereof as if such Airframe or Engine were
         being returned at the end of the Term, or the Lessor, at its option,
         may enter upon the premises where all or any part of the Aircraft,
         Airframe or any Engine is located and take immediate possession of and
         remove the same by summary proceedings or otherwise, all without
         liability accruing to the Lessor for or by reason of such entry or
         taking of possession or removal, whether for the restoration of damage
         to property caused by such action or otherwise; provided, that if the
         Lessee shall for any reason fail to execute and deliver instruments
         deemed necessary or advisable by the Lessor to obtain possession of the
         Aircraft, Airframe and Engines, the Lessor shall be entitled, in a
         proceeding (which proceeding may be done on an ex parte basis without
         notice to the Lessee), to a preliminary injunction granting the Lessor
         the right to possess the Aircraft without having to post a bond or
         provide any other type of security and to a final judgment for specific
         performance, conferring the right to immediate possession upon the
         Lessor and requiring the Lessee to execute and deliver such instruments
         to the Lessor;

                  (b) sell the Aircraft, Airframe or any Engine at public or
         private sale, as the Lessor may determine, or otherwise dispose of,
         hold, use, operate, lease to others or keep idle the Aircraft, Airframe
         or any Engine as the Lessor, in its sole discretion, may determine, all
         free and clear of any rights of the Lessee, except as hereinafter set
         forth in this Section 17, and without any duty to account to the Lessee
         with respect to such action or inaction;

                  (c) whether or not the Lessor shall have exercised, or shall
         thereafter at any time exercise, any of its rights under paragraph (a)
         or (b) above with respect to the Aircraft, the Lessor, by written
         notice to the Lessee specifying a payment date, may demand that the
         Lessee pay to the Lessor, and the Lessee shall pay the Lessor, on the
         payment date so specified, any Basic Rent due on or before the payment
         date so speci-

                                      -74-
<PAGE>

         fied plus, 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
         after the date specified in such notice if any), an amount equal to the
         Stipulated Loss Value for the Aircraft computed as of the immediately
         preceding Stipulated Loss Determination Date, together with interest,
         if any, at the Past Due Rate on the amount of such Basic Rent and
         Stipulated Loss Value from the Stipulated Loss Determination Date as of
         which Stipulated Loss Value is computed until the date of actual
         payment; and upon such payment of liquidated damages and all
         Supplemental Rent then due and payable by the Lessee hereunder, the
         Lessor shall transfer (without any representation, recourse or warranty
         whatsoever) the Aircraft to the Lessee and the Lessor shall execute and
         deliver such documents evidencing such transfer and take such further
         action as the Lessee shall reasonably request to effect such transfer;

                  (d) in the event that the Lessor, pursuant to paragraph (b)
         above, shall have sold the Aircraft, the Lessor, in lieu of exercising
         its rights under paragraph (c) above with respect to such Aircraft,
         may, if it shall so elect, demand that the Lessee pay the Lessor, and
         the Lessee shall pay to the Lessor, on the date of such sale, any
         accrued rent with respect to the Aircraft due on or prior to such date
         plus, as liquidated damages for loss of a bargain and not as a penalty,
         the amount of any deficiency between the net proceeds of such sale
         (after deduction of all reasonable costs of sale) and the Stipulated
         Loss Value of such Aircraft, computed as of the date of such sale
         together with interest, if any, on the amount of such deficiency, at
         the Past Due Rate, from the date of such sale to the date of actual
         payment of such amount;

                  (e) the Lessor may terminate or cancel this Lease or proceed
         by appropriate court action to enforce the terms hereof or to recover
         damages for breach hereof; and

                  (f) the Lessor may exercise any other right or remedy which
         may be available to it under applicable law.

                  In addition, the Lessee shall be liable, except as otherwise
provided above, without duplication of amounts payable hereunder, for any and
all unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses incurred by the Lessor and the Agent and any Lender (including
reasonable allocated time charges of internal counsel for the Lender) in
connection with the Lease Event of Default, the exercise of remedies and the
return of the Airframe or any Engine in accordance with the terms of Section 8
hereof or in placing such Airframe or Engine (which for purposes hereof, shall
include, without limitation, all logs, manuals and data and inspection,
maintenance, modification and overhaul and similar records with respect thereto)
in the condition and airworthiness required by such Section. The Lessee hereby
acknowledges that it shall be directly liable for such costs and expenses to any
Person designated by the Lessor, the Agent or any Lender (as the case may be) to
provide services in connection with or to effect the return of the Airframe or
any Engine in accordance with the terms

                                      -75-
<PAGE>

of Section 8 hereof or in placing such Airframe or Engine (which for purposes
hereof shall include, without limitation, such logs, manuals and records) in the
condition and airworthiness required by such Section.

                  At any sale of the Aircraft or any part thereof pursuant to
this Section 17, the Lessor or the Agent or any Lender may bid for and purchase
such property. The Lessor agrees to give the Lessee at least 10 days' written
notice of the date fixed for any public sale of any Airframe or Engine or of the
date on or after which will occur the execution of any contract providing for
any private sale. Except as otherwise expressly provided above, no remedy
referred to in this Section 17 is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy referred to above or otherwise
available to the Lessor at law or in equity or otherwise; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all of
such other remedies. No waiver by the Lessor of any Lease Event of Default shall
in any way be, or be construed to be, a waiver of any future or subsequent Lease
Event of Default. To the extent permitted by applicable law, the Lessee hereby
waives any rights now or hereafter conferred by statute or otherwise that may
require the Lessor to sell, lease, or otherwise use the Aircraft, Airframe or
any Engine or any part thereof in mitigation of the Lessor's damages as set
forth in this Section 17 or that may otherwise limit or modify any of the
Lessor's rights and remedies in this Section 17.

                  Notwithstanding any of the foregoing provisions of this
Section 17, so long as any Loan relating to the Aircraft or other Obligations
(other than principal and interest on Loans relating to other aircraft or spare
engines) are outstanding under the Credit Agreement, all rights of the Lessor
under this Section 17 shall be exercised only by the Agent as assignee of the
Lessor's rights under this Lease pursuant to the Aircraft Chattel Mortgage.

                  SECTION 18. Lessee's Cooperation Concerning Certain Matters.
(a) Forthwith upon the execution and delivery of each Lease Supplement from time
to time required by the terms hereof and upon the execution and delivery of any
amendment to this Lease, the Lessee (at its expense), unless such supplement or
amendment relates solely to the assignment of all or any portion of the Lessor's
interest hereunder, will cause such Lease Supplement (and, in the case of the
initial Lease Supplement, this Lease as well) or amendment to be duly filed and
recorded, and maintained of record, in accordance with the applicable laws of
the government of registry of the Aircraft. In addition, the Lessee at its
expense will promptly and duly execute and deliver to the Lessor and the Agent
such further documents and take such further action as the Lessor and the Agent
may from time to time reasonably request in order more effectively to carry out
the intent and purpose of this Lease and the other Transaction Documents and to
establish and protect the rights and remedies created or intended to be created
in favor of the Lessor and the Agent hereunder and under the other Transaction
Documents, including, without limitation, if requested by the Lessor and the
Agent, the execution and delivery of supplements or amendments hereto, at the
expense of the

                                      -76-
<PAGE>

Lessee, each in recordable form, and all financing statements and
continuation statements, and all similar notices required by applicable law at
all times to be kept recorded and filed in such manner and such places as the
Lessor and the Agent may reasonably request.

                  (b) The Lessee agrees at its own expense to furnish to the
Lessor and the Agent promptly after execution and delivery of any supplement and
amendment hereto, an opinion of counsel satisfactory to the Lessor and the Agent
(which may include the Lessee's general counsel) stating that, in the opinion of
such counsel, such supplement or amendment to the Lease (or a financing
statement, continuation statement or similar notice thereof if and to the extent
permitted or required by applicable law) has been properly recorded or filed for
record in all public offices in which such recording or filing is necessary to
protect the right, title and interest of the Lessor hereunder and the Agent
under the Loan Documents.

                  SECTION 19. Notices. All notices required under the terms and
provisions hereof shall be in writing (including telex, facsimile or similar
writing) and shall be effective (a) if given by facsimile device, when
transmitted and the appropriate confirmation received, (b) if given by certified
mail, three Business Days after being deposited in the United States mail, with
appropriate postage prepaid, (c) if given by telex, upon receipt by the party
transmitting the telex of such party's answerback code at the end of such telex
(receipt of confirmation in writing not being necessary to the effectiveness of
any telex) and (d) if given by overnight service or other means, when received
or personally delivered, addressed:

                  (i) if to the Lessee, at 538 Commons Drive, Golden, Colorado
         80401, Attention: Counsel, or to such other address as the Lessee shall
         from time to time designate in writing to the Lessor; and

                 (ii) if to the Lessor, at 538 Commons Drive, Golden, Colorado
         80401, Attention: Mr. Richard H. Shuyler, or to such other address as
         the Lessor shall from time to time designate in writing to the Lessee,
         with a copy to the Agent at 130 Liberty Street, New York, New York
         10006, Attention: Marguerite Sutton.

                  SECTION 20. Net Lease, True Lease, etc. (a) The Lessee's
obligations to pay Rent and all other amounts payable hereunder shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right that the Lessee may have against the Lessor,
the Agent, the Lenders, any manufacturer, any supplier or any other Person for
any reason whatsoever, (ii) any defect in the title, airworthiness, eligibility
for registration under Title 49 of the United States Code, as amended, or other
applicable law, condition, design, compliance with specifications, operation or
fitness for use of, or any damage to or loss or destruction of, the Aircraft, or
any theft, interference, interruption or cessation in or prohibition of the use
or possession thereof by the Lessee or any sublessee for any reason whatsoever,
including, without limitation, any such interference, interruption, cessation or
prohibition resulting from the act of any governmental authority or any other
Person, (iii) any Liens, en-

                                      -77-
<PAGE>

cumbrances or rights of any other Person with respect to the Aircraft, (iv) the
invalidity or unenforceability or lack of due authorization or other infirmity
of this Lease or any other Transaction Document or document or instrument
executed pursuant hereto or thereto, or any lack of right, power or authority of
the Lessor or the Lessee or any other party to any other Transaction Document to
enter into this Lease or any other Transaction Document or any such document or
instrument, (v) any loss of or damage to the Aircraft, Airframe, any Engine or
any Part, (vi) any insolvency, bankruptcy, reorganization or similar proceedings
by or against the Lessee or any other Person, or (vii) any failure, breach or
delay by the Lessor or any other Person in performing or complying with any term
of this Lease or any other cause whether similar or dissimilar to the foregoing,
any present or future law notwithstanding, it being the intention of the parties
that all Rent payable by the Lessee hereunder shall continue to be payable in
all events in the manner and at the times provided herein. Such Rent shall not
be subject to any abatement and the payments thereof shall not be subject to any
setoff or any reduction for any reason whatsoever, including any present or
future claims of the Lessee against the Lessor or any other Person under this
Lease or otherwise. The Lessee hereby waives, and hereby agrees to waive at any
future time at the request of the Lessor, to the full extent now or then
permitted by applicable law, any and all rights that it may now have or that at
any time hereafter may be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Lease except in accordance with the
express terms hereof. Each payment of Rent made by the Lessee to the Lessor
shall be final as to the Lessor and the Lessee. The Lessee will not seek to
recover all or any part of any such payment of Rent from the Lessor for any
reason whatsoever.

                  (b) It is the intention of the parties that the Lessor and the
Agent, as assignee of the Lessor's right under this Lease pursuant to the
Aircraft Chattel Mortgage, shall be entitled to the benefits of 11 U.S.C.
Section 1110 or any analogous section of the Federal bankruptcy laws, as amended
from time to time with respect to the right to repossess the Airframe, Engines
and Parts as provided herein, and in any circumstances where more than one
construction of the terms and conditions of this Lease is possible, a
construction that would preserve such benefits shall control over any
construction that would not preserve such benefits or would render them
doubtful. To the extent consistent with the provisions of 11 U.S.C. Section 1110
or any analogous section of the federal bankruptcy laws, as amended from time to
time, it is hereby expressly agreed, that notwithstanding any other provisions
of the federal bankruptcy law, as amended from time to time, any right of the
Lessor and the Agent, as assignee of the Lessor under the Aircraft Chattel
Mortgage, to take possession of the Aircraft in compliance with the provisions
of this Lease shall not be affected by the provisions of 11 U.S.C. Section 362
or Section 363, as amended from time to time, or any analogous provisions of any
superseding statute or any power of the bankruptcy court to enjoin such taking
of possession.

                  (c) The Lessor and the Lessee hereby agree that this Lease,
including any modifications, supplements and amendments thereto, is intended to
be treated as a lease for purposes of the Internal Revenue Code, and neither the
Lessor nor the Lessee shall file any tax

                                      -78-
<PAGE>

returns in a manner or take any other action or position inconsistent with the
foregoing or with the Lessor's ownership of the Aircraft. Nothing contained in
this Lease shall be construed as conveying to the Lessee any right, title or
interest in the Aircraft except as a Lessee only. The Aircraft shall at all
times during the term of this Lease be the sole and exclusive property of the
Lessor.

                  SECTION 21. Purchase Option.

                  (a) Purchase Option. So long as no Lease Event of Default has
occurred and is continuing, the Lessee shall have the option to purchase the
Aircraft at the end of the Term for a purchase price equal to the higher of the
Fair Market Sales Value (assuming that the Aircraft are in the condition
required by the Lease) as of such date and Stipulated Loss Value plus all
accrued Rent and all Supplemental Rent then due. Upon the payment by the Lessee
of the full of such amounts, the Lessor shall convey to the Lessee all right,
title and interest of the Lessor in and to the Aircraft on an "as-is, where is"
basis, without recourse or warranty.

                  (b) Notice of Purchase. In order to exercise any purchase
option under Section 21, the Lessee shall be required to give not less than 90
days (but not more than 360 days) irrevocable prior written notice to the
Lessor. The Lessee will give the Lessor prior written irrevocable notice not
less than 90 days (but not more than 360 days) before the expiration of the Term
of its determination to return the Aircraft and not exercise any purchase option
under this Section 21. If the Lessee fails to give notice as required herein,
the Lessee will be deemed to have elected to return the Aircraft to the Lessor.

                  SECTION 22. Lessor's Right to Perform for Lessee. If the
Lessee fails to make any payment of Rent required to be made by it hereunder or
fails to perform or comply with any of its agreements contained herein, then the
Lessor may itself make such payment or perform or comply with such agreement but
shall not be obligated hereunder to do so, and the amount of such payment and
the amount of the reasonable expenses of the Lessor incurred in connection with
such payment or the performance of or compliance with such agreement, as the
case may be, together with interest thereon at the Past Due Rate, shall be
deemed Supplemental Rent, payable by the Lessee upon demand.

                  SECTION 23. Miscellaneous. (a) Any provision of this Lease
that 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 Lease may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the Lessor, the Lessee and the
Agent. This Lease shall constitute an agreement of lease, and nothing contained
herein shall be construed as conveying to the Lessee any right, title or
interest in the Aircraft except as a lessee only. Neither the Lessee nor any
Affili-

                                      -79-
<PAGE>

ate of the Lessee will file any tax returns in a manner inconsistent with the
foregoing fact or with the Lessor's ownership of the Aircraft or with the
parties' agreement that this Lease be treated as a tax lease for purposes of the
Internal Revenue Code. The section and paragraph headings in this Lease 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 reference
herein to numbered sections, unless otherwise indicated, are to sections of this
Lease. THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. EACH OF
THE LESSEE AND THE LESSOR HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
TO WHICH IT IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
ARISING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS LEASE OR ANY OTHER TRANSACTION DOCUMENT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER AND WHETHER ARISING OR ASSERTED
BEFORE OR AFTER THE DATE HEREOF OR BEFORE OR AFTER THE PAYMENT, OBSERVANCE OR
PERFORMANCE OF THE LESSEE'S OR THE LESSOR'S OBLIGATIONS UNDER THIS LEASE OR ANY
OTHER TRANSACTION DOCUMENT. This Lease 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.

                  (b) This Lease, together with the agreements, instruments and
other documents required to be executed and delivered in connection herewith,
supersedes all prior agreements and understanding of the parties with respect to
the subject matter hereof and thereof, except any agreements referred to herein.

                  (c) The time stipulated in this Lease for all payments and
notices by the Lessee to the Lessor and for the performance of the Lessee's
other obligations under this Lease will be of the essence of this Lease.

                  SECTION 24. Security for Lessor's Obligations. In order to
secure the obligations, the Lessor has agreed in the Aircraft Chattel Mortgage,
among other things, to assign to the Agent this Lease and the Lease Supplements
and to mortgage in favor of the Agent the Aircraft, subject to the reservations
and conditions therein set forth. All rights of the Lessor hereunder are subject
to the Aircraft Chattel Mortgage and the Lessor and the Lessee agree that so
long as the lien of the Aircraft Chattel Mortgage has not been discharged in
accordance with its terms, (i) all payments hereunder shall be made to the Agent
for the benefit of Lenders to the extent of the Lenders' interest in such
payments, (ii) all notices from or to the Lessor shall be copied to the Agent
and (iii) the Lessee shall not take any actions that the Lessor would be
prohibited from taking under the terms of the Aircraft Chattel Mortgage. The
Les-

                                      -80-
<PAGE>

see hereby acknowledges due notice of, and consents to, such assignment and
to the creation of such mortgage and security interest. To the extent, if any,
that this Lease and any Lease Supplement constitutes chattel paper (as such term
is in effect in any applicable jurisdiction), no security interest in this Lease
or any Lease Supplement may be created through the transfer or possession of any
counterpart other than the original executed counterpart containing the receipt
therefor executed by the Agent on the signature page hereof or thereof.

                  (Remainder of page intentionally left blank)

                                      -81-
<PAGE>

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

                                    ATLAS FREIGHTER LEASING III, INC.,
                                     Lessor

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

                                    ATLAS AIR, INC.,
                                     Lessee

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

Receipt of this original counterpart of this Lease is hereby acknowledged this
____ day of April, 2000.

                                    BANKERS TRUST COMPANY,
                                     as Agent

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

                                      -82-AIRCRAFT CHATTEL MORTGAGE

                     SECURITY AGREEMENT AND CHATTEL MORTGAGE
                              (AIRCRAFT NO. N527MC)

               THIS SECURITY AGREEMENT AND CHATTEL MORTGAGE is dated as of April
25, 2000 (this "MORTGAGE"), and entered into by and between ATLAS FREIGHTER
LEASING III, INC., a Delaware corporation (the "COMPANY" OR "LESSOR"), and
BANKERS TRUST COMPANY, as administrative agent for and representative of (in
such capacity, the "AGENT") the financial institutions (the "LENDERS") party to
the Credit Agreement referred to below.

                             PRELIMINARY STATEMENTS

               The Company has entered into a credit agreement dated as of April
25, 2000, (said credit agreement, as it may be amended, restated, supplemented
or otherwise modified from time to time, being the "CREDIT AGREEMENT") with the
Lenders and the Agent, pursuant to which the Lenders have agreed, on the terms
and conditions set forth in the Credit Agreement, to make term loans to the
Company in the principal amount of up to $300 million (the "LOANS") to enable
the Company to refinance certain indebtedness currently encumbering the Aircraft
Collateral (as defined below). The indebtedness with respect to the Loans made
by the Lenders is to be evidenced by certain promissory notes of the Company to
the order of the Lenders of even date herewith issued under and pursuant to the
Credit Agreement (such promissory notes, as they may be amended, modified,
supplemented, renewed, converted or extended from time to time, being the
"NOTES"). It is a condition precedent to the making by the Lenders of the Loans
under the Credit Agreement that this Mortgage be executed, delivered and filed
for recordation.

               NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make the Loans, the Company hereby agrees with the Agent
as follows:

SECTION 1.     Mortgage and Grant of Security.

               To secure the due and punctual payment of the Notes, together
with accrued interest thereon, and all other amounts from time to time payable
by the Company under the Credit Agreement, this Mortgage and the other Loan
Documents (as defined below) (including payment of amounts that would become due
but for the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code), and to secure performance of all obligations and
covenants of the Company under the Credit Agreement, this Mortgage and the other
Loan Documents (all such payment and performance obligations of the Com-
<PAGE>
                                      -2-

pany, the "SECURED OBLIGATIONS"), the Company hereby mortgages to the Agent, for
the benefit of the Lenders, and their respective successors and assigns, and
hereby grants and assigns to the Agent, for the benefit of the Lenders, and
their respective successors and assigns, a first priority security interest in
the Aircraft (the "AIRCRAFT COLLATERAL") and a first priority security interest
in all estate, right, title and interest of the Company in, to and under, the
other below described property wherever the same may be located (the "AIRCRAFT
RELATED COLLATERAL"):

         (a) Aircraft Collateral. All of the Company's right, title and interest
in and to:

         (i) the airframe (the Aircraft except for the Engines or engines from
      time to time installed thereon) that is described on Schedule I hereto and
      any replacement airframe that may be substituted for such airframe in
      accordance with the provisions of Section 4(f) hereof or Section 9.21B of
      the Credit Agreement, together with any and all Parts (as hereinafter
      defined) incorporated or installed in or attached to such airframe and all
      Parts removed from such airframe until such Parts are replaced in
      accordance with Section 4(e) hereof (such airframe, together with any
      replacement airframe and all such Parts, hereinafter referred to as the
      "AIRFRAME");

         (ii) each of the engines that are listed in Schedule II hereto or which
      are described in a Supplemental Chattel Mortgage (a "SUPPLEMENTAL CHATTEL
      MORTGAGE") substantially in the form of Exhibit A attached hereto,
      supplementing this Mortgage, and listed by manufacturer's serial numbers
      in such Schedule or in such Supplemental Chattel Mortgage, whether or not
      from time to time installed on the Airframe or on any other airframe or
      aircraft, and any replacement engine that may be substituted for such
      engine in accordance with the provisions of Section 4(f) hereof or Section
      9.21A of the Credit Agreement, together, in each case, with any and all
      Parts incorporated or installed in or attached thereto and any and all
      Parts removed therefrom, until such Parts are replaced in accordance with
      Section 4(e) hereof (each such engine, and replacement engine, together
      with any and all such Parts, hereinafter referred to as an "ENGINE" and
      collectively, the "Engines");

         (iii) all appliances, parts, instruments, appurtenances, accessories,
      furnishings and other equipment of whatever nature (other than complete
      Engines or engines), that may from time to time be incorporated or
      installed in or attached to the Airframe or any Engine, including all such
      appliances, parts, instruments, appurtenances, accessories, furnishings
      and other equipment purchased by the Company for incorporation or
      installation in or attachment to the Airframe or any Engine pursuant to
      the terms of any agreement whether or not identified in a Supplemental
      Chattel Mortgage (collectively referred to herein as "PARTS"); and
<PAGE>
                                      -3-

         (iv) all records, logs and other materials required by applicable law
      or regulation to be maintained and all other records, logs and materials
      maintained in the ordinary course of business with respect to the
      properties described in paragraphs (i), (ii) and (iii) above (together
      with such Airframe and Engines, the "AIRCRAFT").

      (b) Aircraft Related Collateral. All of the Company's right, title and
interest in and to:

         (i) all the tolls, rents, issues, profits, revenues and other income of
      the property subject or required to be subject to the lien of this
      Mortgage including, without limitation, all payments or proceeds payable
      to the Company after termination of the Lease with respect to the Aircraft
      as the result of the sale, lease or other disposition thereof, and all
      estate, right, title and interest of every nature whatsoever of the
      Company in and to the same and every part thereof;

         (ii) all monies and securities deposited or required to be deposited
      with the Agent pursuant to any term of this Mortgage and held or required
      to be held by the Agent hereunder or paid to the Agent in accordance with
      the terms of the Lease;

         (iii) the contractual rights of the Company under any purchase or
      modification agreement or manufacturer's warranty, together with all
      rights, powers, privileges, options, licenses and other benefits of the
      Company (including such indemnities, rights of assignment, rights and
      remedies for breach of any warranty and/or claims for damages, rights to
      receive title to parts and materials to the extent same relates to the
      Aircraft including any agreement assigned therewith;

         (iv) all amounts payable to the Company by any manufacturer, supplier
      or vendor of any of the Aircraft Collateral or any component thereof
      pursuant to any warranty or indemnity covering any such Aircraft
      Collateral;

         (v) all amounts payable as proceeds of insurance, as an award or
      otherwise in connection with any loss, confiscation, condemnation,
      requisition or other taking of any Aircraft Collateral to the extent
      payable to the Company under the Lease or to the Agent hereunder;

         (vi) the Lease, including without limitation all Basic Rent (as defined
      in the Lease), Supplemental Rent (as defined in the Lease), insurance
      proceeds, requisition, indemnity and other payments of any kind
      thereunder, and including all rights of the Company, as lessor, to execute
      any election or option or to give any notice, consent, waiver or approval
      under or in respect of the Lease or to accept any surrender of any of the
      Aircraft or any part thereof, as well as any rights, powers or remedies on
      the part of
<PAGE>
                                      -4-

      the Lessor, whether arising under the Lease or by statute or at law or in
      equity, or otherwise, arising out of any Lease Event of Default (as
      defined in the Lease), including, without limitation, all rights under
      Section 1110 of the Bankruptcy Code; and

         (vii) all proceeds of any and all of the properties described above,
      including, without limitation, all payments under insurance proceeds or
      payment under any indemnity, payable by reason of any loss or damage to
      the Aircraft or any Engine.

               The Company shall deliver to the Agent an executed chattel paper
original counterpart of each Lease and the Lease Supplements covering the
Aircraft. All property referred to in this granting clause, whenever acquired by
the Lessor under the Lease, shall secure all Secured Obligations. The Company
does hereby warrant and represent that it has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as the assignment
hereunder shall remain in effect, any of its right, title or interest hereby
assigned to anyone other than the Agent, and that it will not, except as
provided herein or in the Credit Agreement, enter into any agreement amending or
supplementing any purchase agreement, modification agreement to the extent such
agreement relates to the Aircraft, or execute any waiver or modification of, or
consent under, any such agreement, or settle or compromise any claim arising
under any such agreement or submit or consent to the submission of any dispute,
difference or other matter arising under or in any respect of any such agreement
to arbitration thereunder.

SECTION 2.     Definitions.

               Unless the context otherwise requires, the following terms shall
have the following meanings for all purposes of this Mortgage and shall be
equally applicable to both the singular and the plural forms of such terms.
Terms defined in the Credit Agreement and not otherwise defined herein are used
herein as therein defined.

               "ACCEPTABLE ALTERNATE AIRFRAME" means a Boeing 747-200 which is
in cargo configuration capable of immediate operation in the business of the
Lessee and has a maximum gross takeoff weight of at least 800,000 pounds and is
of the equivalent or greater residual value, condition, utility, airworthiness,
and remaining useful life and which shall have been maintained, serviced,
repaired and overhauled in substantially the same manner as required under the
Lease without in any way discriminating against such airframe.

               "ACCEPTABLE ALTERNATE ENGINE" means a General Electric CF6-50E2
aircraft engine or an engine of the same or another manufacturer of equivalent
or greater residual value, condition, utility, airworthiness, and remaining
useful life and suitable for installation and use on the Airframe; provided,
that such engine shall be of the same make, model and manufacturer as the other
engines installed on the Airframe, shall be an engine of a type then
<PAGE>
                                      -5-

being utilized by the Lessee on other Boeing 747-200 aircraft operated by the
Lessee, and shall have been maintained, serviced, repaired and overhauled in
substantially the same manner as required under the Lease without in any way
discriminating against such engine.

               "ACMI CONTRACT" means (i) any contract entered into by the Lessee
pursuant to which the Lessee furnishes the aircraft, crew, maintenance and
insurance and customers bear all other operating expenses and (ii) any similar
contract in which the customer provides the flight crew, all in accordance with
the Lessee's historical practices.

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

               "AGENT" has the meaning specified in the first paragraph of this
instrument.

               "AIRCRAFT" has the meaning specified in Section 1 hereof.

               "AIRCRAFT COLLATERAL" has the meaning specified in Section 1
hereof.

               "AIRCRAFT RELATED COLLATERAL" has the meaning specified in
Section 1 hereof.

               "AIRFRAME" has the meaning specified in Section 1 hereof.

               "COMPANY" has the meaning specified in the first paragraph of
this instrument. "CREDIT AGREEMENT" has the meaning specified in the Preliminary
Statements.

               "DOMESTIC AIR CARRIER" means any United States "domestic air
carrier," as defined in Part 121 of the Federal Aviation Regulations, that is
operating in accordance with the operating certificate and appropriate
operations specifications issued under Part 121 or any successor regulations.

               "ENGINE" has the meaning specified in Section 1 hereof.

               "EVENT OF DEFAULT" means any Event of Default as defined in the
Credit Agreement.

               "LEASE" means that certain Lease Agreement, dated as of April 25,
2000, by and between Atlas Freighter Leasing III, Inc., as Lessor, and Atlas
Air, Inc., as Lessee, for the lease of the Aircraft, together with any
amendments, modifications, supplements or additions thereto.
<PAGE>
                                      -6-

               "LESSEE" means Atlas Air, Inc., a Delaware corporation.

               "LESSOR" has the meaning specified in the first paragraph of this
Mortgage.

               "LOANS" has the meaning specified in the Preliminary Statements.

               "MORTGAGE" has the meaning specified in the first paragraph of
this instrument.

               "NOTES" has the meaning specified in the Preliminary Statements.

               "PARTS" has the meaning specified in Section 1 hereof.

               "SECURED OBLIGATIONS" has the meaning specified in Section 1
hereof.

               "SUPPLEMENTAL CHATTEL MORTGAGE" has the meaning specified in
Section 1 hereof.

SECTION 3.     Representations and Warranties.

               The Company hereby represents and warrants that, in the case of
the Airframe or each Engine initially or subsequently mortgaged hereunder on the
date the Airframe or such Engine is mortgaged hereunder as follows:

               (a) The Company has good and marketable title to the Aircraft
Collateral free and clear of all Liens except for the lien of this Mortgage and
Permitted Encumbrances and the Lease and has full power and authority to
mortgage and grant the lien and security interest in the Aircraft Collateral and
Aircraft Related Collateral intended by the terms hereof and in the manner
aforesaid and has not assigned or pledged any of its right, title or interest
hereby assigned to anyone other than the Agent.

               (b) The Company is a "citizen of the United States" as defined in
Section 40102(15) of Title 49 of the United States Code.

               (c) Ownership of the Airframe is duly registered in the name of
the Company in accordance with the Act; and the Airframe is not registered under
the laws of any other country.

               (d) This Mortgage or a Supplemental Chattel Mortgage, as the case
may be, is in due form for recording in accordance with the Act and has been
duly filed for recording in accordance with the Act against the Aircraft or such
Engine(s) as the case may be.
<PAGE>
                                      -7-

               (e) An airworthiness certificate has been duly issued under the
Act for the Aircraft (evidence of which has been supplied to the Agent), and the
airworthiness certificate for the Aircraft is in full force and effect.

               (f) The Aircraft and Engines are in such condition so as to
comply with the requirements of Section 4(c) hereof; and the insurance required
by Section 4(g) hereof is in full force and effect.

               (g) This Mortgage or this Mortgage as supplemented by a
Supplemental Chattel Mortgage constitutes the legally valid and binding
obligation of the Company enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditors' rights generally, and creates a valid, perfected and first priority
mortgage on and security interest in the Aircraft Collateral, securing the
payment and performance of the Secured Obligations.

               (h) The Company has delivered to the Agent for filing financing
statements under Article 9 of the Uniform Commercial Code of the States of
Colorado and New York and such other states as may be required with respect to
that portion of the Aircraft Collateral not covered by the filing system
established under the Act and with respect to the Aircraft Related Collateral;
and except for the filings described in this paragraph and in paragraph (d)
above of this Section 3, no filing or recording of any instrument shall be
required to establish and perfect a first priority security interest in the
Aircraft Collateral and Aircraft Related Collateral under the laws of the United
States or any State thereof.

               (i) The chief place of business and the chief executive office of
the Company is located at 538 Commons Drive, Golden, Colorado 80401.

SECTION 4.     Covenants.

               The Company hereby covenants that so long as this Mortgage is in
effect:

               (a) Liens. The Company will not directly or indirectly create,
incur, assume or suffer to exist any Lien, on or with respect to any of the
Aircraft Collateral, or Aircraft Related Collateral, title thereto or any
interest therein, except the lien of this Mortgage and Permitted Encumbrances,
including the Lease. The Company will promptly, at its own expense, take such
action as may be necessary to duly discharge any such Lien not excepted above if
the same shall arise at any time.

               (b) Taxes. The Company will pay, and hereby indemnifies the Agent
from and against, any and all fees and taxes, levies, imposts, duties, charges
or withholdings, to-
<PAGE>
                                      -8-

gether with any penalties, fines or interest thereon (any of the foregoing for
the purposes of this Section 4(b) being called a "TAX"), which may from time to
time be imposed on or asserted against the Agent or any Lender or the Airframe
or any Engine or any part thereof or interest therein by any Federal, state or
local government or other taxing authority in the United States or by any
foreign government or subdivision thereof or by any foreign taxing authority in
connection with, relating to or resulting from: (i) the Airframe or any Engine
or any part thereof of interest therein; (ii) the manufacture, purchase,
ownership, mortgaging, lease, sublease, use, storage, maintenance, sale or other
disposition of the Airframe or any Engine; (iii) any rentals or other earnings
therefor or arising therefrom or the income or other proceeds received with
respect thereto; or (iv) this Mortgage; provided, however, that there shall be
excluded from any indemnification any Lessor Tax (as defined in the Lease) and
unless the payment of any such Tax shall be a condition to the enforceability of
this Mortgage or the perfection of the lien hereof or unless proceedings shall
have been commenced to foreclose any lien which may have attached as security
for such Tax, nothing in this Section shall require the payment of any Tax so
long as and to extent that validity thereof shall be contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
the Company shall have set aside on its books adequate reserves with respect
thereto in accordance with generally accepted accounting principles.

               (c) Registration; Maintenance and Operation. The Company, at its
own cost and expense, (i) will be a "citizen of the United States" as defined in
Section 40102(15) of Title 49 of the United States Code; (ii) will cause
ownership of the Aircraft to be duly registered and remain duly registered in
the United States of America in the name of the Company in accordance with the
Act; and (iii) will cause the Lessee to service, repair, inspect, test,
maintain, overhaul the Airframe and each Engine and install replacement
equipment and parts on the Aircraft and each Engine (A) so as to keep the
Airframe and each Engine in such operating condition as may be required to
permit the Airframe and each Engine to be utilized in commercial operations, (B)
so as to enable the airworthiness certification of the Airframe to be maintained
in good standing at all times under the Act, except when aircraft of the same
type, model or series as the Airframe (powered by engines of the same type as
those with which the Airframe shall be equipped at the time of grounding)
registered in the United States have been grounded by the FAA; provided,
however, that if following its issuance, the United States FAA airworthiness
certificate of the Aircraft shall be withdrawn, then subject to the provisions
of Section 4(f) hereof, so long as the Company is diligently taking or causing
to be taken all necessary action to promptly correct the condition which caused
such withdrawal, no Event of Default shall arise from such withdrawal, (C) in
accordance with the Lessee's FAA-approved maintenance, inspection and
maintenance control programs, and in the same manner and with the same care used
by the Lessee with respect to the same or similar aircraft and engines owned or
operated by the Lessee so as to keep the same in as good operating condition as
when originally mortgaged hereunder, ordinary wear and tear excepted, which
practices

<PAGE>
                                      -9-

shall at all times be at or above the standard of the industry in the United
States for prudent maintenance of similar equipment, and (D) in such manner as
may be necessary to maintain in full force all warranties of the manufacturers
thereof. The Company shall maintain, or shall cause Lessee to maintain, all
records, logs and other materials which may be required to permit the Airframe
and each Engine to be so utilized.

                  The Company will comply in all material respects with all
airworthiness directives, mandatory notes or modifications or similar
requirements affecting the same (including those issued by the manufacturer or
supplier) in such condition so as to comply with the provisions of this Mortgage
and the rules and regulations of the FAA from time to time in force and
applicable to the Aircraft and Engines. Neither the Airframe nor any Engine will
be maintained, used or operated in violation of any law or any rule, regulation
or order of any government or governmental authority having jurisdiction
(domestic or foreign), or in violation of any airworthiness certificate, license
or registration relating to the Airframe or such Engine issued by any such
authority, and in the event that such laws, rules, regulations or orders require
alteration of the Airframe or any Engine, the Company, at its own cost and
expense, will conform thereto or obtain conformance therewith and will maintain
the same in proper operating condition under such laws, rules, regulations and
orders; provided, however, that the Company may, in good faith (after having
delivered to the Agent an Officer's Certificate stating the facts with respect
thereto), contest the validity or application of any such law, rule, regulation
or order in any reasonable manner which does not, in the Agent's opinion,
adversely affect the interests under this Mortgage of the Agent or any Lender.

                  The Company will not operate, use or locate the Airframe or
any Engine, (I) in any area in which any insurance required to be maintained
pursuant to Section 4(g) shall not be at the time in full force and effect, or
in any area excluded from coverage by an insurance policy in effect with respect
to the Airframe or such Engine, except in the case of a requisition for use by
the United States of America, and then only if Company obtains indemnity or "war
risk" insurance in lieu of such insurance from the United States of America
against the risks and in the amounts required by said Section covering such
area, or (II) in any recognized or threatened area of hostilities unless fully
covered to the Agent's satisfaction by war risk and political risk and allied
perils insurance or unless the Airframe or such Engine is operated or used under
contract with the Government of the United States of America under which
contract that Government provides "war risk" insurance or assumes liabilities
for any damages, loss, destruction or failure to return possession of the
Airframe or such Engine at the end of the term of such contract and for injury
to persons or damage to property of others.

                  The Company shall not use the Aircraft nor suffer it to be
used in any manner or for any purpose excepted from any of the insurance on or
in respect of the Aircraft or for the purpose of carriage of goods of any
description excepted from such insurance nor do, or
<PAGE>
                                      -10-

permit to be done, anything which, or admit to do anything the admission of
which, may invalidate any of such insurance.

                  (d) Possession. The Company will not, without the prior
written consent of the Agent, sell, assign, lease or otherwise in any manner
deliver, transfer or relinquish possession or control of, or transfer the right,
title or interest of the Company in, the Airframe or any Engine except that the
Company may enter into and perform all provisions and terms of the Lease and the
Lessee or the Company, unless a Potential Event of Default or Event of Default
shall have occurred and be continuing, without the prior written consent of the
Agent, may take the following actions so long as the actions to be taken shall
not deprive the Agent of the first priority Lien of this Mortgage on the assets
subject hereto and so long as the actions to be taken shall not deprive the
Company as Lessor of the protections of Section 1110 of the Bankruptcy Code with
respect to the Aircraft nor shall such actions deprive the Agent of the
protections of Section 1110 of the Bankruptcy Code with respect to the Aircraft
as assignee of the Company's rights under this Mortgage:

                  (i) transfer possession of the Airframe or any Engine other
         than by lease to the United States of America or any instrumentality
         thereof pursuant to the Civil Reserve Air Fleet Program (as
         administered pursuant to Executive Order 12656, or any substitute
         order) or any similar or substitute programs;

                  (ii) transfer possession of the Airframe or any Engine to the
         manufacturer thereof for testing or other similar purposes or any other
         organization for service, repairs, maintenance or overhaul or, to the
         extent permitted by Section 4(e) hereof, for alterations or
         modifications;

                  (iii) subject any Engine to normal interchange or pooling
         agreements or arrangements of the type customary in the United States
         airline industry and entered into by the Company or the Lessee in the
         ordinary course of business that do not contemplate or require the
         transfer of title to, use for the remainder of its useful life, or
         registration of the Airframe or title to, or use for the remainder of
         its useful life of such Engine; provided, however, that if the
         Company's title to or use for the remainder of its useful life, of the
         Airframe or any Engines shall be divested under any such agreement or
         arrangement, such divesture shall be deemed to be an Event of Loss with
         respect to the Airframe or such Engine and the Company shall comply
         with Section 4(f) in respect thereof;

                  (iv) install an Engine on an airframe that is owned by the
         Lessee, provided that such airframe is free and clear of all Liens on
         property of the Lessee except (A) Liens permitted under the Lease, (B)
         Liens that apply only to the engines (other than the Engines),
         appliances, parts, instruments, appurtenances, accessories, furnishings
<PAGE>
                                      -11-

         and other equipment (other than Parts) installed on such airframe (but
         not to the airframe as an entirety), and (C) the rights of any Domestic
         Air Carrier, under normal interchange agreements which are customary in
         the airline industry and do not contemplate or require the transfer of
         title to such airframe or the engines installed thereon;

                  (v) install an Engine on an airframe leased to the Lessee or
         owned by the Lessee subject to a conditional sale or other security
         agreement, provided that: (A) such airframe is free and clear of all
         Liens, except the rights of the parties to the lease or conditional
         sale or other security agreement covering such airframe and except
         Liens of the type permitted by clause (iv) above and (B) the Agent
         shall have received from the lessor, conditional vendor or secured
         party and each of the purchasers, mortgagees and encumbrancers of such
         lessor, conditional vendor or secured party of such airframe a written
         agreement (which may be the lease, conditional sale agreement or
         mortgage covering such airframe), whereby such lessor, conditional
         vendor or secured party and each of the purchasers, mortgagees and
         encumbrancers of such lessor, conditional vendor or secured party
         expressly and effectively agrees that neither it nor its successors and
         assigns will acquire or claim any right, title or interest in any
         Engine by reason of such Engine being installed on such airframe at any
         time when such Engine is subject to this Mortgage;

                  (vi) install an Engine on an airframe owned or leased by the
         Lessee subject to a conditional sale or other security agreement under
         circumstances where neither clause (iv) nor clause (v) above is
         applicable; provided, that any divesture of title to such Engine
         resulting from such installation shall be deemed to be an Event of Loss
         with respect to such Engine and the Company shall comply with Section
         4(f) in respect thereof;

                  (vii) authorize or permit the Lessee to enter into an ACMI
         Contract or wet lease for the Airframe and the Engines or engines
         installed thereon with any third party pursuant to which the Company
         has operational control of the Airframe and any Engines installed
         thereon, such operation to be performed solely by individuals under the
         operational control of the Company possessing all current certificates
         and licenses that would be required under the applicable laws of the
         United States for the performance by such employees of similar
         functions within the United States; provided, that the Company's
         obligations hereunder shall continue in full force and effect
         notwithstanding any such ACMI Contract or wet lease;

provided, however, that the rights of any transferee who receives possession of
the Airframe or any Engine permitted by the terms hereof shall be made subject
and subordinate to, and the Leases shall be made expressly subject and
subordinate to, the lien and security interest of this
<PAGE>
                                      -12-

Mortgage and all of the Agent's rights hereunder and the Company shall remain
primarily liable hereunder for the performance of all the terms of this Mortgage
to the same extent as if such transfer had not occurred, and any such instrument
of transfer shall include appropriate provisions for the maintenance and
insurance of the Airframe or such Engine, and any such instrument of transfer
(other than the Lease) shall expressly prohibit any further transfer of the
Airframe or such Engine or any assignment of the rights thereunder; and provided
further, that no such lease, pooling arrangement or other transfer or
relinquishment of the possession of the Airframe or any Engine shall in any way
discharge or diminish any of the Company's obligations to the Agent hereunder or
under the Credit Agreement. In the event that the Agent shall have received from
the lessor, conditional vendor or secured party of any airframe leased to the
Lessee or purchased by the Lessee subject to a conditional sale or other
security agreement, a written agreement complying with clause (B) of Section
4(d)(v), and the lease or conditional sale or other security agreement covering
such airframe also covers an engine, engines or spare engines owned by the
lessor under such lease, conditionally owned by the conditional vendor under
such conditional sale agreement, or subject to such security agreement, the
Agent hereby agrees for the benefit of such lessor, conditional vendor or
secured party that the Agent will not acquire or claim, as against such lessor,
conditional vendor or secured party, any right, title or interest in any such
engine or spare engine as the result of such engine or spare engine being
installed on the Airframe at any time while such engine or spare engine is
subject to such lease or conditional sale or other security agreement and owned
by such lessor, conditionally owned by such conditional vendor or subject to
such security agreement.

                  (e) Replacement and Pooling of Parts; Alterations,
Modifications and Additions.

                  (i) Except as otherwise provided in Section 4(e)(iv), the
         Company, at its own cost and expense, will promptly replace all Parts,
         that may from time to time be incorporated or installed in or attached
         to the Airframe or any Engine and that 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 or
         testing, the Company at its own cost and expense may remove any Parts,
         whether or not worn out, lost, stolen, destroyed, seized, confiscated,
         damaged beyond repair or permanently rendered unfit for use; provided,
         that, except as otherwise provided in Section 4(e)(iv), the Company at
         its own cost and expense shall replace such Parts as promptly as
         practicable. All replacement Parts shall be owned by the Company free
         and clear of all Liens (except Permitted Encumbrances and the Lease,
         and for pooling arrangements to the extent permitted by Section
         4(e)(ii)), and shall be in as good operating condition as, and shall
         have a value and utility at least equal to, the Parts replaced assuming
         such
<PAGE>
                                      -13-

         property were in the condition and repair required to be maintained by
         the terms hereof.

                  All Parts at any time removed from the Airframe or any Engine
         shall remain the property of the Company and shall remain subject to
         the lien and security interest of this Mortgage, no matter where
         located until such time as such Parts shall be replaced by parts that
         have been incorporated or installed in or attached to the Airframe or
         any Engine and which meet the requirements for replacement parts
         specified above. Immediately upon any replacement Part becoming
         incorporated or installed in or attached to the Airframe or any Engine
         as above provided, without further act, (A) title to such replacement
         Part shall vest in and such replacement part shall become the property
         of the Company and shall become subject to the lien and security
         interest of this Mortgage and shall be deemed part of the Airframe or
         such Engine for all purposes hereof to the same extent as the property
         originally comprising, or installed on, such Airframe or such Engine,
         and (B) title to the replaced part shall no longer be the property of
         the Company and shall thereupon become free and clear of all rights of
         the Agent hereunder and shall no longer be deemed a Part hereunder.

                  (ii) Any Part removed from the Airframe or any Engine as
         provided in Section 4(e)(i) may be subjected by the Company or the
         Lessee to a normal pooling arrangement of the type customary in the
         airline industry entered into by the Lessee in the ordinary course of
         its business and entered into with Domestic Air Carriers that are not
         the subject of any bankruptcy, insolvency, or similar proceeding,
         voluntary or involuntary, provided that the Part replacing such removed
         Part shall be incorporated or installed in or attached to the Airframe
         or such Engine in accordance with Section 4(e)(i) as promptly as
         possible after the removal of such removed part. In addition, any
         replacement Part when incorporated or installed in or attached to the
         Airframe or any Engine in accordance with Section 4(e)(i) may be owned
         subject to such a pooling arrangement, provided that the Company, at
         its expense, as promptly thereafter as possible, either (A) causes such
         replacement Part to become subject to the lien and security interest of
         this Mortgage in accordance with Section 4(e)(i) by the Company's
         acquiring title thereto for the benefit of the Agent free and clear of
         all Liens (except Permitted Encumbrances and the Lease) or (B) replaces
         such replacement Part by incorporating or installing in or attaching to
         the Airframe or such Engine a further replacement Part owned by the
         Company free and clear of all Liens (except Permitted Encumbrances and
         the Lease).

                  (iii) The Company, at its own cost and expense, shall make or
         cause to be made such alterations and modifications in and additions to
         the Airframe and the Engines as may be required from time to time to
         meet the standards of the FAA or other governmental authority having
         jurisdiction; provided, that the Company may, in good
<PAGE>
                                      -14-

         faith, contest the validity or application of any such standard in any
         reasonable matter that shall not adversely affect the Lien of this
         Mortgage or Lenders' interests therein. The Company also agrees, at its
         own cost and expense, to make or cause to be made such alterations and
         modifications in and additions to the Airframe and the Engines as may
         be required from time to time to meet the standards or requirements of
         any directive issued by a manufacturer relating to the Airframe or any
         Engine. In addition, so long as no Potential Event of Default or Event
         of Default shall have occurred and be continuing, the Company, at its
         own cost and expense, may from time to time make such alterations and
         modifications in and additions to the Airframe and any Engine as the
         Company may deem desirable in the proper conduct of its business or to
         accommodate the business of the Lessee, provided that no such
         alteration, modification or addition diminishes the value or utility or
         impairs the condition or airworthiness of the Airframe or such Engine
         below the value, utility, condition or airworthiness thereof
         immediately prior to such alteration, modification or addition,
         assuming that the Airframe or such Engine were then in the condition
         and airworthiness required to be maintained by the terms of this
         Mortgage.

                  (iv) All Parts incorporated or installed in or attached to or
         added to the Airframe or any Engine as the result of such alteration,
         modification or addition shall, without further act, become the
         property of, and title to such parts shall vest in the Company and
         shall be subject to the lien and security interest of this Mortgage;
         provided, that, so long as no Potential Event of Default or Event of
         Default shall have occurred and be continuing, the Company may remove
         and not replace any such Part if it (A) is in addition to, and not in
         replacement of or in substitution for, any Part incorporated or
         installed in or attached to the Airframe or such Engine on the date
         hereof, on the date the Engine first becomes subject to the lien of
         this Mortgage, or any Part in replacement of or substitution for any
         such Part, (B) is not required to be incorporated or installed in or
         attached or added to the Airframe or such Engine pursuant to the terms
         of Section 4(c) hereof or any other provision of this Mortgage and (C)
         can be removed from the Airframe or such Engine without diminishing or
         impairing the value, utility or airworthiness that the Airframe or such
         Engine would have had at such time had such alteration, modification or
         addition not occurred, assuming that the Aircraft Collateral was
         otherwise in the condition required by this Mortgage. Upon the removal
         by the Company of any such Part, as above provided, title thereto
         shall, without further act, be free and clear of all rights of the
         Agent hereunder and such Part shall no longer be deemed a Part
         hereunder.

                  (v) The Company will ensure that, pursuant to the terms of the
         Leases, all obligations of the Company pursuant to this Section 4(e)
         shall be performed by the Lessee, at the Lessee's own cost and expense,
         and all Parts and alterations, improve-
<PAGE>
                                      -15-

         ments or modifications in and additions to the Aircraft shall become
         subject to the Lien of this Mortgage and shall be leased to the Lessee
         under the applicable Lease.

                  (f) Event of Loss.

                  (i) If an Event of Loss shall occur with respect to an
         Airframe or an Engine, the Company will promptly notify the Agent
         thereof in writing (in any event within five (5) days of such
         occurrence) and will, not later than 180 days after the receipt of
         Proceeds in connection with such Event of Loss, mortgage hereunder, by
         complying with all of the terms of subsection (ii) below and otherwise
         taking all necessary actions to provide that the Company (and the Agent
         upon foreclosure of the Company's interest in the Lease) will continue
         to be entitled to the benefits of Section 1110 of the Bankruptcy Code
         with respect to the replacement airframe or engine referred to below,
         an Acceptable Alternate Airframe or Acceptable Alternate Engine free of
         all Liens (other than Permitted Encumbrances and the Lease). Upon
         compliance with the preceding sentence within such 180-day period, the
         Agent will execute and deliver to the Company a partial release, in
         recordable form, releasing the lien of this Mortgage to the extent that
         it covers such Airframe or Engine with respect to which such Event of
         Loss has occurred. Such Acceptable Alternate Airframe or Acceptable
         Alternate Engine shall thereupon constitute an "Airframe" or an
         "Engine," as the case may be, for all purposes hereof and shall be
         deemed to constitute part of the Aircraft.

                  (ii) Whenever the Company shall subject any Airframe or Engine
         to the lien and security interest of this Mortgage (as contemplated by
         paragraph (i) above), the Company will on or prior thereto:

                           (A) deliver to the Agent and duly file for recording
                  under the Act, a Supplemental Chattel Mortgage substantially
                  in the form of Exhibit A hereto duly executed by the Company
                  appropriately describing such engine to be subjected to the
                  lien and security interest of this Mortgage;

                           (B) deliver to the Agent for filing financing
                  statements under Article 9 of the Uniform Commercial Code of
                  the States of Colorado and New York (or such other States as
                  may be required at such time) covering the security interest
                  created by this Mortgage to perfect the security interest of
                  the Agent in the Airframe or Engine to be subjected to the
                  lien and security interest of this Mortgage;

                           (C) deliver to the Agent an Officers' Certificate
                  dated the date of execution of said Supplemental Chattel
                  Mortgage, stating:
<PAGE>
                                      -16-

                                    (I) that the representations and warranties
                           contained in Section 3 hereof are true and correct on
                           and as of such date of execution with respect to such
                           Airframe or Engine and the Company;

                                    (II) that, upon consummation of the terms of
                           this Section 4(f), no Potential Event of Default or
                           Event of Default will exist; and

                                    (III) that all conditions precedent
                           contemplated in this Section 4(f)(ii) have been
                           complied with;

                           (D) furnish the Agent with evidence of compliance
                  with the insurance provisions of Section 4(g) hereof with
                  respect to such Airframe or Engine as the Agent may reasonably
                  request;

                           (E) furnish the Agent with a warranty (as to title)
                  bill of sale, in form and substance reasonably satisfactory to
                  the Agent with respect to such Airframe or Engine;

                           (F) furnish the Agent with such evidence of title
                  such as the bill of sale as the Agent may reasonably request
                  concerning such Airframe or Engine;

                           (G) cause to be delivered to the Agent an appraisal
                  by the Approved Appraisers relating to the Airframe or Engine
                  to be subjected to the lien and the security interest of this
                  Mortgage stating that it has a value and utility at least
                  equal to, and in as good operating condition as the Airframe
                  or Engine subject to such Event of Loss immediately prior to
                  such Event of Loss, assuming compliance by the Company with
                  all the terms of this Mortgage with respect to such Airframe
                  or Engine; and

                           (H) cause to be delivered to the Agent an opinion or
                  opinions of counsel dated the date of execution of such
                  Supplemental Chattel Mortgage, stating:

                                    (I) that the Airframe or Engine specifically
                           described in said Supplemental Chattel Mortgage, is
                           free and clear of all recorded Liens,

                                    (II) that said Supplemental Chattel Mortgage
                           (1) has been duly authorized, executed and delivered
                           by Company, and (2) creates a valid, perfected and
                           first priority security interest in and to the
                           Airframe or Engine described in said Supplemental
                           Chattel Mortgage, enforceable against all third
                           parties and securing the payment of all obligations
<PAGE>
                                      -17-

                           purported to be secured thereby and that all action
                           required to perfect fully such security interest has
                           been taken and completed,

                                    (III) that said Supplemental Chattel
                           Mortgage has been duly filed for recordation in
                           accordance with the provisions of the Act to continue
                           the perfection and priority of the security interest
                           intended to be created by the Mortgage,

                                    (IV) that the Company (and the Agent upon
                           succeeding to the Company's interest in the Lease)
                           will continue to be entitled to the benefits of
                           Section 1110 of the Bankruptcy Code with respect to
                           the lease of the Airframe or Engine described in said
                           Supplemental Chattel Mortgage, and

                                    (V) as to such other matters as the Agent
                           may reasonably request.

                           Promptly upon the recording of each Supplemental
                           Chattel Mortgage under the Act, the Company will
                           cause to be delivered to the Agent an opinion of
                           counsel for the Company as to the due recording of
                           such Supplemental Chattel Mortgage in accordance with
                           the Act.

                  (iii) With respect to the Airframe or any Engine as between
         the Agent and the Company, any payments on account of an Event of Loss
         (other than insurance proceeds or other payments the application of
         which is provided for in Section 4(g) below and under the terms of the
         Credit Agreement) received from any government authority or other
         person shall be applied as follows:

                           (A) if such payments are received with respect to an
                  Event of Loss to an Airframe or Engine that has been or is
                  being replaced by the Company pursuant to the terms hereof, so
                  long as there shall exist no Event of Default or Potential
                  Event of Default, such payment shall be paid over to or
                  retained by the Company or the Lessee upon satisfaction of the
                  conditions for replacement contained in paragraph (ii) above
                  and until such time shall be held by the Agent in accordance
                  with the provisions hereof as security for the Secured
                  Obligations; and

                           (B) if such payments are received with respect to an
                  Event of Loss with respect to which no replacement is being
                  effected, such payments shall be applied to the prepayment of
                  the Notes required pursuant to the terms of the
<PAGE>
                                      -18-

                  Credit Agreement and shall be held pursuant to the terms of
                  this Mortgage, and the balance, if any, shall be paid over to
                  or retained by the Company.

                           (C) In the event of a requisition for use by the
                  United States Government of the Airframe or any Engine, the
                  Company shall promptly notify the Agent of such requisition
                  and all of the Company's obligations under this Mortgage shall
                  continue to the same extent as if such requisition had not
                  occurred. Any payments received by the Agent or the Company
                  from the United States Government for the use of the Airframe
                  or such Engine, shall be paid over to, or retained by, the
                  Company.

                           (D) Any amount referred to in paragraph (iii) or (iv)
                  of this Section 4(f) that is payable to or retained by the
                  Company shall not be paid to the Company or retained by the
                  Company, if at the time of such payment or retention any Event
                  of Default or a Potential Event of Default shall have occurred
                  and be continuing, but shall be held by or paid over to the
                  Agent as security for the obligations of the Company under
                  this Mortgage and the other Loan Documents, and, if the Agent
                  shall declare the Credit Agreement to be in default, shall be
                  applied against the Company's obligations hereunder and
                  thereunder as and when due. At such time as there shall not be
                  continuing any such Event of Default or Potential Event of
                  Default, such amount shall be paid to the Company to the
                  extent not previously applied in accordance with the preceding
                  sentence. In addition, and whether or not there shall exist an
                  Event of Default or Potential Event of Default, until such
                  time as the Company shall request to be paid any amount
                  referred to in paragraph (iii) or (iv) in order to effect the
                  mortgaging hereunder of a replacement Airframe or Engine, any
                  amounts referred to in paragraphs (iii) or (iv) of this
                  Section 4(f) shall be held by the Agent as security for the
                  obligations of the Company under this Mortgage and the other
                  Loan Documents.

                  (g) Insurance.

                  (i) The Company will cause the Lessee at all times to carry
         and maintain on or with respect to the Aircraft, at the Lessee's own
         cost and expense, public liability (including without limitation,
         contractual liability, cargo liability, passenger legal liability,
         bodily injury and product liability, but excluding manufacturer's
         product liability) and property damage insurance with insurers of
         recognized responsibility and reputation in amounts, of the type and
         covering the risks customarily carried with respect to similar aircraft
         by corporations engaged in the same or similar business and similarly
         situated with the Lessee but in no event in an amount less than
         $500,000,000 per occurrence (which shall include war risk, governmental
         confiscation and expro-
<PAGE>
                                      -19-

         priation and allied perils coverage). During any period when the
         Aircraft is on the ground and not in operation, the Lessee may carry or
         cause to be carried, in lieu of insurance required by this Section,
         insurance otherwise conforming with the provisions of this Section
         except that the amounts of coverage shall not be required to exceed the
         amounts of comprehensive airline liability insurance, and the scope of
         risk covered and type of insurance shall be the same, as are
         customarily carried with respect to similar aircraft on the ground by
         corporations engaged in the same or similar business and similarly
         situated with the Lessee. Any policies of insurance carried in
         accordance with this Section 4(g) and any policies taken out in
         substitution or replacement of any such policies (A) shall be amended
         to name the Agent and the Lenders as additional named insureds, (B)
         shall be primary without right of contribution from any other insurance
         which is carried by the Lessee, (C) shall expressly provide that all
         provisions thereof, except the limits of the liability, shall operate
         in the same manner as if there were a separate policy covering each
         insured, and (D) shall provide that the insurer shall waive any right
         of subrogation against the Agent or the Lenders.

                  (ii) The Company will cause the Lessee at all times to carry
         and maintain with insurers of recognized responsibility and reputation
         on or with respect to the Aircraft, at the Lessee's own cost and
         expense, aircraft ground and flight all-risk hull insurance as well as
         fire and extended coverage insurance on Engines and other equipment
         while removed from the Airframe or airframe (which shall include war
         risk, governmental confiscation and expropriation (other than by the
         United States Government) and allied perils including (A) strikes,
         riots, civil commotions or labor disturbances, (B) any malicious act or
         act of sabotage and (C) hijacking (air piracy) or any unlawful seizure
         or wrongful exercise of control of the Aircraft or crew in flight
         (including any attempt at such seizure or control) made by any person
         or persons aboard the Aircraft or another aircraft acting without the
         consent of the insured, if and to the extent the same shall be
         maintained by the Lessee with respect to similar aircraft owned or
         operated by the Lessee on the same routes or if the Aircraft or another
         aircraft is operated on routes where the custom is for Domestic
         Carriers similarly situated with the Lessee flying comparable routes
         with similar aircraft to carry such insurance, of the type usually
         carried by corporations engaged in the same or similar business and
         similarly situated with the Lessee; provided, that such insurance
         (including any self-insurance to the extent permitted below) shall at
         all times be for an amount not less than the greater of the amount
         required by the applicable Lease and $50,000,000. During any period
         when the Aircraft is on the ground and not in operation the Lessee may
         carry or cause to be carried, in lieu of the insurance required by this
         Section, insurance otherwise conforming hereto except that the scope of
         risk covered and type of insurance shall be the same as are from time
         to time customarily carried with respect to similar aircraft or spare
         engines by corporations engaged in the same or similar
<PAGE>
                                      -20-

         business and similarly situated with the Lessee for aircraft on the
         ground in an amount at least equal to the applicable amount provided
         above. All such insurance shall name the Agent and the Lenders as
         additional insureds and loss payees to the extent their interest may
         appear and shall provide that any loss to the Airframe or an Engine in
         excess of $2,000,000 (and, if a Potential Event of Default or Event of
         Default has occurred and is continuing, any such loss) shall be payable
         to the Agent for the benefit of the Lenders; and shall be primary
         without right of contribution from any other insurance that is carried
         by the Agent with respect to its interest therein.

                  The Lessee may self-insure, by way of deductible or equivalent
         provisions in insurance policies, the risks required to be insured
         against pursuant to this Section 4(g)(ii) in such reasonable amounts as
         are then applicable to other similar aircraft or spare engines in the
         Lessee's fleet that are of a value comparable to the Aircraft, and as
         are not substantially greater than amounts self-insured by corporations
         engaged in the same or similar business and similarly situated with the
         Lessee; provided, however, that the Company shall not permit the Lessee
         to self-insure in an amount in excess of $1,000,000 without the prior
         written consent of the Agent.

                  (iii) Any policies of insurance required pursuant to either
         paragraph (i) or paragraph (ii) above shall: (A) be amended to name the
         Agent and the Lenders as additional named insureds, but without the
         Agent or the Lenders being thereby liable for premiums; (B) provide
         that in respect of the interest of the Agent or the Lenders in such
         policies the insurance shall not be invalidated by any action or
         inaction of the Lessee and shall insure the interests of the Agent and
         the Lenders regardless of any breach or violation by the Lessee or any
         Person (other than the Agent) of any warranty, declaration or condition
         contained in such policies; (C) provide that if such insurance is
         cancelled, or if any material change is made in the coverage that
         affects the interest of the Agent or any Lender, or if such insurance
         is allowed to lapse for nonpayment of premium, such cancellation,
         change or lapse shall not be effective as to the Agent for thirty (30)
         days (seven (7) days, or such shorter or longer period as may from time
         to time be customarily available in the industry, in the case of any
         war risk and allied perils coverage) after receipt by the Agent of
         written notice from such insurers of such cancellation, change or
         lapse; (D) be in full force and effect throughout any geographical
         areas at any time traversed by the Aircraft and shall be payable in
         U.S. dollars; (E) waive any right of the insurers to any setoff or
         counterclaim or any other deduction, whether by attachment or otherwise
         in respect of any liability of the Agent; and (F) waive all rights of
         subrogation against the Agent.

                  (iv) In the case of a lease or contract with the United States
         or any agency or instrumentality thereof in respect of the Airframe or
         any Engine, a valid agreement by the United States or such agency or
         instrumentality to indemnify the Lessee against
<PAGE>
                                      -21-

         the same risks against which the Lessee is required hereunder to insure
         shall be considered adequate insurance with respect to the Airframe or
         such Engine to the extent of the risks and in the amounts that are the
         subject of any such agreement to indemnify.

                  (v) On or prior to the date hereof, and annually thereafter on
         or prior to January 31, the Company will cause the Lessee to furnish to
         the Agent (A) a report signed by a firm of independent aircraft
         insurance brokers, appointed by the Lessee and not objected to by the
         Agent, describing in reasonable detail acceptable to the Agent the
         insurance then carried and maintained on or with respect to the
         Aircraft and the Engines and stating that in the opinion of such firm
         such insurance complies with the terms of this Section 4(g) and is
         adequate to protect the interests of the Lessee, the Company and the
         Agent, and (B) certificates of the insurer or insurers evidencing the
         insurance covered by the report. The Company will cause the Lessee to
         cause such brokers to advise the Agent in writing (x) promptly of any
         default in the payment of any premium and of any other act or omission
         on the part of the Lessee of which such firm has knowledge and which
         might invalidate or render unenforceable, in whole or in part, any
         insurance on the Aircraft or any Engine and (y) at least thirty (30)
         days prior to the expiration or termination date, or date of
         effectiveness of any material change, of any insurance carried and
         maintained on the Aircraft hereunder.

                  (vi) All insurance payments and other payments received by the
         Agent or the Company from insurance referred to in paragraph (ii) above
         shall be, if received by the Company, immediately paid to the Agent and
         shall be held by the Agent as security for the Secured Obligations and
         all other obligations required to be paid in accordance with the terms
         of this Mortgage and the Credit Agreement and such payments shall be
         paid to the Company upon compliance by the Company with the terms of
         Subsection 4(f) with respect to the replacement of an airframe or an
         engine, as the case may be, provided that no Potential Event of Default
         or Event of Default shall have occurred and be continuing.

                  All insurance payments and other payments received by the
         Agent or the Company from insurance referred to in paragraph (ii) above
         and paid other than as a result of an Event of Loss shall be paid by
         the Agent to or be retained by the Company, and promptly applied by the
         Company to the extent necessary to repair the damage to the Airframe or
         the Engine for which such insurance was paid, provided that the Agent
         shall not be required to make any such payment to the Company if a
         Potential Event of Default or Event of Default has occurred and is
         continuing, but shall be held or paid over to the Agent as security for
         the obligations of the Company under this Mortgage and the other Loan
         Documents, and, if the Agent shall declare the Credit Agreement to be
         in default, shall be applied against the Company's obligations
         hereunder and thereunder as and when due. Retention by the Agent of any
         amounts pursuant to the pre-
<PAGE>
                                      -22-

         ceding sentence shall not relieve the Company of its obligations to
         make promptly all repairs and replacements required by Sections 4(c)
         and (e) hereof and to pay for the same with the Company's funds or
         cause payment of the same under the Lease by the Lessee.

                  (vii) Nothing in this Section 4(g) shall prohibit the Agent or
         any Lender from obtaining insurance with respect to the Aircraft for
         its own account. The Company may, at its own expense, carry insurance
         with respect to its interest in the Aircraft in amounts in excess of
         that required to be maintained by this Section 4(g). No insurance
         maintained by the Agent or any Lender shall prevent the Company from
         causing the Lessee to carry the insurance required or permitted by this
         Section or adversely affect such insurance or the cost thereof.
         Proceeds of any such insurance carried by the Agent or any Lender shall
         be paid as provided in the insurance policy relating thereto and the
         Agent shall have no duty to obtain any such insurance.

                  (h) Inspection. The Company will permit, and cause the Lessee
to permit, any officers, employees or authorized representatives of the Agent to
inspect, at the Lessee's cost and expense under the Lease, the Aircraft
Collateral and Aircraft Related Collateral, or any part thereof, and to examine,
copy or make extracts from, any and all books, records and documents in the
possession of the Company relating to such Collateral or any part thereof and
performance of this Mortgage, all at such reasonable times and as often as may
be requested. The Agent shall have no duty to make any such inspection or
examination and shall not incur any liability or obligation by reason of making
or not making any such inspection or examination.

                  (i) Insignia. The Company shall, at its own cost and expense,
or pursuant to the Lease, cause the Airframe and each Engine included in the
Aircraft Collateral to be legibly marked (in a reasonably prominent location,
which in the case of the Airframe shall be adjacent to the airworthiness
certificate) with such a plate, disk, or other marking of customary size, and
bearing the legend "Owned by Atlas Freighter Leasing III, Inc., and Mortgaged to
Bankers Trust Company, as Agent" or such other legend, as shall in the opinion
of the Agent be appropriate or desirable to evidence the fact that it is subject
to the lien and security interest created by this Mortgage. The Company shall
not remove or deface, or permit to be removed or defaced, any such plate, disk,
or other marking or the identifying manufacturer's serial number, and, in the
event of such removal or defacement, shall promptly cause such plate, disk, or
other marking or serial number to be promptly replaced. Except as provided
above, the Company shall not allow the name of any person, association or
corporation to be placed on the Airframe or any Engine as a designation that
might be interpreted as a claim of ownership or of any security interest
therein, except that any permitted lessee may place its customary colors and
insignia or the insignia of the manufacturer on the Airframe or any Engine.
<PAGE>
                                      -23-

SECTION 5. Remedies.

                  (a) If any Event of Default shall occur and be continuing,
then the Agent may, without notice of any kind to the Company, exercise in
respect of the Aircraft Collateral and Aircraft Related Collateral, (i) all the
rights and remedies of a secured party on default under the Uniform Commercial
Code as in effect at the time in any applicable jurisdiction (whether or not the
Uniform Commercial Code applies to the affected Aircraft Collateral), (ii) any
and all remedies under the Leases and all of the rights and remedies of the
Lessor under the Lease, (iii) all the rights and remedies provided for in this
Mortgage, the Credit Agreement and any other Loan Document, and in any other
agreement between the Company and the Agent, and (iv) such other rights and
remedies as may be provided by law or otherwise.

                  (b) After an Event of Default has occurred and is continuing,
the Agent may, without notice, take possession of the Aircraft Collateral or any
part thereof and may exclude the Company and the Lessee, and all persons
claiming under the Company or the Lessee, wholly or partly therefrom. At the
request of the Agent, the Company shall promptly deliver or cause the Lessee to
deliver to the Agent or to whomsoever the Agent shall designate, at such time or
times and place or places as the Agent may specify, and fly or cause to be flown
to such airport or airports in the United States as the Agent may specify,
without risk or expense to the Agent, the Aircraft Collateral or any part
thereof. In addition, the Company will provide, or cause the Lessee to provide,
without cost or expense to the Agent, storage facilities for the Aircraft
Collateral. If the Company or the Lessee shall for any reason fail to deliver
the Aircraft Collateral or any part thereof after demand by the Agent, the Agent
may, without being responsible for loss or damage, (i) obtain a judgment
conferring on the Agent the right to immediate possession or requiring the
Company and the Lessee to deliver immediate possession of the Aircraft
Collateral or any part thereof to the Agent, the entry of which judgment the
Company hereby specifically consents and the Lessor's consent to which will be
obtained by the Company under the Lease, or (ii) with or without such judgment,
pursue the Aircraft Collateral or any part thereof wherever it may be found and
may enter any of the premises of the Company and the Lessee where the Aircraft
Collateral may be and search for the Aircraft Collateral and take possession of
and remove the same. The Company agrees to pay to the Agent, upon demand, all
expenses incurred in taking any such action; and all such expenses shall, until
paid, be secured by the lien of this Mortgage. Upon every such taking of
possession, the Agent may, from time to time, make all such reasonable
expenditures for maintenance, insurance, repairs, replacements, alterations,
additions and improvements to and of the Aircraft Collateral, as it may deem
proper. In each such case, the Agent shall have the right to maintain, use,
operate, store, lease, control or manage the Aircraft Collateral or any part
thereof and to carry on the business and exercise all rights and powers of
Company relating to the Aircraft Collateral, as the Agent shall deem best,
including the right to enter into any and all such agreements with respect to
the maintenance, use, operation, storage, leasing,
<PAGE>
                                      -24-

control, management or disposition of the Aircraft Collateral or any part
thereof as the Agent may determine. Further, after the occurrence and during the
continuation of an Event of Default, the Agent shall be entitled to collect and
receive directly all tolls, rents, revenues, issues, income, products and
profits of the Aircraft Collateral or any part thereof, including without
limitation, all payments under any of the Leases. Such tolls, rents, revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, leasing, control, management or disposition of the
Aircraft Collateral, and of all maintenance, insurance, repairs, replacements,
alterations, additions and improvements, and to make all payments that the Agent
may be required or may elect to make, if any, for taxes, assessments, or other
proper charges upon the Aircraft Collateral and all other payments that the
Agent may be required or authorized to make under any provision of this
Mortgage, as well as just and reasonable compensation for the services of the
Agent and of all persons properly engaged and employed for such purposes by the
Agent.

                  (c) The Agent, with or without taking possession of the
Aircraft Collateral, may, without notice:

                  (i) to the extent permitted by law, sell at one or more sales,
         as an entirety or in separate lots or parcels, the Aircraft Collateral
         or any part thereof, at public or private sale, at such place or places
         and at such time or times and upon such terms, including terms of
         credit (which may include the retention of title by the Agent to the
         property so sold), as the Agent may determine, whether or not the
         Aircraft Collateral shall be at the place of sale; and

                  (ii) proceed to protect and enforce its rights under this
         Mortgage by suit, whether for specific performance of any covenant
         herein contained or in aid of the exercise of any power herein granted
         or for the foreclosure of this Mortgage and the sale of the Aircraft
         Collateral under the judgment or decree of a court of competent
         jurisdiction or for the enforcement of any other right.

                  (d) After an Event of Default has occurred and is continuing,
the Company agrees to the fullest extent that it lawfully may, that it and the
Lessee will not (and hereby irrevocably waives its right to) at any time plead,
or claim the benefit or advantage of, any appraisement, valuation, stay,
extension, moratorium, or redemption law now or hereafter in force, in order to
prevent or hinder the enforcement of this Mortgage or the absolute sale of the
Aircraft Collateral. The Company, for itself and all who may claim under it,
waives, to the extent that it lawfully may, all right to have all or any portion
of the Aircraft Collateral marshalled upon any foreclosure hereof.

                  (e) Each and every remedy of the Agent shall be cumulative and
shall not be exclusive of any other remedies provided now or hereafter at law,
in equity or otherwise.
<PAGE>
                                      -25-

The Company shall reimburse the Agent, upon demand, for all fees and other
expenses paid or incurred by the Agent in exercising any rights, powers or
remedies granted hereby. All such fees and expenses shall, until paid, be
secured by the lien of this Mortgage.

                  (f) Notwithstanding anything to the contrary contained in this
Mortgage or the Lease, the Agent shall at all times have the right, to the
exclusion of the Company, to declare the Lease in default in accordance with its
terms and to exercise all remedies set forth in the Leases.

SECTION 6. Application of Proceeds.

                  The proceeds of amounts received pursuant to the Lease
(including, without limitation, amounts received in connection with the exercise
by the Lessee of any purchase option or Event of Loss) and the proceeds of any
sale, lease or other disposition of all or any of the Aircraft Collateral or
Aircraft Related Collateral under this Mortgage and all other sums realized by
the Agent pursuant to this Mortgage or any proceedings hereunder shall be
applied in the following order of priority:

                  First: To the payment of the costs and expenses of such sale,
         lease, disposition or other realization, including reasonable
         compensation to the Agent's agents and counsel, and all expenses,
         liabilities and advances made or incurred by the Agent in connection
         therewith, including, without limitation, taxes upon or with respect to
         the sale, lease, disposition or realization and the payment of taxes
         and Liens, if any, prior to the lien and security interest of this
         Mortgage (except any taxes or Liens to which the respective sale,
         lease, disposition or realization shall have been subject) and to the
         payment of expenses and the reimbursement of payments incurred or made
         by the Agent pursuant to Section 9 hereof;

                  Second: To the ratable payment of interest accrued and unpaid
         on the Notes to and including the date of such application;

                  Third: To the ratable payment of principal of the Notes, which
         payment shall be applied to the principal installments of the Notes in
         the manner specified by the Credit Agreement; and

                  Fourth: To the payment of all other amounts payable by the
         Company under the Credit Agreement, this Mortgage or any other Loan
         Document, and otherwise to the Company or to such other Person(s) as
         may lawfully be entitled, or as any court of competent jurisdiction may
         direct, the remainder.
<PAGE>
                                      -26-

SECTION 7. Agent as Attorney.

                  The Company hereby irrevocably appoints the Agent the true and
lawful attorney of the Company (with full power of substitution) in the name,
place and stead of, and at the expense of, the Company at any time after the
occurrence and during the continuation of an Event of Default (i) to ask,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Aircraft Collateral and Aircraft Related Collateral, (ii) to make all necessary
transfers of all or any part of the Aircraft Collateral and Aircraft Related
Collateral in connection with any sale, lease or other disposition made pursuant
hereto, (iii) to execute and deliver for value all necessary or appropriate
bills of sale, assignments and other instruments in connection with any such
sale, lease or other disposition, and (iv) generally to do, at the Agent's
option and the Company's cost and expense, at any time, or from time to time,
all acts and things that the Agent deems necessary to protect, preserve or
realize upon the Aircraft Collateral and Aircraft Related Collateral and the
Agent's security interest therein, in order to effect the intent of this
Mortgage, all as fully and effectively as the Company might do, the Company
hereby ratifying and confirming all that its said attorney (or any substitute)
shall lawfully do hereunder and pursuant hereto.

SECTION 8. Cash Collateral.

                  All monies received by the Agent to be held and applied under
this Section, and all monies if any, required to be paid to the Agent hereunder,
which disposition is not elsewhere herein otherwise specifically provided for,
shall be held by the Agent and applied from time to time as provided herein and
in the Credit Agreement and the other Loan Documents and shall be held in an
account in the name of the Agent and invested in Cash Equivalents for the
benefit and at the risk of the Company.

SECTION 9. Agent's Right to Perform.

                  If the Company fails to make any payment required to be made
by it hereunder or fails to perform or comply with any of its agreements
contained herein, the Agent may itself make such payment or perform or comply
with such agreement (including, without limitation, the agreement of the Company
to maintain insurance pursuant to Section 4(g) hereof), and the amount of such
payment and the amount of the reasonable expenses of the Agent incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the rate
specified in the Credit Agreement from time to time, shall be payable by the
Company to the Agent on demand and shall constitute additional indebtedness
secured by the lien and security interest of this Mortgage.
<PAGE>
                                      -27-

SECTION 10. Further Assurances.

                  The Company at its expense will promptly and duly execute and
deliver such documents and assurances and take such action as may be necessary
or desirable, or as the Agent may from time to time request, in order to correct
any defect, error or omission which may at any time hereafter be discovered in
the contents of this Mortgage or in the execution or delivery hereof, and/or in
order to more effectively carry out the intent and purpose of this Mortgage and
to establish, protect and perfect the rights, remedies and security interests
created or intended to be created in favor of the Agent hereunder, including,
without limitation, the execution, delivery and filing of any instruments with
the FAA and of any Uniform Commercial Code financing and continuation statements
with respect to the security interests created hereby, in form and substance
satisfactory to the Agent, in such jurisdictions as the Agent may reasonably
request. The Company hereby authorizes the Agent to file any such statements
without the signature of the Company to the extent permitted by applicable law.

SECTION 11. Continuing Security Interest.

                  This Mortgage shall create a continuing security interest in
the Aircraft Collateral and Aircraft Related Collateral and shall (a) remain in
full force and effect until the indefeasible payment in full of the Secured
Obligations, (b) be binding upon the Company, its successors and assigns and (c)
inure, together with the rights and remedies of the Agent hereunder, to the
benefit of the Agent and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), the Agent or any Lender
may, subject to any restrictions contained in the Credit Agreement, assign or
otherwise transfer any of its interests in the Credit Agreement or in any Note
to any other person or entity, and such other benefits in respect thereof
granted to the Agent or any Lender herein or otherwise. Upon the indefeasible
payment in full of the Secured Obligations, the security interest granted hereby
shall terminate and all rights to the Aircraft Collateral and Aircraft Related
Collateral shall revert to Company. Upon any such termination, the Agent will
execute and deliver to the Company, at the Company's expense, such instruments
of release and termination as the Company may reasonably request to evidence
such termination.

SECTION 12. Miscellaneous.

                  Any provision of this Mortgage 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. To the extent permitted by applicable law, the Company
hereby waives any provision of law which renders any provision hereof prohibited
or unenforceable in any respect. No term or provision of this Mortgage may be
changed, waived, discharged or
<PAGE>
                                      -28-

terminated orally, but only by an instrument in writing signed by the Company
and the Agent. The captions and headings in this Mortgage are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.

SECTION 13. Consent to Jurisdiction and Service of Process.

                  All judicial proceedings brought against the Company with
respect to this Mortgage may be brought in any state or federal court of
competent jurisdiction in the State of New York or Colorado and by execution and
delivery of this Mortgage Company accepts for itself and in connection with the
Aircraft Collateral and Aircraft Related Collateral, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Mortgage. The Company hereby agrees that service of process in any
such proceeding in any such court may be made by registered or certified mail
return receipt requested to the Company at its address provided on the signature
pages of the Mortgage, such service being hereby acknowledged by the Company to
be effective and binding service in every respect. A copy of any such process so
served shall be mailed by registered mail to the Company, at its address
specified in Section 15 hereof, except that unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity of
service of process. If any agent appointed by the Company refuses to accept
service, the Company hereby agrees that service upon it by mail shall constitute
sufficient notice. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of the Agent to bring
proceedings against the Company in the courts of any other jurisdiction.

SECTION 14. GOVERNING LAW; TERMS.

                  THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES, EXCEPT AS REQUIRED BY MANDATORY PROVISION OF LAW AND EXCEPT TO
THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR AIRCRAFT COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless
otherwise defined herein or in the Credit Agreement, terms used in Article 9 of
the Uniform Commercial Code in the State of New York are used herein as therein
defined.

SECTION 15. Addresses for Notices.

                  All notices and other communications provided for hereunder
shall be in writing (including facsimile communication) and mailed or telecopied
or delivered to the Com-
<PAGE>
                                      -29-

pany or the Agent, as the case may be, addressed to it at the address of such
party specified on the signature page hereof, or as to either party at such
other address as shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this Section 15. All such
notices and other communications shall, when mailed, be effective when deposited
in the mails, addressed as aforesaid.

SECTION 16. Counterparts.

                  This Mortgage may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same Mortgage.

                  [Remainder of page intentionally left blank.]
<PAGE>
                                      -30-

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

                                ATLAS FREIGHTER LEASING III, INC.

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

                                Notice Address:

                                Atlas Freighter Leasing III, Inc.
                                538 Commons Drive
                                Golden, Colorado  80401

                                Attention:    Richard H. Shuyler
                                              Executive Vice President -
                                              Strategic Planning and Treasurer

                                BANKERS TRUST COMPANY, as Agent

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

                                Notice Address:

                                Bankers Trust Company
                                130 Liberty Street
                                New York, New York  10006

                                Attention:    Marguerite Sutton
<PAGE>
                                                                      SCHEDULE I
                                                           to Security Agreement
                                                            and Chattel Mortgage

                                    AIRFRAME

<TABLE>
<CAPTION>
                                                          Manufacturer's                 United States
Manufacturer                   Model                      Serial Number                  Registry No.
------------                   -----                      -------------                  ------------
<S>                            <C>                        <C>                            <C>
Boeing                         747-2D7B                   22471                          N527MC
</TABLE>
<PAGE>
                                                                     SCHEDULE II
                                                           to Security Agreement
                                                            and Chattel Mortgage

                                     ENGINES

<TABLE>
<CAPTION>
                                                                                    Manufacturer's
Manufacturer                              Model                                     Serial Number
------------                              -----                                     -------------
<S>                                       <C>                                       <C>
General Electric                          CF6-50E2                                  528420

General Electric                          CF6-50E2                                  517532

General Electric                          CF6-50E2                                  455793

General Electric                          CF6-50E2                                  455430
</TABLE>

Each such engine having 750 or more rated takeoff horsepower or the equivalent
thereof.
<PAGE>
                                                                       EXHIBIT A
                                                           to Security Agreement
                                                            and Chattel Mortgage

                        SUPPLEMENTAL CHATTEL MORTGAGE NO.

                  THIS SUPPLEMENTAL CHATTEL MORTGAGE is dated April 25, 2000,
between Atlas Freighter Leasing III, Inc., a Delaware corporation (the
"Company"), and Bankers Trust Company, as Administrative Agent for and
representative of (in such capacity, the "Agent") the financial institutions
(the "Lenders") party to the Credit Agreement dated as of April 25, 2000, among
the Company, the Lenders and the Agent.

                  The Company and the Agent have heretofore entered into a
Security Agreement and Chattel Mortgage dated April 25, 2000, (the "Mortgage")
and the terms defined therein and not otherwise defined herein are used herein
as therein defined. The Mortgage provides for the execution and delivery of
supplements thereto substantially in the form hereof, for the purpose of
particularly describing each Engine subjected to the lien of the Mortgage
pursuant to Section 4(f) thereof, and shall specifically mortgage such Engine to
the Agent.

                  The Mortgage relates to the Engine(s) described below and a
counterpart of the Mortgage has been recorded by the Federal Aviation
Administration on April __, 2000, and has been assigned Conveyance No.
____________.

                  NOW, THEREFORE, that, to secure the due and punctual payment
and performance of the Secured Obligations and in consideration of the premises
and of the covenants contained in the Mortgage, the Company hereby mortgages to
the Agent, its successors and assigns, and grants and assigns to the Agent, its
successors and assigns, a first priority purchase money security interest in all
estate, right, title and interest of the Company in and to the property
described in Schedule I annexed hereto (whether or not such Engine shall be
installed on or attached to the Airframe), and the proceeds thereof.

                  This Supplemental Chattel Mortgage shall be construed as
supplemental to the Mortgage and shall form a part thereof, and the Mortgage is
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.

                  THIS SUPPLEMENTAL CHATTEL MORTGAGE IS INTENDED TO BE DELIVERED
IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THAT
STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

                                      A-1
<PAGE>
                  This Supplemental Chattel Mortgage may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Supplemental Chattel Mortgage.

                  [Remainder of page intentionally left blank]

                                      A-2
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Chattel Mortgage to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first above
written.

                             ATLAS FREIGHTER LEASING III, INC.

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

                             Notice Address:

                             Atlas Freighter Leasing III, Inc.
                             538 Commons Drive
                             Golden, Colorado  80401

                             Attention:    Richard H. Shuyler
                                           Executive Vice President -
                                           Strategic Planning and Treasurer

                             BANKERS TRUST COMPANY, as Agent

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

                             Notice Address:

                             Bankers Trust Company
                             130 Liberty Street
                             New York, New York  10006

                             Attention:    Marguerite Sutton

                                      A-3
<PAGE>
                                                                    SCHEDULE I-A
                                                                 to Supplemental
                                                                Chattel Mortgage

                               SCHEDULE OF ENGINES

<TABLE>
<CAPTION>
Manufacturer                            Model                                Manufacturer's Serial Number
------------                            -----                                ----------------------------
<S>                                     <C>                                  <C>

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

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

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

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

Such engine having 750 or more rated takeoff horsepower or the equivalent
thereof.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}]]