EXHIBIT 10.3.1

[Execution]

LOAN AND SECURITY AGREEMENT

by and among

ATLAS AIR, INC.
POLAR AIR CARGO, INC.
as Borrowers

and

ATLAS AIR WORLDWIDE HOLDINGS, INC.
AIRLINE ACQUISITION CORP I
as Guarantors

CONGRESS FINANCIAL CORPORATION
as Agent

WACHOVIA BANK, NATIONAL ASSOCIATION
as Lead Arranger

and

THE LENDERS FROM TIME TO TIME PARTY HERETO
as Lenders

Dated: November 30, 2004

TABLE OF CONTENTS

                                                                                PAGE
                                                                                ----
SECTION 1.  DEFINITIONS .....................................................      1

SECTION 2.  CREDIT FACILITIES ...............................................     31
    2.1     Loans ...........................................................     31
    2.2     Letter of Credit Accommodations .................................     32
    2.3     Commitments .....................................................     35
    2.4     Joint and Several Liability .....................................     36
    2.5     Reduction of Maximum Credit .....................................     37

SECTION 3.  INTEREST AND FEES ...............................................     37
    3.1     Interest ........................................................     37
    3.2     Fees ............................................................     38
    3.3     Changes in Laws and Increased Costs of Loans ....................     39

SECTION 4.  CONDITIONS PRECEDENT ............................................     41
    4.1     Conditions Precedent to Initial Loans and Letter of Credit
            Accommodations ..................................................     41
    4.2     Conditions Precedent to All Loans and Letter of Credit
            Accommodations ..................................................     44

SECTION 5.  GRANT AND PERFECTION OF SECURITY INTEREST .......................     45
    5.1     Grant of Security Interest ......................................     45
    5.2     Perfection of Security Interests ................................     47
    5.3     No Assumption ...................................................     51

SECTION 6.  COLLECTION AND ADMINISTRATION ...................................     51
    6.1     Borrowers' Loan Accounts ........................................     51
    6.2     Statements ......................................................     51
    6.3     Collection of Accounts ..........................................     51
    6.4     Payments ........................................................     53
    6.5     Authorization to Make Loans .....................................     54
    6.6     Use of Proceeds .................................................     55
    6.7     Appointment of Administrative Borrower as Agent for Requesting
            Loans and Receipts of Loans and Statements ......................     55
    6.8     Pro Rata Treatment ..............................................     56
    6.9     Sharing of Payments, Etc ........................................     56
    6.10    Settlement Procedures ...........................................     57
    6.11    Obligations Several; Independent Nature of Lenders' Rights ......     59

SECTION 7.  COLLATERAL REPORTING AND COVENANTS ..............................     59
    7.1     CNS/CASS and Collateral Reporting ...............................     59
    7.2     Accounts Covenants ..............................................     61
    7.3     Engines, Spare Parts and Inventory Covenants ....................     62
    7.4     Aircraft Covenants ..............................................     63
    7.5     Power of Attorney ...............................................     64
    7.6     Right to Cure ...................................................     65
    7.7     Access to Premises ..............................................     65

SECTION 8.  REPRESENTATIONS AND WARRANTIES ..................................     66
    8.1     Corporate Existence, Power and Authority ........................     66
    8.2     Name; State of Organization; Chief Executive Office; Collateral
            Locations .......................................................     66
    8.3     Financial Statements; No Material Adverse Change ................     67
    8.4     Priority of Liens; Title to Properties ..........................     67
    8.5     Tax Returns .....................................................     67
    8.6     Litigation ......................................................     67
    8.7     Compliance with Other Agreements and Applicable Laws ............     68
    8.8     Air Carrier Operations ..........................................     68
    8.9     Slot and Route Utilization ......................................     69
    8.10    CASS/IATA Operations ............................................     69
    8.11    Environmental Compliance ........................................     70
    8.12    Employee Benefits ...............................................     70
    8.13    Bank Accounts ...................................................     71
    8.14    Intellectual Property ...........................................     71
    8.15    Subsidiaries; Affiliates; Capitalization; Solvency ..............     72
    8.16    Interrelated Businesses .........................................     72
    8.17    Labor Disputes ..................................................     73
    8.18    Restrictions on Subsidiaries ....................................     73
    8.19    Material Contracts ..............................................     73
    8.20    Payable Practices ...............................................     73
    8.21    Accuracy and Completeness of Information ........................     73
    8.22    Inactive Subsidiaries ...........................................     74
    8.23    EETC Documents ..................................................     74
    8.24    Survival of Warranties; Cumulative ..............................     74

SECTION 9.  AFFIRMATIVE AND NEGATIVE COVENANTS ..............................     74
    9.1     Maintenance of Existence ........................................     74
    9.2     New Collateral Locations ........................................     75
    9.3     Compliance with Laws, Regulations, Etc ..........................     75
    9.4     Payment of Taxes and Claims .....................................     76
    9.5     Insurance .......................................................     77
    9.6     Financial Statements and Other Information ......................     77
    9.7     Sale of Assets, Consolidation, Merger, Dissolution, Etc .........     79
    9.8     Encumbrances ....................................................     82
    9.9     Indebtedness ....................................................     84

    9.10    Loans, Investments, Etc .........................................     92
    9.11    Dividends and Redemptions .......................................     97
    9.12    Transactions with Affiliates ....................................     99
    9.13    Compliance with ERISA ...........................................     99
    9.14    End of Fiscal Years; Fiscal Quarters ............................     99
    9.15    Change in Business ..............................................    100
    9.16    Limitation of Restrictions Affecting Subsidiaries ...............    100
    9.17    EBITDAR .........................................................    100
    9.18    Excess Availability .............................................    100
    9.19    Capital Expenditures ............................................    100
    9.20    License Agreements...............................................    101
    9.21    Slot Utilization; Route Utilization; Leasehold Utilization ......    102
    9.22    Costs and Expenses ..............................................    103
    9.23    Dissolution of Inactive Subsidiaries ............................    104
    9.24    Further Assurances ..............................................    104

SECTION 10. EVENTS OF DEFAULT AND REMEDIES ..................................    104
    10.1    Events of Default ...............................................    104
    10.2    Remedies ........................................................    106

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
            GOVERNING LAW ...................................................    110
    11.1    Governing Law; Choice of Forum; Service of Process; Jury Trial
            Waiver ..........................................................    110
    11.2    Waiver of Notices ...............................................    1ll
    11.3    Amendments and Waivers ..........................................    1ll
    11.4    Waiver of Counterclaims .........................................    113
    11.5    Indemnification .................................................    113

SECTION 12. THE AGENT .......................................................    114
    12.1    Appointment, Powers and Immunities ..............................    114
    12.2    Reliance by Agent ...............................................    114
    12.3    Events of Default ...............................................    115
    12.4    Congress in its Individual Capacity .............................    115
    12.5    Indemnification .................................................    115
    12.6    Non-Reliance on Agent and Other Lenders  ........................    116
    12.7    Failure to Act ..................................................    116
    12.8    Additional Loans ................................................    116
    12.9    Concerning the Collateral and the Related Financing Agreements ..    117
    12.10   Field Audit, Examination Reports and other Information;
            Disclaimer by Lenders ...........................................    117
    12.11   Collateral Matters ..............................................    118
    12.12   Agency for Perfection ...........................................    119
    12.13   Successor Agent .................................................    119
    12.14   Lead Arranger ...................................................    120

SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS ................................    120
    13.1    Term ............................................................    120
    13.2    Interpretative Provisions .......................................    121
    13.3    Notices .........................................................    123
    13.4    Partial Invalidity ..............................................    123
    13.5    Confidentiality .................................................    124
    13.6    Successors ......................................................    125
    13.7    Assignments; Participations .....................................    125
    13.8    Entire Agreement ................................................    127
    13.9    USA Patriot Act .................................................    127
    13.10   Counterparts, Etc ...............................................    127

LOAN AND SECURITY AGREEMENT

This Loan and Security Agreement dated November 30, 2004 is entered into by and among Atlas Air, Inc., a Delaware corporation ("Atlas Air"), Polar Air Cargo, Inc., a California corporation ("Polar", and together with Atlas Air, each individually, a "Borrower" and collectively, "Borrowers"), Atlas Air Worldwide Holdings, Inc., a Delaware corporation ("Atlas Holdings"), Airline Acquisition Corp I, a Delaware corporation ("AACI", and together with Holdings, each individually, a "Guarantor" and collectively, "Guarantors"), the parties hereto from time to time as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a "Lender" and collectively, "Lenders"), Congress Financial Corporation, a Delaware corporation, in its capacity as agent for Lenders (in such capacity, "Agent") and Wachovia Bank, National Association, as Lead Arranger (in such capacity, "Lead Arranger").

WITNESSETH:

WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders enter into financing arrangements with Borrowers pursuant to which Lenders may make loans and provide other financial accommodations to Borrowers; and

WHEREAS, each Lender is willing to agree (severally and not jointly) to make such loans and provide such financial accommodations to Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth herein and Agent is willing to act as agent for Lenders on the terms and conditions set forth herein and the other Financing Agreements;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

1.1 "1998 Class A Certificates" means the 7.38% Atlas Air Initial Pass Through Certificates, Series 1998-1A and 7.38% Atlas Air Exchange Pass Through Certificates, Series 1998-1A issued by that certain Atlas Air Pass Through Trust 1998-1A-S formed pursuant to that certain Pass Through Trust Agreement dated as of February 9, 1998 between Atlas Air and Wilmington Trust Company, as Trustee, as amended by that certain 1998 Class A Pass Through Trust Supplement dated as of July 27, 2004.

1.2 "1999 Class A Certificates" means the 7.20% Atlas Air Pass Through Certificates, Series 1999-1A-1 and the 6.88% Atlas Air Pass Through Certificates, Series 1999-1A-2 issued by that certain Atlas Air Pass Through Trust 1999-1 A-1 formed pursuant to that certain Pass Through Trust Agreement dated as of April 1, 1999, as supplemented by that certain Trust Supplement No. 1999 1A-1 dated as of April 1, 1999, and as amended by that certain Amendment to 1999 Class A-1 Pass Through Trust Supplement dated as of July 27, 2004, in

each case between Atlas Air and Wilmington Trust Company, as Trustee, and that certain Atlas Air Pass Through Trust 1999-1A-2 formed pursuant to that certain Pass Through Trust Agreement dated as of April 1, 1999, as supplemented by that certain Trust Supplement No. 1999 1A-2 dated as of April 1, 1999, in each case between Lessee and Wilmington Trust Company, as Trustee, respectively.

1.3 "2000 Class A Certificates" means the 8.707% Atlas Air Initial Pass Through Certificates, Series 2000-1A and the 8.707% Atlas Air Exchange Pass Through Certificates, Series 2000-1A issued by that certain Atlas Air Pass Through Trust 2000-1A formed pursuant to that certain Pass Through Trust Agreement dated as of January 28, 2000, as supplemented by that certain Trust Supplement No. 2000-1A dated as of January 28, 2000 between Atlas Air and Wilmington Trust Company, as Trustee, as amended by that certain Amendment to 2000 Class A Pass Through Trust Supplement dated as of July 27, 2004.

1.4 "Accounts" shall mean, as to each Borrower and Guarantor, all present and future rights of such Borrower and Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or
(d) arising out of the use of a credit or charge card or information contained on or for use with the card including, as to any of the foregoing, any right to receive payment arising from the rendition of any charter or scheduled cargo transportation services or other services by any Borrower or Guarantor or any right to receive payment arising from any ACMI Contract.

1.5 "ACMI Contracts" shall mean, collectively, (a) each contract at any time entered into by a Borrower pursuant to which such Borrower furnishes to its customers an Aircraft, crew, maintenance and insurance and its customer bears all of the operating expenses associated with the use thereof and (b) any similar contract in which the customer provides the flight crew, all in accordance with such Borrower's historical practices; each sometimes being referred to herein individually as an "ACMI Contract".

1.6 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to the next one-thousandth (1/1000) of one (1%) percent) determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a decimal, prescribed by any United States or foreign banking authority for determining the reserve requirement which is or would be applicable to deposits of United States dollars in a non-United States or an international banking office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, whether or not the Reference Bank actually holds or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.

1.7 "Administrative Borrower" shall mean Atlas Air, Inc., a Delaware corporation in its capacity as Administrative Borrower on behalf of itself and the other Borrower pursuant to Section 6.7 hereof and its successors and assigns in such capacity.

1.8 "Affiliate" shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds ten (10%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds ten (10%) percent or more of any class of Voting Stock or in which such Person beneficially owns or holds ten (10%) percent or more of the equity interests and (c) any director or executive officer of such Person. For the purposes of this definition, the term "control" (including with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.

1.9 "AFL III Equipment" means (i) thirteen (13) Boeing 747-200 aircraft (including the engines attached thereto) with registration numbers N505MC, N509MC, N512MC, N517MC, N522MC, N523MC, N524MC, N526MC, N527MC, N528MC, N534MC, N808MC and N809MC, (ii) nine General Electric CF6-50E2 engines, and (iii) three General Electric CF6-80C2 engines.

1.10 "AFL III Financing Agreement" means that certain Credit Agreement dated as of April 25, 2000, and amended and restated as of July 27, 2004, by and among Atlas Freighter Leasing III, Inc., the lenders party thereto and Deutsche Bank Trust Company Americas, as administrative agent, as such agreement may be amended, amended and restated, modified and/or supplemented from time to time in accordance with the terms thereof.

1.11 "Agent" shall mean Congress Financial Corporation, in its capacity as agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.

1.12 "Agent Payment Account" shall mean account no. 5000000030279 of Agent at Wachovia Bank, National Association, or such other account of Agent as Agent may from time to time designate to Administrative Borrower as the Agent Payment Account for purposes of this Agreement and the other Financing Agreements.

1.13 "Air Carrier Certificates" shall mean, collectively, the Air Carrier Certificate No. UIEA784E issued by the FAA (as hereinafter defined) in the name of Atlas Air dated effective on February 23, 2003 and the Air Carrier Certificate No. P5CA067Y issued by the FAA in the name of Polar dated effective on July 4, 1999 and reissued on March 3, 2003, all other certificates, permits, approvals, licenses, maintenance programs and other documents required by the FAA, the DOT (as hereinafter defined) and the Federal Aviation Laws, including
Section 44705 of Title 49 of the United States Code, for the air transportation of passengers and/or cargo, including mail, by Borrowers and each Airworthiness Certificate issued by the FAA for each Aircraft, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, reissued or replaced.

1.14 "Aircraft" shall mean all aircraft of Borrowers and Guarantors now or hereafter owned, leased or used in their respective businesses for the transportation of passengers and/or cargo, including mail, wherever located.

1.15 "Aircraft Credit Facility Agreement" means that certain Fifth Amended and Restated Credit Agreement dated as of July 27, 2004 among Atlas Air, Inc., the lenders party thereto and Deutsche Bank Trust Company Americas, as administrative agent, as the same now exists or hereafter may be amended, modified, supplemented, extended, renewed, restated or replaced.

1.16 "Airport Leaseholds" shall mean all of the right, title, privilege, interest, and authority now or hereafter acquired or held by any Borrower or, if applicable a Guarantor in connection with the right to use or occupy space in any airport at which any Borrower or such Guarantor conducts scheduled operations and in any airport terminal, hanger, warehouse or other building, facility or area at any such airport.

1.17 "Applicable Margin" means, at any time, as to the interest rate for Prime Rate Loans and the interest rate for Eurodollar Rate Loans the applicable percentage (on a per annum basis) set forth below if the Monthly Average Excess Availability for the immediately preceding calendar month is at or within the amounts indicated for such percentage:

                                     Applicable    Applicable    Unused
             Monthly Average           Prime       Eurodollar     Line
 Tier      Excess Availability      Rate Margin   Rate Margin     Fee
-----   -------------------------   -----------   -----------   ------

1       $40,000,000 or more            -1/4%        1 3/4%       1/2%

2       Greater than or equal to        1/4%        2 1/4%       3/8%
        $25,000,000 and less than
        $40,000,000

3       Less than $25,000,000           3/4%        2 3/4%       1/4%

PROVIDED, THAT, the Applicable Margin shall be calculated and established once each calendar month on the first Business Day thereof and shall remain in effect until adjusted thereafter as of the first Business Day of the next month.

1.18 "Aircraft Security Agreement" shall mean collectively, each Aircraft Security Agreement, dated of even date herewith, with respect to each Secured Aircraft, duly executed and delivered by Polar, as debtor, in favor of Agent, as secured party, granting to Agent, as secured party for itself and the benefit of Lenders, a lien upon and security interest in the Secured Aircraft, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.19 "Assignment and Acceptance" shall mean an Assignment and Acceptance substantially in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lender's interest hereunder in accordance with the provisions of Section 13.7 hereof.

1.20 "Bankruptcy Code" shall mean the United States Bankruptcy Code, being Title 11 of the United States Code, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all official rules, regulations and interpretations thereunder or related thereto.

1.21 "Bankruptcy Court" shall mean the United States Bankruptcy Court for the Southern District of Florida.

1.22 "Blocked Accounts" shall have the meaning set forth in Section 6.3 hereof.

1.23 "Borrowers" shall have the meaning set forth in the preamble hereto; each sometimes being referred to herein individually as a "Borrower".

1.24 "Borrowing Base" shall mean, at any time, the amount equal to:

(a) the sum of:

(i) eighty-five (85%) percent of Eligible Domestic Accounts, PLUS

(ii) the lesser of (A) the sum of (1) seventy-five (75%) percent of Eligible Preferred Foreign Accounts, PLUS (2) the lesser of (x) twenty-five
(25%) percent of all other Eligible Foreign Accounts or (y) $7,500,000, or (B) $30,000,000, MINUS

(b) Reserves.

1.25 "Borrowing Base Certificate" shall mean a certificate substantially in the form of Exhibit B hereto, as such form may from time to time be modified by Agent, which is duly completed (including all schedules thereto) and executed by the chief executive officer or chief financial officer, vice president of finance, treasurer or controller of Administrative Borrower and delivered to Agent.

1.26 "Business Day" shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York or the State of North Carolina, and a day on which Agent is open for the transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.

1.27 "Capital Expenditures" shall mean, for any period of time with respect to which a determination thereof is to be made, all expenditures for any fixed or capital assets (including Aircraft and related Equipment and other fixed or capital assets that in accordance with GAAP are or should be included in "property, plant and equipment" or a similar fixed asset balance sheet category), whether such expenditures are paid in cash or financed and including the direct or indirect acquisition of such assets by way of increased service charges, offset items or otherwise.

1.28 "Capital Leases" shall mean, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of such Person.

1.29 "Capital Stock" shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person's capital stock or partnership, limited liability company or other equity interests at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).

1.30 "Cargo Agency Agreement" shall mean an agreement between an IATA member and a Cargo Agent pursuant to which such IATA member appoints the Cargo Agent to act as its representative for the promotion and sale of international air cargo transportation within the country specified in such agreement with respect to the handling and delivery of cargo consignments within such country and the specified airports that are adjacent thereto.

1.31 "Cargo Agent" shall mean a Person which has applied for and been awarded qualification in accordance with all applicable regulations and procedures of IATA to act as a cargo agent on behalf of IATA members.

1.32 "Cash Equivalents" shall mean, at any time, (a) any evidence of Indebtedness with a maturity date of one hundred eighty (180) days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof; PROVIDED, THAT, the full faith and credit of the United States of America is pledged in support thereof; (b) certificates of deposit or bankers' acceptances with a maturity of one hundred eighty (180) days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $250,000,000; (c) commercial paper (including variable rate demand notes) with a maturity of one hundred eighty (180) days or less issued by a corporation (except an Affiliate of any Borrower or Guarantor) organized under the laws of any state of the United States of America or the District of Columbia and rated at least A-2 by Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. or at least P-2 by Moody's Investors Service, Inc.; (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $250,000,000; (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one hundred eighty (180) days or less from the date of acquisition; PROVIDED, THAT, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; and (f) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through
(e) above.

1.33 "CASS" shall mean the Cargo Accounts Settlement System developed by IATA (as hereinafter defined) with respect to cargo sales reporting and accounts settlement.

1.34 "Certificated Air Carrier" shall mean, as to any Person, an air carrier holding a certificate issued by the FAA pursuant to Section 44705 of Title 49 of the United States Code or any other Federal Aviation Laws.

1.35 "Change of Control" shall mean (a) the transfer (in one transaction or a series of transactions) of all or substantially all of the assets of Borrowers and Guarantors, taken as a whole, to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), other than as permitted in
Section 9.7 hereof; (b) the liquidation or dissolution of Atlas Holdings or the adoption of a plan by the stockholders of Atlas Holdings relating to the dissolution or liquidation of Atlas Holdings; (c) the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), of beneficial ownership, directly or indirectly, of a majority of the voting power of the total outstanding Voting Stock of Atlas Holdings or the Board of Directors of Atlas Holdings; (d) during any period of twelve (12) consecutive months, individuals who at the beginning of such period constituted the Board of Directors of Atlas Holdings (together with any new directors whose nomination for election by the stockholders of Atlas Holdings, as the case may be, was approved by a vote of at least fifty-one (51%) percent of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Atlas Holdings then still in office; or (e) the failure of Atlas Holdings to own directly or indirectly one hundred (100%) percent of the voting power of the total outstanding Voting Stock of each Borrower and each other Guarantor (other than directors' qualifying shares).

1.36 "Chapter 11 Cases" shall mean the Chapter 11 Cases of Chapter 11 Debtors under the Bankruptcy Code referred to as In re Atlas Air Worldwide Holdings, Inc., et al., Case Nos. 04-10792-BKC-RAM through 04-10796-BKC-RAM, Jointly Administered under Case No. 04- 10792-BKC-RAM, which were pending in the Bankruptcy Court.

1.37 "Chapter 11 Debtors" shall mean, collectively, Atlas Air, Inc., as debtor and debtor-in-possession, Polar Air Cargo, Inc., as debtor and debtor-in-possession, Atlas Worldwide Holdings, Inc., as debtor and debtor-in-possession, Airline Acquisition Corp. I, as debtor-in-possession and Atlas Worldwide Aviation Logistics, Inc., as debtor and debtor-in-possession; each sometimes being referred to hereinafter individually as a "Chapter 11 Debtor".

1.38 "Clearing Bank" shall mean Citibank, N.A., a national banking association, together with its successors and assigns, or such other bank as shall perform the clearing and settlement function for CNS and/or CASS pursuant to the Clearinghouse Agreements or interclearance functions with IATA or its members.

1.39 "Clearinghouse Agreements" shall mean, collectively, the agreements of Polar with each of CNS and IATA related to the collection, clearing, settlement and payment of funds, including utilizing CASS, with respect to sales of transportation services for which air carrier members or associate member air carriers have provided inter-airline transportation services, and

any other agreements and documents related to the foregoing; each sometimes being referred to herein individually as a "Clearinghouse Agreement".

1.40 "CNS" shall mean Cargo Network Services Corporation, a Delaware corporation, together with its successors and assigns.

1.41 "Code" shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

1.42 "Collateral" shall have the meaning set forth in Section 5 hereof.

1.43 "Collateral Access Agreement" shall mean an agreement in writing, in form and substance satisfactory to Agent, from any lessor of premises to any Borrower or Guarantor, or any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, in favor of Agent with respect to the Collateral at such premises or otherwise in the custody, control or possession of such lessor, consignee or other person.

1.44 "Commitment" shall mean, at any time, as to each Lender, the principal amount set forth below such Lender's signature on the signatures PAGEs hereto designated as the Commitment or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as "Commitments".

1.45 "Confirmation Order" shall mean the Order and Judgment Confirming the Final Modified Second Amended Joint Plan of Reorganization of Chapter 11 Debtors issued by the Bankruptcy Court and entered on July 16, 2004 in the Chapter 11 Cases.

1.46 "Congress" shall mean Congress Financial Corporation, a Delaware corporation, in its individual capacity, and its successors and assigns.

1.47 "Consolidated Net Income" shall mean, with respect to any Person for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries, on a consolidated basis, for such period (excluding to the extent included therein any extraordinary and/or one time or unusual and non-recurring gains or any non-cash losses) after deducting all charges which should be deducted before arriving at the net income (loss) for such period and, without duplication, after deducting the Provision for Taxes for such period, all as determined in accordance with GAAP; PROVIDED, THAT, (a) the net income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid or payable to such Person or a Subsidiary of such Person; (b) except to the extent included pursuant to the foregoing clause, the net income of any Person accrued prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or that Person's assets are acquired by such Person or by its Subsidiaries shall be excluded; and (c) the net income (if positive) of any Subsidiary (other than a Borrower or an Obligor) to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to such Person or to any other wholly-

owned Subsidiary of such Person 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 such Subsidiary shall be excluded. For the purposes of this definition, net income excludes any gain or non-cash loss, together with any related Provision for Taxes for such gain or non-cash loss, realized upon the sale or other disposition of any assets that are not sold in the ordinary course of business (including, without limitation, dispositions pursuant to sale and leaseback transactions) or of any Capital Stock of such Person or a Subsidiary of such Person and any net income realized or loss incurred as a result of changes in accounting principles or the application thereof to such Person.

1.48 "Credit Facility" shall mean the Loans and Letter of Credit Accommodations provided to or for the benefit of any Borrower pursuant to Sections 2.1 and 2.2 hereof.

1.49 "Default" shall mean an act, condition or event which with notice or passage of time or both would constitute an Event of Default.

1.50 "Defaulting Lender" shall have the meaning set forth in Section 6.10(d) hereof.

1.51 "Deposit Account Control Agreement" shall mean an agreement in writing, in form and substance satisfactory to Agent, by and among Agent, any Borrower or Guarantor with a deposit account at any bank and the bank at which such deposit account is at any time maintained which provides that such bank will comply with instructions originated by Agent directing disposition of the funds in the deposit account without further consent by such Borrower or Guarantor and has such other terms and conditions as Agent may reasonably require.

1.52 "Domestic Account" shall mean an Account with respect to which Agent determines that either (a) the billing office of the account debtor with respect thereto is located in the United States of America and such account debtor otherwise has its chief executive office or equivalent in the United States of America or (b) the billing office of the account debtor with respect thereto is located in Canada and such account debtor otherwise has its chief executive office or equivalent in Canada.

1.53 "Domestic Cash Reserve" shall mean cash or Cash Equivalents maintained by Borrowers and Guarantors in one or more investment accounts, depository accounts or other accounts at banks or other financial or depository institutions located in the United States of America and in an amount not to exceed at any time the aggregate sum of $50,000,000.

1.54 "Domestic Slot" shall mean the rights and operational authority of any Borrower and, if applicable, any Guarantor, now held or hereafter acquired, to conduct an Instrumental Flight Rule (as defined under FAA regulations) take-off or landing operation, as allocated pursuant to 14 C.F.R. Part 93, Subpart S, during a specific hour or half-hour period at a specific High Density Traffic Airport (as defined under FAA regulations), excluding such rights and operational authority provided on a non-allocated basis for the conduct of international operations pursuant to 14 C.F.R. 93.217.

1.55 "DOT" shall mean the United States Department of Transportation and any successor or replacement governmental department, agency or other entity having the same or similar authority and responsibility.

1.56 "EBITDAR" shall mean, as to any Person, with respect to any period, an amount equal to: (a) the Consolidated Net Income of such Person and its Subsidiaries for such period (without giving effect to extraordinary or non-recurring gains or extraordinary or non-recurring non-cash charges), PLUS
(b) depreciation, amortization, rent and other non-cash charges (including, but not limited to, imputed interest, deferred compensation, the actual restructuring, relocation and reorganization costs incurred through December 31, 2004 in connection with the Reorganization Plan, together with any additional restructuring, relocation and reorganization costs not to exceed $15,000,000 in the aggregate on a cumulative basis incurred from and after December 31, 2004 (to the extent deducted in the computation of Consolidated Net Income of such Person), all in accordance with GAAP, PLUS (c) Interest Expense for such period (to the extent deducted in the computation of Consolidated Net Income of such Person), PLUS (d) the Provision for Taxes for such period (to the extent deducted in the computation of Consolidated Net Income of such Person).

1.57 "EETC Aircraft" shall mean, collectively, nine (9) Boeing 747-400 freighter aircraft (including the engines attached thereto) bearing U.S. registration numbers N408MC, N492MC, N493MC, N496MC, N497MC, N498MC, N499MC, N409MC and N412MC and (ii) three (3) Boeing 747-400 freighter aircraft (including the engines attached thereto) bearing registration numbers U.K. registration marks G-GSSA (formerly bearing U.S. registration mark N495MC), G-GSSB (formerly bearing U.S. registration mark N491MC), and G-GSSC (formerly bearing U.S. registration mark N494MC).

1.58 "EETC Certificates" shall mean, collectively, the 1998 Class A Certificates, the 1999 Class A Certificates and the 2000 Class A Certificates, each as defined in the Reorganization Plan.

1.59 "EETC Certificate Holders" shall mean, collectively, the Persons who beneficially hold through The Depository Trust Company, the EETC Certificates, together with their respective successors and assigns; each sometimes being referred to herein individually as an "EETC Certificate Holder".

1.60 "EETC Documents" shall mean, collectively, the following: (a) the EETC Lease Agreements; (b) the EETC Trust Indentures; (c) the EETC Restructure Agreements, (d) the EETC Security Agreements and (e) the other principal agreements, documents and instruments executed or delivered in connection with or related to the foregoing; each sometimes being referred to herein individually as an "EETC Document".

1.61 "EETC Effective Date" shall mean the date upon which all of the conditions precedent to the effectiveness of the amendments to certain of the EETC Documents (as set forth in the EETC Restructure Agreements) shall have occurred and the EETC Intercreditor Agreement shall have become a valid, binding and enforceable agreement in accordance with its terms.

1.62 "EETC Intercreditor Agreement" shall mean an Intelcreditor and Subordination Agreement in the form of Exhibit G attached hereto, duly authorized, executed and delivered to Agent by the Owner Trustees (as such term is defined in the Reorganization Plan) and each Indenture Trustee (as such term is defined in the Reorganization Plan) in respect of the EETC Transactions.

1.63 "EETC Lease Agreements" shall mean the lease agreements, executed in connection with the EETC Transactions, to which Atlas Air is a party as lessee, in each case as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced; each sometimes being referred to herein individually as an "EETC Lease Agreement".

1.64 "EETC Restructure Agreements" shall mean the Restructure Agreements, dated as of July 27, 2004 and effective as of the EETC Effective Date, by and among Atlas Air, the EETC Trustee and Wells Fargo Bank Northwest N.A., in its capacity as the Owner Trustee (as defined in the Reorganization Plan), pursuant to which certain of the EETC Documents have been amended, in each case as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced; each sometimes being referred to herein individually as an "EETC Restructure Agreement".

1.65 "EETC Security Agreements" shall mean, collectively, each Security Agreement between Atlas Air, as debtor and EETC Owner Trustees, as secured parties, with respect to the grant by Atlas Air in favor of the EETC Trustee in connection with the EETC Transactions, in each case as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced; each sometimes being referred to herein individually as an "EETC Security Agreement".

1.66 "EETC Transactions" shall mean, collectively, the enhanced equipment trust certificate financing transactions consummated by Atlas in 1998, 1999 and 2000 and pursuant to which the EETC Aircraft are leased or financed, as further defined in the Reorganization Plan.

1.67 "EETC Trustee" shall mean Wilmington Trust Company, in its capacity as Pass Through Trustee with respect to the EETC Transactions and evidenced by the EETC Documents, together with its successors and assigns in such capacity.

1.68 "EETC Trust Indentures" shall mean, collectively, each Trust Indenture and Mortgage executed by Atlas Air, as mortgagor, in favor of the EETC Trustee, as mortgagee, in connection with the EETC Transactions, in each case as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced; each sometimes being referred to herein individually as an "EETC Trust Indenture".

1.69 "Effective Date" shall mean a date after July 27,2004 (when the Confirmation Order became a Final Order) on which all of the conditions precedent to the effectiveness of the Reorganization Plan shall have been satisfied as determined by Agent in good faith, or with the consent of Agent, waived in accordance with the terms thereof.

1.70 "Eligible Accounts" shall mean Accounts constituting Collateral created by a Borrower which are and continue to be acceptable to Agent based on the criteria set forth below and which consist, in the case of Accounts created by Polar, of Accounts arising from the

rendition of any charter or scheduled cargo transportation services and which consist, in the case of Accounts of Atlas, of Accounts arising under an ACMI Contract. In general, without limitation upon the preceding sentence, such Accounts shall be Eligible Accounts if:

(a) such Accounts arise from the actual and BONA FIDE rendition of services by such Borrower consisting (i) of the leasing of Aircraft and related assets and rights pursuant to ACMI contracts or (ii) of air transportation of cargo, including mail, in each case in the ordinary course of such Borrower's business and which transactions are completed in accordance with the terms and provisions contained in any documents related thereto including the applicable Clearinghouse Agreements;

(b) such Accounts are not unpaid more than ninety (90) days after the date of the original invoice for them or more than sixty (60) days after the due date for them;

(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;

(d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the account debtor may be conditional or contingent;

(e) such Accounts do not consist of (i) progress billings (such that the obligation of the account debtors with respect to such Accounts is conditioned upon such Borrower's satisfactory completion of any further performance under the agreement giving rise thereto), (ii) bill and hold invoices or retainage invoices, except as to bill and hold invoices, if Agent shall have received an agreement in writing from the account debtor, in form and substance satisfactory to Agent, confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice, or (iii) advance billings (including, in the case of any Accounts arising under an ACMI Contract, payments due for lease periods that have not yet transpired);

(f) the account debtor with respect to such Accounts has not asserted a counterclaim, defense or dispute and is not owed or does not claim to be owed any amounts that may give rise to any right of setoff or recoupment against such Accounts including, with respect to any ACMI Contract, any entitlement by such account debtor with respect thereto to prospective performance by a Borrower or Guarantor (but the portion of the Accounts of such account debtor in excess of the amount at any time and from time to time owed by such Borrower to such account debtor or claimed owed by such account debtor may be deemed Eligible Accounts);

(g) if such Accounts are Accounts of Polar, notwithstanding anything to the contrary set forth herein, (i) the rendition of air transportation services is evidenced by bills of lading, exchange orders or other applicable cargo transportation documents covering such transportation as completed by Polar and, if settled under Clearinghouse Agreements, settled and cleared through CNS or IATA, which transportation documents have been separated into batches and submitted to and received by CNS or CASS in accordance with the requirements and procedures set forth in the Clearinghouse Agreements and identified in the form of the Recap

Sheet required to be delivered to Agent pursuant to Section 7.1 hereof, (ii) if settled under Clearinghouse Agreements any applicable Cargo Agent with respect thereto has (A) been duly appointed to act as an agent on behalf of Polar for the promotion and sale to the general public of international air cargo transportation within the country of origin of the shipment giving rise to such Account under the terms of a Cargo Agency Agreement substantially in the form of the agreement included as Resolution 801(a)(ii) of the Cargo Agency Conference Resolutions Manual, 25th edition, effective October 1, 2002, issued by IATA, (B) no notice of irregularity has been issued in respect of the Cargo Agent obligated on such Account and (C) such Cargo Agent is not in default under the Cargo Agency Agreement by which it is bound and is in compliance with all rules and procedures of CASS applicable to such Cargo Agent, (iii) without limitation, upon any other provision hereof, such Accounts are not unpaid after the date of the bi-monthly settlement next following the date the applicable transportation service has been completed, as provided in the applicable Clearinghouse Agreements and (iv) there are no proceedings or actions which are threatened or pending against the account debtors with respect to such Accounts or the Clearing Bank which might result in any material adverse change in any such account debtor's financial condition or the ability of CNS or CASS, as applicable, to effectuate timely settlement and payment to Polar with respect thereto;

(h) if such Accounts are Accounts arising under an ACMI Contract, the applicable ACMI Contract shall have been pledged to Agent in accordance with
Section 5.2(b) hereof in a manner satisfactory to Agent;

(i) there are no facts, events or occurrences which would impair the validity, enforceability or collectability of such Accounts or reduce the amount payable or delay payment thereunder;

(j) such Accounts are subject to the first priority, valid and perfected security interest of Agent, for itself and the benefit of Lenders, under the laws of the United States of America, its states and political subdivisions, and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any liens except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent;

(k) neither the account debtor nor any officer or employee of the account debtor with respect to such Accounts is an officer, employee, agent or other Affiliate of any Borrower or Guarantor;

(l) the account debtors with respect to such Accounts are not any foreign government, the United States of America, any state, political subdivision, department, agency or instrumentality thereof, unless, if the account debtor is the United States of America, any state, political subdivision, department, agency or instrumentality thereof, upon Agent's request, the Federal Assignment of Claims Act of 1940, as amended or any similar state or local law, if applicable, has been complied with in a manner satisfactory to Agent; PROVIDED, HOWEVER, that at any time or times that Excess Availability equals or exceeds $20,000,000 (assuming that the determination of Excess Availability only for purposes of this clause 1.70(1) includes all otherwise Eligible Accounts as to which the account debtor is the United States of America or any state, political subdivision, department, agency or instrumentality thereof (collectively, "US

Government Accounts") to the extent that such US Government Accounts do not constitute more than fifty (50%) percent of all Eligible Accounts for purposes of this clause 1.70(1), and no Default or Event of Default exists or has occurred and is continuing, Agent shall not request or require that Borrowers comply with the Federal Assignment of Claims Act of 1940 with respect to Accounts which satisfy all of the other eligibility criteria set forth in this definition and as to which the account debtor is the United States of America, any state, political subdivision, department, agency or instrumentality thereof;

(m) without limitation upon subsection 1.70(g)(iv) above, there are no proceedings or actions which are threatened or pending against the account debtors with respect to such Accounts which might result in any material adverse change in any such account debtor's financial condition (including, without limitation, any bankruptcy, dissolution, liquidation, reorganization or similar proceeding);

(n) the aggregate amount of such Accounts owing by a single account debtor do not constitute twenty-five (25%) percent of the aggregate amount of all otherwise Eligible Accounts (but the portion of the Accounts not in excess of such percentage may be deemed Eligible Accounts);

(o) such Accounts are not owed by an account debtor who has Accounts unpaid more than ninety (90) days after the original invoice date for them or more than sixty (60) days after the due date for them which constitute more than fifty (50%) percent of the total Accounts then owed by such account debtor;

(p) the account debtor is not located in a state requiring the filing of a Notice of Business Activities Report or similar report in order to permit such Borrower to seek judicial enforcement in such state of payment of such Account, unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year or such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost;

(q) such Accounts are owed by account debtors whose total indebtedness to such Borrower does not exceed the credit limit with respect to such account debtors as determined by such Borrower from time to time, to the extent such credit limit as to any account debtor is established consistent with the current practices of such Borrower as of the date hereof and such credit limit is acceptable to Agent (but the portion of the Accounts not in excess of such credit limit may be deemed Eligible Accounts); and

(r) such Accounts are owed by account debtors deemed creditworthy at all times by Agent in good faith.

In general, criteria for Eligible Accounts set forth above may only be changed and any new criteria for Eligible Accounts may only be established by Agent in good faith based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect in any manner the Accounts

or the security interest therein of Agent, for itself and the benefit of Lenders, in the good faith determination of Agent. Any Accounts constituting Collateral that are not Eligible Accounts shall nevertheless be part of the Collateral.

1.71 "Eligible Domestic Accounts" shall mean Domestic Accounts that are in all other respects Eligible Accounts as determined by Agent. Without limiting the generality of the foregoing, with respect to Domestic Accounts that Agent determines in good faith that the validity, perfection, priority or enforcement of Agent's security interest in such Account shall be governed by the laws of Canada, then at any time, promptly upon Agent's request, the Borrower to which such Domestic Account is owed or owing shall satisfy the following conditions as determined by Agent:

(A) if requested by Agent, Agent shall have received an original of a Deposit Account Control Agreement with respect to the deposit accounts of such Borrower maintained in such Province of Canada on terms and conditions acceptable to Agent, duly executed and delivered by such Borrower and such depository bank;

(B) Agent shall have received, in form and substance satisfactory to Agent, the originals of all Financing Agreements that Agent determines in its good faith judgment is necessary to perfect and enforce its security interest or lien upon such Domestic Account under the applicable laws of Canada, duly executed and delivered by such Borrower;

(C) Agent shall have received evidence, in form and substance satisfactory to Agent, that Agent has valid perfected and first priority security interests in and liens upon any such Domestic Accounts under the applicable laws of Canada, subject only to the security interests and liens (if any) permitted herein; and

(D) at Agent's request, such Borrower shall deliver to Agent, in form and substance satisfactory to Agent, evidence of the subsistence of corporate authorizing resolutions and an opinion of counsel to such Borrower with respect to the Financing Agreements and the transactions contemplated thereby, and such other matters as Agent shall reasonably require.

1.72 "Eligible Foreign Accounts" shall mean Foreign Accounts with respect to which the billing office of the account debtor with respect thereto is located in a country other than a Preferred Foreign Jurisdiction, the United States of America or Canada (each such country herein referred to as a "Non-Preferred Foreign Jurisdiction") and such account debtor otherwise has its chief executive office or equivalent located in a Non-Preferred Foreign Jurisdiction, but shall in all events be Accounts with respect to which the validity, perfection, priority and enforcement of Agent's security interest in such Accounts shall be governed by the laws of a Non-Preferred Foreign Jurisdiction, as determined by Agent in good faith and which are in all respects Eligible Accounts except that Agent's security interest in such Accounts shall not be required to be valid, perfected and/or enforceable under the laws of such Non-Preferred Foreign Jurisdiction.

1.73 "Eligible Preferred Foreign Accounts" shall mean Foreign Accounts with respect to which the billing office of the account debtor with respect thereto is located in a country that is a Preferred Foreign Jurisdiction, and such account debtor otherwise has its chief executive office or equivalent located in a country that is a Preferred Foreign Jurisdiction, but shall in all events

be an Account with respect to which the validity, perfection, priority and enforcement of Agent's security interest in such Account shall be governed by the laws of a Preferred Foreign Jurisdiction as determined by Agent in good faith and are in all respects Eligible Accounts.

1.74 "Eligible Transferee" shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent owned by such Lender or its parent company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business of making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and in each case is approved by Agent; and (d) any other commercial bank, financial institution or "accredited investor" (as defined in Regulation D under the Securities Act of 1933) approved by Agent; PROVIDED, THAT, (i) neither any Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor shall qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness which is in any way subordinated in right of payment to any other Indebtedness of any Borrower or Guarantor shall qualify as an Eligible Transferee, except as Agent may otherwise specifically agree.

1.75 "Engines" shall mean goods of a Borrower or Guarantor consisting of aircraft engines having the equivalent of 750 or more rated take off shaft horsepower and that are owned by a Borrower or Guarantor and used in connection with the operation of its Aircraft, whether now owned or hereafter acquired and wherever located.

1.76 "Engine Security Agreement" shall mean the Aircraft Engines Security Agreement, dated of even date herewith, duly executed and delivered by Borrowers and Guarantors, as debtors, granting to Agent, as secured party for itself and the benefit of Lenders, a lien upon and security interest in certain of the Engines, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.77 "Environmental Laws" shall mean all foreign, federal, state and local laws (including common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements between any Borrower or Guarantor and any Governmental Authority, (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials. The term "Environmental Laws" includes (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the

Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws and
(iii) any common law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Materials.

1.78 "Equipment" shall mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor's now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment (whether owned or licensed and including embedded software), Aircraft, Engines, flight simulators, Spare Parts, vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.

1.79 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, together with all rules, regulations and interpretations thereunder or related thereto.

1.80 "ERISA Affiliate" shall mean any person required to be aggregated with any Borrower, any Guarantor or any of its or their respective Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

1.81 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan; (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the occurrence of a "prohibited transaction" with respect to which any Borrower, Guarantor or any of its or their respective Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which any Borrower, Guarantor or any of its or their respective Subsidiaries could otherwise be liable; (f) a complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (i) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor or any ERISA Affiliate in excess of $250,000 and (j) any other event or condition with respect to a Plan including any Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that could reasonably be expected to result in liability of any Borrower in excess of $250,000.

1.82 "Eurodollar Rate" shall mean with respect to the Interest Period for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic average of the rates of interest per

annum (rounded upwards, if necessary, to the next one-thousandth (1/1000th) of one (1%) percent) at which Reference Bank is offered deposits of United States dollars in the London interbank market (or other Eurodollar Rate market selected by a Borrower or Administrative Borrower on behalf of such Borrower and approved by Agent) on or about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement of such Interest Period in amounts substantially equal to the principal amount of the Eurodollar Rate Loans requested by and available to such Borrower in accordance with this Agreement, with a maturity of comparable duration to the Interest Period selected by or on behalf of a Borrower.

1.83 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.

1.84 "Event of Default" shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof.

1.85 "Excess Availability" shall mean the amount, as determined by Agent in good faith, calculated at any date, equal to: (a) the amount of Qualified Cash of Borrowers and Guarantors, PLUS (b) the lesser of: (i) the Borrowing Base and (ii) the Maximum Credit (in each case under (i) or (ii) after giving effect to any Reserves other than any Reserves in respect of Letter of Credit Accommodations), MINUS (c) the sum of: (i) the amount of all then outstanding and unpaid Obligations of Borrowers (but not including for this purpose Obligations of such Borrower arising pursuant to any guarantees in favor of Agent and Lenders of the Obligations of any other Borrowers or any outstanding Letter of Credit Accommodations), PLUS (ii) the amount of all Reserves then established in respect of Letter of Credit Accommodations, PLUS (iii) the aggregate amount of all then outstanding and unpaid trade payables and other obligations of Borrowers which are outstanding more than forty-five (45) days past the due date for them as of such time based on such reports as Agent may from time to time specify (other than trade payables or other obligations being contested or disputed by a Borrower in good faith), PLUS (iv) without duplication, the amount of checks issued by Borrowers and Atlas Holding to pay trade payables and other obligations which are more than forty-five (45) days past the due date for them as of such time based on such reports as Agent may from time to time specify (other than trade payables or other obligations being contested or disputed by a Borrower or any Guarantor in good faith or which are subject to extended payment terms as of the date hereof as disclosed by Borrowers to Agent in writing), but not yet sent.

1.86 "Exchange Act" shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.

1.87 "Excluded Property" shall have the meaning set forth in Section 5.1(b).

1.88 "Existing Aircraft Financings" shall mean, collectively, the financing arrangements other than the EETC Transactions and the transactions under the Aircraft Credit Facility Agreement, of certain of Borrowers, Guarantors and/or their affiliates with respect to the acquisition by them of rights in and to Aircraft and related Equipment, including pursuant to Capital Leases, as more fully described on Schedule 1.88 hereto and pursuant to the agreements, documents and instruments listed on such Schedule, in each case as the same now exist or may

hereafter be amended, modified, supplemented, extended, renewed, restated or replaced; each sometimes being referred to herein individually as an "Existing Aircraft Financing".

1.89 "Existing Letters of Credit" shall mean, collectively, the letters of credit issued for the account of a Borrower or a Guarantor or for which such Borrower or Guarantor is otherwise liable listed on Schedule 1.89 to the Information Certificate, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.90 "FAA" shall mean the Federal Aviation Administration of the DOT, and any successor or replacement administration, governmental agency or other entity having the same or similar authority and responsibility.

1.91 "Federal Aviation Laws" shall mean Title 49 of the United States Code, as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules, regulations, directives, special directives and interpretations thereunder or related thereto.

1.92 "Fee Letter" shall mean the letter agreement, dated of even date herewith, by and among Borrowers, Guarantors and Agent, setting forth certain fees payable by Borrowers to Agent for the benefit of itself and Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.93 "Fifth Freedom Rights" shall mean the operational right and authority (including "behind/beyond rights") to enplane either passenger traffic and/or cargo or both, including mail, in a foreign country and deplane it in another foreign country.

1.94 "Final Order" shall mean an order (a) that has been duly entered by the Bankruptcy Court, (b) that has not been modified, vacated, reversed, revoked, rescinded, stayed, or appealed from, (c) with respect to which no petition, application or motion for reversal, stay or modification thereof or for a writ of certiorari with respect thereto has been filed or granted, and (d) as to which the applicable time period in which to appeal, petition for certiorari, or move for reargument or rehearing has expired.

1.95 "Financing Agreements" shall mean, collectively, this Agreement and all notes, guarantees, security agreements (including the Aircraft Security Agreement, Engine Security Agreement, Spare Parts Agreement and Slots Agreement), deposit account control agreements, investment property control agreements, intercreditor agreements and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Borrower or Obligor in connection with this Agreement, as the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced; PROVIDED, THAT, in no event shall any Financing Agreement be deemed to include any Interest Rate Protection Agreement.

1.96 "Foreign Account" shall mean an Account with respect to which Agent determines the billing office of the account debtor with respect thereto is located in a country other than the United States of America or Canada and such account debtor otherwise has its chief executive office or equivalent located in a country other than the United States of America or Canada.

1.97 "Foreign Aviation Authorities" means any foreign governmental, regulatory or public entity, or other agency or agencies or quasi-governmental corporate entity which exercises jurisdiction over the issuance or authorization to serve any foreign point on any of the Routes and/or operations related to any of the Routes or the Foreign Slots.

1.98 "Foreign Cash Reserve" shall mean cash or Cash Equivalents maintained by Borrowers and Guarantors in one or more investment accounts, depository accounts or other accounts at banks or other financial or depository institutions located outside the United States of America and in an amount not to exceed at any time the aggregate sum of $12,500,000.

1.99 "Foreign Slot" shall mean the rights and operational authority, of any Borrower and, if applicable, any Guarantor, now held or hereafter acquired, to conduct take-off or landing operations during a specific hour or other time period at the New Tokyo Narita International Airport located in Narita, Japan, as necessary to operate a Route, and at any other airport not located in the United States of America for which any Borrower or, if applicable, any Guarantor, holds or hereafter acquires such rights and operational authority for a period of not less than twelve (12) consecutive months, excluding the two slots held by Federal Express Corporation that are on loan to Polar on a temporary and fully-revocable basis.

1.100 "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied, except that, for purposes of Section 9.17 hereof, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements delivered to Agent prior to the date hereof.

1.101 "Governmental Authority" shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

1.102 "Guarantors" shall have the meaning set forth in the preamble hereto; each sometimes being referred to herein individually as a "Guarantor".

1.103 "GSS" shall mean Global Supply Systems Limited, a private company organized under the laws of England and Wales, and its successors and assigns.

1.104 "Hazardous Materials" shall mean any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are

or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

1.105 "IATA" shall mean the International Air Transportation Association, together with its successors and assigns, or such other replacement trade association or other Person performing the same or similar functions with respect to the airline industry.

1.106 "Inactive Subsidiaries" shall mean, collectively, Airline Acquisition Corp II, a Delaware corporation, Airline Acquisition Corp III, a Delaware corporation, Atlas Air Global Services, Inc., a Delaware corporation, Atlas Worldwide Aviation Logistics, Inc., a Florida corporation, and Liege Global Cargo (Sales Co), a private company organized under the laws of Belgium, each sometimes being referred to herein individually as an "Inactive Subsidiary".

1.107 "Indebtedness" shall mean, with respect to any Person, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services (except any such balance that constitutes an account payable to a trade creditor (whether or not an Affiliate) created, incurred, assumed or guaranteed by such Person in the ordinary course of business of such Person in connection with obtaining goods, materials or services that is not overdue by more than ninety (90) days, unless the trade payable is being contested in good faith); (c) all obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit, banker's acceptances, drafts or similar documents or instruments issued for such Person's account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time; (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values; (i) all obligations owed by such Person under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments; and (j) the principal and interest portions of all rental obligations of such Person under any synthetic lease or similar off-balance sheet financing where such transaction is considered to be borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP.

1.108 "Information Certificate" shall mean the Information Certificate of Borrowers and Guarantors constituting Exhibit C hereto containing material information with respect to Borrowers and Guarantors, their respective businesses and assets provided by or on behalf of Borrowers and Guarantors to Agent in connection with the preparation of this Agreement and the other Financing Agreements and the financing arrangements provided for herein.

1.109 "Intellectual Property" shall mean, as to each Borrower and Guarantor, such Borrower's and Guarantor's now owned and hereafter arising or acquired: patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright applications, copyright registrations, trademarks, servicemarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Copyright Office, the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with respect to any Borrower's or Guarantor's use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.

1.110 "Interest Expense" shall mean, for any period, as to any Person, as determined in accordance with GAAP, the total interest expense of such Person, whether paid or accrued during such period (including the interest component of Capital Leases for such period), including, without limitation, discounts in connection with the sale of any Accounts and bank fees, commissions, discounts and other fees and charges owed with respect to letters of credit, banker's acceptances or similar instruments.

1.111 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2), or three (3) months duration as any Borrower (or Administrative Borrower on behalf of such Borrower) may elect, the exact duration to be determined in accordance with the customary practice in the applicable Eurodollar Rate market; PROVIDED, THAT, such Borrower (or Administrative Borrower on behalf of such Borrower) may not elect an Interest Period which will end after the last day of the then-current term of this Agreement.

1.112 "Interest Rate" shall mean,

(a) Subject to clauses (b) and (c) of this definition below:

(i) as to Prime Rate Loans, a rate equal to one quarter of one (1/4%) percent per annum in excess of the Prime Rate,

(ii) as to Eurodollar Rate Loans, a rate equal to two and one quarter (2 1/4%) percent per annum in excess of the Adjusted Eurodollar Rate (in each case, based on the Eurodollar Rate applicable for the Interest Period selected by a Borrower, or by Administrative Borrower on behalf of such Borrower, as in effect three (3) Business Days after the date of receipt by Agent of the request of or on behalf of such Borrower for such Eurodollar Rate Loans in accordance with the terms hereof, whether such rate is higher or lower than any rate previously quoted to any Borrower or Guarantor).

(b) Subject to clause (c) of this definition below, effective as of the first (1st) day of the second calendar month after the date hereof, the Interest Rate payable by each Borrower shall be increased or decreased, as the case may be, (i) as to Prime Rate Loans, to the rate equal to the Applicable Margin for Prime Rate Loans on a per annum basis plus the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the rate equal to the Applicable Margin for Eurodollar Rate Loans on a per annum basis in excess of the Adjusted Eurodollar Rate.

(c) Notwithstanding anything to the contrary contained in clauses (a) and (b) of this definition, the Applicable Margin otherwise used to calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall be the otherwise applicable percentage set forth in the definition of the term Applicable Margin for each category of Loans, PLUS two (2%) percent per annum, at Agent's option, (i) for the period (A) from and after the effective date of termination or non-renewal hereof until Agent and Lenders have received full and final payment of all outstanding and unpaid Obligations which are not contingent and cash collateral or letter of credit, as Agent may specify, in the amounts and on the terms required under Section 13.1 hereof for contingent Obligations
(notwithstanding entry of a judgment against any Borrower or Guarantor) and (B) from and after the date of the occurrence of an Event of Default and for so long as such Event of Default is continuing and (ii) on Loans to a Borrower at any time outstanding in excess of the Borrowing Base of such Borrower (whether or not such excess(es) arise or are made with or without the knowledge or consent of Agent or any Lender and whether made before or after an Event of Default).

1.113 "Interest Rate Protection Agreements" shall mean, collectively, any agreements between any Borrower or Guarantor and any Affiliate of Agent or any other financial institution reasonably acceptable to Agent that is a rate swap agreement, basis swap, forward rate agreement, commodity swap, fuel hedging agreement or derivative, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement rate, floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option, any other similar agreement (including any option to enter into any of the foregoing or a master agreement for any the foregoing together with all supplements thereto) for the purpose of protecting against or managing exposure to fluctuations in interest or exchange rates, currency valuations, commodity prices or aviation fuel prices; sometimes being referred to herein individually as an "Interest Rate Protection Agreement".

1.114 "Inventory" shall mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor's now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by such Borrower or Guarantor as lessor; (b) are held by such Borrower or Guarantor for sale or lease or to be furnished under a contract of service; (c) are furnished by

such Borrower or Guarantor under a contract of service; or (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business.

1.115 "Investment Property Control Agreement" shall mean an agreement in writing, in form and substance satisfactory to Agent, by and among Agent, any Borrower or Guarantor (as the case may be) and any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property of such Borrower or Guarantor acknowledging that such securities intermediary, commodity intermediary or other person has custody, control or possession of such investment property on behalf of Agent, that it will comply with entitlement orders originated by Agent with respect to such investment property, or other instructions of Agent, and has such other terms and conditions as Agent may require.

1.116 "Lenders" shall mean the financial institutions who are signatories hereto as Lenders and other persons made a party to this Agreement as a Lender in accordance with Section 13.7 hereof, and their respective successors and assigns; each sometimes being referred to herein individually as a "Lender".

1.117 "Letter of Credit Accommodations" shall mean, collectively, the letters of credit, merchandise purchase or other guaranties which are from time to time either (a) issued or opened by Agent or any Lender for the account of any Borrower or Obligor or (b) with respect to which Agent or Lenders have agreed to indemnify the issuer or guaranteed to the issuer the performance by any Borrower or Obligor of its obligations to such issuer; sometimes being referred to herein individually as "Letter of Credit Accommodation".

1.118 "License Agreements" shall have the meaning set forth in Section 8.14 hereof.

1.119 "Loan Limit" shall mean, as to each Borrower, at any time, the amount equal to the Maximum Credit minus the then outstanding principal amount of the Loans and Letter of Credit Accommodations provided to the other Borrower.

1.120 "Loans" shall mean the loans now or hereafter made by or on behalf of any Lender or by Agent for the account of any Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1 hereof.

1.121 "Material Adverse Effect" shall mean a material adverse effect on
(a) the financial condition, business, performance or operations of Borrowers and Guarantors (taken as a whole); (b) the legality, validity or enforceability of this Agreement or any of the other Financing Agreements; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of Agent upon the Collateral; (d) the Collateral or its value; (e) the ability of Borrowers and Guarantors (taken as a whole) to repay the Obligations or to perform their obligations under this Agreement or any of the other Financing Agreements as and when to be performed; or (f) the ability of Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of Agent and Lenders under this Agreement or any of the other Financing Agreements.

1.122 "Material Contract" shall mean (a) the contracts and agreements listed on Schedule 1.122 hereto, as each now exists and may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced and (b) any other contract or other agreement (other than

the Financing Agreements), whether written or oral, to which any Borrower or Guarantor is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect.

1.123 "Maximum Credit" shall mean the amount of $60,000,000, subject to reduction in accordance with Section 2.5 hereof.

1.124 "Monthly Average Excess Availability" shall mean, at any time, the average of the aggregate amount of the Excess Availability of Borrowers during the immediately preceding calendar month as calculated by Agent in good faith based on the information received by Agent as set forth in any applicable Borrowing Base Certificate delivered to Agent, or otherwise, with respect to the components of the Borrowing Base during such month.

1.125 "Multiemployer Plan" shall mean a "multi-employer plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by any Borrower, Guarantor or any ERISA Affiliate.

1.126 "Net Cash Proceeds" shall mean, with respect to any sale or other disposition of assets permitted under Section 9.7(b), the aggregate amount of cash received from time to time by a Borrower or Guarantor in connection with such sale or other disposition after deducting therefrom only (a) legal fees, finder's fees and other similar fees and other commissions and direct marketing costs, (b) the amounts paid from cash proceeds at the time of the sale or other disposition thereof in respect of Indebtedness (other than the Obligations) secured by a security interest permitted under Section 9.8 hereof on the assets subject to such sale or other disposition and (c) the amount of income taxes reasonably estimated to be actually payable by such Borrower or Guarantor (or the direct or indirect equity holders of such Borrower or Guarantor) in connection with or as a result of such sale or other disposition.

1.127 "Obligations" shall mean (a) any and all Loans, Letter of Credit Accommodations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers and Guarantors to Agent or any Lender or any of Agent's or such Lender's Affiliates and arising under this Agreement or any other Financing Agreements, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to such Borrower under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case and including loans, interest, fees, charges and expenses related thereto and all other obligations of any Borrower or its successors to Agent or any Lender under this Agreement, the Loan Agreement or any other Financing Agreement arising after the commencement of such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured and (b) for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations of Borrowers or Guarantors to a Lender or an Affiliate of a Lender, or another financial institution acceptable to Agent, arising under or pursuant to an Interest Rate Protection Agreement in each case

acceptable to Agent; PROVIDED, THAT, upon Agent's request, Agent shall have entered into an agreement, in form and substance satisfactory to Agent, with such Lender, Affiliate or other Person that is a counterparty to such Interest Rate Protection Agreement, as acknowledged and agreed to by Borrowers and Guarantors, providing for the delivery to Agent by such counterparty of information with respect to the amount of such obligations and providing for the other rights of Agent and such Lender, Affiliate or other Person, as the case may be, in connection with such arrangements. In no event shall the party to such Interest Rate Protection Agreement to whom such obligations are owed be deemed a Lender for purposes hereof to the extent of and as to such obligations other than for purposes of Section 5.1 hereof and other than for purposes of Sections 12.1, 12.2, 12.3(b), 12.5, 12.6, 12.7 and 12.12 hereof.

1.128 "Obligor" shall mean any guarantor, endorser, acceptor, surety or other person liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations (including, without limitation, Guarantors), other than Borrowers.

1.129 "Participant" shall mean any financial institution that acquires and holds a participation in the interest of any Lender in any of the Loans and Letter of Credit Accommodations in conformity with the provisions of Section 13.7 of this Agreement governing participations.

1.130 "Person" or "person" shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

1.131 "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time during the immediately preceding six (6) plan years.

1.132 "Preferred Foreign Jurisdictions" shall mean (i) for the first one-hundred eighty (180) days after the date hereof, those foreign countries described on Exhibit E hereto, and (ii) any other foreign countries (other than Canada) as to which each of the following conditions shall have been satisfied (including, without limitation, any of the foreign countries described on Exhibit E hereto at any time after the date that is one hundred-eighty (180) days after the date hereof), as determined by Agent in good faith:

(a) Agent shall have received, in form and substance satisfactory to Agent, the originals of all Financing Agreements that Agent determines are necessary to perfect and enforce its security interest and lien in any such Foreign Account, duly executed and delivered by Borrowers or Guarantors as the case may be;

(b) Agent shall have received, in form and substance satisfactory to Agent, evidence that (i) Agent has a valid, perfected and first priority security interests in and liens (or equivalent, in the determination of Agent, pledge, charge, lien or assignment) upon any such Foreign Accounts, subject only to the security interests and liens (if any) permitted herein;

(c) if requested by Agent, Agent shall have received an original of a Deposit Account Control Agreement with respect to the deposit accounts of such Borrower maintained in such foreign country on terms and conditions acceptable to Agent, duly executed and delivered by such Borrower and such depository bank; and

(d) Borrowers shall deliver to Agent, in form and substance satisfactory to Agent, evidence of the subsistence of corporate authorizing resolutions and an opinion of counsel to Borrowers with respect to the Financing Agreements and the transactions contemplated thereby, and such other matters as Agent shall reasonably require.

1.133 "Prime Rate" shall mean the rate from time to time publicly announced by Wachovia Bank, National Association, or its successors, as its prime rate, whether or not such announced rate is the best rate available at such bank.

1.134 "Prime Rate Loans" shall mean any Loans or portion thereof on which interest is payable based on the Prime Rate in accordance with the terms thereof.

1.135 "Pro Rata Share" shall mean as to any Lender, the fraction (expressed as a percentage) the numerator of which is such Lender's Commitment and the denominator of which is the aggregate amount of all of the Commitments of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; PROVIDED, THAT, if the Commitments have been terminated, the numerator shall be the unpaid amount of such Lender's Loans and its interest in the Letter of Credit Accommodations and the denominator shall be the aggregate amount of all unpaid Loans and Letter of Credit Accommodations.

1.136 "Provision for Taxes" shall mean an amount equal to all taxes imposed on or measured by net income, whether federal, state, Provincial, county or local, and whether foreign or domestic, that are paid or payable by any Person in respect of any period in accordance with GAAP.

1.137 "Qualified Cash" shall mean unrestricted cash or Cash Equivalents of Borrowers and Guarantors in deposit or securities accounts maintained by a bank or securities intermediary located in the United States of America, which accounts are subject to Deposit Account Control Agreements or Investment Property Control Agreements, as applicable, and which cash or Cash Equivalents is otherwise available to Borrowers or Guarantors for working capital without condition or limitation.

1.138 "Real Property" shall mean all now owned and hereafter acquired real property of each Borrower and Guarantor, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located.

1.139 "Recap Sheet" shall have the meaning set forth in Section 7.1(b) hereof.

1.140 "Receivables" shall mean all of the following now owned or hereafter arising or acquired property of each Borrower and Guarantor: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (c) all payment intangibles of such Borrower or Guarantor; (d)

letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Borrower or Guarantor or otherwise in favor of or delivered to any Borrower or Guarantor in connection with any Account; or (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to any Borrower or Guarantor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by any Borrower or Guarantor or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated with any Accounts, Inventory or general intangibles of any Borrower or Guarantor (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or Guarantor is a beneficiary).

1.141 "Records" shall mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor's present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of any Borrower or Guarantor with respect to the foregoing maintained with or by any other person).

1.142 "Reference Bank" shall mean Wachovia Bank, National Association, or such other bank as Agent may from time to time designate.

1.143 "Refinancing Indebtedness" shall have the meaning set forth in
Section 9.9(1) hereof.

1.144 "Register" shall have the meaning set forth in Section 13.7 hereof.

1.145 "Renewal Date" shall the meaning set forth in Section 13.1 hereof.

1.146 "Reorganization Plan" shall mean the Final Modified Second Amended Joint Plan of Reorganization of Debtors, dated July 14, 2004, approved by the Confirmation Order.

1.147 "Required Lenders" shall mean, at any time, those Lenders whose Pro Rata Shares aggregate fifty-one (51%) percent or more of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom at least fifty-one (51%) percent of the then outstanding Obligations are owing.

1.148 "Reserves" shall mean as of any date of determination, such amounts as Agent may from time to time establish and revise in good faith reducing the amount of Loans and Letter of Credit Accommodations which would otherwise be available to any Borrower under the

lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by Agent in good faith, adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) the Collateral or any other property which is security for the Obligations, its value or the amount that might be received by Agent from the sale or other disposition or realization upon such Collateral, or (ii) the assets, business or prospects of Borrowers and Guarantors (taken as a whole) or (iii) the security interests and other rights of Agent or any Lender in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agent's good faith belief that any collateral report or financial information furnished by or on behalf of any Borrower or Obligor to Agent is or may have been incomplete, inaccurate or misleading or (c) to reflect outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) in respect of any state of facts which Agent determines in good faith constitutes a Default or an Event of Default. Without limiting the generality of the foregoing, Reserves may, at Agent's option, be established to reflect: dilution with respect to the Accounts or any category thereof (based on the ratio of the aggregate amount of non-cash reductions in Accounts for any period to the aggregate dollar amount of the sales of such Borrower for such period) as calculated by Agent for any period is or is reasonably anticipated to be greater than five (5%) percent; or returns, discounts, claims, credits and allowances of any nature that are not paid pursuant to the reduction of Accounts; or sales, excise or similar taxes included in the amount of any Accounts reported to Agent; or amounts due or to become due to owners and lessors of premises where any Collateral is located, other than for those locations where Agent has received a Collateral Access Agreement that Agent has accepted in writing; (e) obligations (contingent or otherwise) of Borrowers or Guarantors to any Affiliate of Agent or a Lender or any other Person arising under or in connection with any Interest Rate Protection Agreement of any Borrower or Guarantor with such Affiliate or Person or as such Affiliate or Person may otherwise require in connection therewith to the extent that such obligations constitute Obligations as such term is defined herein or otherwise receive the benefit of the security interest of Agent in any Collateral. The amount of any Reserve established by Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such reserve as determined by Agent in good faith. Agent shall not maintain a reserve in respect of an event, condition or other matter that had been the basis for a reserve, but which no longer exists or otherwise has been addressed in a manner satisfactory to Agent.

1.149 "Routes" shall mean the commercial air routes for which any Borrower or, if applicable, any Guarantor, holds or hereafter acquires the requisite authority to operate pursuant to Federal Aviation Laws, including applicable designations pursuant to any transport agreement between the United States of America and a foreign government, frequencies, exemption and certificate authorities and Fifth Freedom Rights.

1.150 "Secured Aircraft" shall mean, collectively: (a) the Boeing model 747-283B airframe bearing manufacturer's serial number 21575 and FAA registration number N921FT, together with the four (4) Pratt & Whitney model JT9D-70A aircraft engines related thereto, respectively bearing manufacturer's serial numbers 689167, 689169, 689184 and 689185, and (b) the Boeing model 747-100SF airframe bearing manufacturer's serial number 20109 and FAA registration number N858FT, together with the four (4) Pratt & Whitney model JT9D-7A aircraft engines related thereto, respectively bearing manufacturer's serial numbers 662476, 695757,

662642, and 662652, and any and all parts, aircraft manuals, records, logs and books related to any of the foregoing; each sometimes hereafter referred to individually as a "Secured Aircraft".

1.151 "Slot" shall mean a Domestic Slot or a Foreign Slot.

1.152 "Slots Agreement" shall mean a Slot, Airport Leasehold and Routes Pledge and Security Agreement, dated of even date herewith, duly executed and delivered by Borrowers and each applicable Guarantor, as pledgers, in favor of Agent, as pledgee for itself and the benefit of Lenders, with respect to certain rights of Borrowers and Guarantors with respect to Slots and Routes, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.153 "Solvent" shall mean, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the date hereof, and (b) the assets and properties of such Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability of it becoming a matured liability).

1.154 "Spare Parts" shall mean goods of a Borrower or Guarantor consisting of (a) aircraft instruments, apparatus, parts, accessories, appliances, rotables, expendables, repairables, avionics, and other components and parts, which are owned or held by or on behalf of a Borrower or Guarantor in connection with the use, operation or maintenance of Aircraft, and (b) aircraft engines having less than 750 rated take off shaft horsepower) that are owned or held by or on behalf of a Borrower or Guarantor in connection with the use, operation or maintenance of Aircraft, in each case, whether now owned or hereafter acquired and wherever located.

1.155 "Spare Parts Agreement" shall mean the Aircraft Spare Security Agreement, dated of even date herewith, duly executed and delivered by Borrowers and each applicable Guarantor, as debtors, granting to Agent, as secured party for itself and on behalf of Lenders, a lien upon and security interest in (a) aircraft engines having less than 750 rated take off shaft horsepower) that are owned or held by or on behalf of a Borrower or Grantor in connection with the use, operation or maintenance of Aircraft, and (b) Spare Parts of each Borrower and Guarantor, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.156 "Special Agent Advances" shall have the meaning set forth in Section 12.11 hereof.

1.157 "Subsidiary" or "subsidiary" shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority

of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person.

1.158 "Supporting Route Facilities" shall mean the Airport Leaseholds reasonably necessary to operate a flown Route.

1.159 "Sweep Event" shall have the meaning set forth in Section 6.3(a) hereof.

1.160 "UCC" shall mean the Uniform Commercial Code as in effect in the State of New York, and any successor statute, as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agent may otherwise determine).

1.161 "Use or Lose Rule" shall mean, with respect to Slots, the terms of 14 C.F.R. Section 93.227 or any successor provision with respect to Domestic Slots, and any corresponding rule of any Foreign Aviation Authority with respect to Foreign Slots.

1.162 "Voting Stock" shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition.

SECTION 2. CREDIT FACILITIES

2.1 LOANS.

(a) Subject to and upon the terms and conditions contained herein, each Lender severally (and not jointly) agrees to make its Pro Rata Share of Loans to each Borrower from time to time in amounts requested by such Borrower (or Administrative Borrower on behalf of such Borrower) up to the aggregate amount outstanding for all Lenders at any time equal to the lesser of: (i) the Borrowing Base at such time or (ii) the Loan Limit of such Borrower at such time.

(b) Except in Agent's discretion, with the consent of all Lenders, or as otherwise provided herein, (i) the aggregate amount of the Loans and the Letter of Credit Accommodations outstanding at any time shall not exceed the Maximum Credit, (ii) the aggregate principal amount of Loans and Letter of Credit Accommodations outstanding at any time to Borrowers shall not exceed the Borrowing Base, (iii) the aggregate principal amount of Loans and Letter of Credit Accommodations outstanding at any time to a Borrower shall not exceed the Loan Limit

of such Borrower and (iv) the aggregate amount of the outstanding Letter of Credit Accommodations shall not exceed the sublimit set forth in Section 2.2(e) hereof.

(c) In the event that the aggregate principal amount of the Loans and Letter of Credit Accommodations outstanding at any time exceeds the Maximum Credit, or the aggregate principal amount of the Loans and Letter of Credit Accommodations outstanding at any time to Borrowers exceeds the Borrowing Base, or the aggregate principal amount of Loans and Letter of Credit Accommodations outstanding at any time to a Borrower exceeds the Loan Limit of such Borrower, or the aggregate amount of the outstanding Letter of Credit Accommodations exceeds the sublimit for Letter of Credit Accommodations set forth in Section 2.2(e) hereof, such event shall not limit, waive or otherwise affect any rights of Agent or Lenders in such circumstances or on any future occasions and Borrowers shall, upon demand by Agent, which may be made at any time or from time to time, immediately repay to Agent the entire amount of any such excess(es) for which payment is demanded.

2.2 LETTER OF CREDIT ACCOMMODATIONS.

(a) Subject to and upon the terms and conditions contained herein, at the request of a Borrower (or Administrative Borrower on behalf of such Borrower), Agent agrees, for the ratable risk of each Lender according to its Pro Rata Share, to provide or arrange for Letter of Credit Accommodations for the account of such Borrower containing terms and conditions acceptable to Agent and the issuer thereof. Any payments made by or on behalf of Agent or any Lender to any issuer thereof and/or related parties in connection with the Letter of Credit Accommodations provided to or for the benefit of a Borrower shall constitute additional Loans to such Borrower pursuant to this Section 2 (or Special Agent Advances as the case may be).

(b) In addition to any charges, fees or expenses charged by any bank or issuer in connection with the Letter of Credit Accommodations, Borrowers shall pay to Agent, for the benefit of Lenders, a letter of credit fee at a rate equal to the Applicable Margin with respect to Eurodollar Rate Loans per annum, on the daily outstanding balance of the Letter of Credit Accommodations for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month, except that Agent may, and upon the written direction of Required Lenders shall, require Borrowers to pay to Agent for the benefit of Lenders such letter of credit fee, at a rate equal to two (2%) percent per annum in excess of the otherwise applicable rate on such daily outstanding balance for: (i) the period from and after the date of termination hereof until Agent and Lenders have received full and final payment of all Obligations (notwithstanding entry of a judgment against any Borrower) and (ii) the period from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing as determined by Agent. Such letter of credit fee shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed and the obligation of Borrowers to pay such fee shall survive the termination of this Agreement.

(c) The Borrower requesting such Letter of Credit Accommodation (or Administrative Borrower on behalf of such Borrower) shall give Agent two (2) Business Days' prior written notice of such Borrower's request for the issuance of a Letter of Credit Accommodation. Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit Accommodation requested, the effective date (which date shall be a Business

Day and in no event shall be a date less than ten (10) days prior to the end of the then current term of this Agreement) of issuance of such requested Letter of Credit Accommodation, whether such Letter of Credit Accommodations may be drawn in a single or in partial draws, the date on which such requested Letter of Credit Accommodation is to expire (which date shall be a Business Day), the purpose for which such Letter of Credit Accommodation is to be issued, and the beneficiary of the requested Letter of Credit Accommodation. The Borrower requesting the Letter of Credit Accommodation (or Administrative Borrower on behalf of such Borrower) shall attach to such notice the proposed terms of the Letter of Credit Accommodation.

(d) In addition to being subject to the satisfaction of the applicable conditions precedent contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of Credit Accommodations shall be available unless each of the following conditions precedent have been satisfied in a manner satisfactory to Agent: (i) the Borrower requesting such Letter of Credit Accommodation (or Administrative Borrower on behalf of such Borrower) shall have delivered to the proposed issuer of such Letter of Credit Accommodation at such times and in such manner as such proposed issuer may require, an application, in form and substance satisfactory to such proposed issuer and Agent, for the issuance of the Letter of Credit Accommodation and such other documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit Accommodation shall be satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit Accommodation, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed issuer of such Letter of Credit Accommodation refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit Accommodation; and (iii) prior to giving effect to any Reserves with respect to such Letter of Credit Accommodations, on the date of the proposed issuance of any Letter of Credit Accommodations, Excess Availability shall be equal to or greater than an amount equal to one hundred (100%) percent of the face amount thereof and all other commitments and obligations made or incurred by Agent with respect thereto. Effective on the issuance of each Letter of Credit Accommodation, a Reserve shall be established in the applicable amount set forth in Section 2.2(d)(iii).

(e) Except in Agent's discretion, with the consent of all Lenders, the amount of all outstanding Letter of Credit Accommodations and all other commitments and obligations made or incurred by Agent or any Lender in connection therewith shall not at any time exceed $10,000,000.

(f) Borrowers and Guarantors shall indemnify and hold Agent and Lenders harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which Agent or any Lender may suffer or incur in connection with any Letter of Credit Accommodations and any documents, drafts or acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any action taken by any issuer or correspondent with respect to any Letter of Credit Accommodation, except for such losses, claims, damages, liabilities, costs or expenses that are a direct result of the gross negligence or

willful misconduct of Agent or any Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. Each Borrower and Guarantor assumes all risks with respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit Accommodation and for such purposes the drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower and Guarantor assumes all risks for, and agrees to pay, all foreign, federal, state and local taxes, duties and levies relating to any goods subject to any Letter of Credit Accommodations or any documents, drafts or acceptances thereunder. Each Borrower and Guarantor hereby releases and holds Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions, whether caused by any Borrower, Guarantor, by any issuer or correspondent or otherwise with respect to or relating to any Letter of Credit Accommodation, except for the gross negligence or willful misconduct of Agent or any Lender as determined pursuant to a final, non-appealable order of a court of competent jurisdiction. The provisions of this Section 2.2(f) shall survive the payment of Obligations and the termination of this Agreement.

(g) Each Borrower and Guarantor hereby irrevocably authorizes and directs any issuer of a Letter of Credit Accommodation to name such Borrower or Guarantor as the account party therein and to deliver to Agent all instruments, documents and other writings and property received by issuer pursuant to the Letter of Credit Accommodations and to accept and rely upon Agent's instructions and agreements with respect to all matters arising in connection with the Letter of Credit Accommodations or the applications therefor. Nothing contained herein shall be deemed or construed to grant any Borrower or Guarantor any right or authority to pledge the credit of Agent or any Lender in any manner. Agent and Lenders shall have no liability of any kind with respect to any Letter of Credit Accommodation provided by an issuer other than Agent or any Lender unless Agent has duly executed and delivered to such issuer the application or a guarantee or indemnification in writing with respect to such Letter of Credit Accommodation. Borrowers and Guarantors shall be bound by any reasonable interpretation made in good faith by Agent, or any other issuer or correspondent under or in connection with any Letter of Credit Accommodation or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of any Borrower or Guarantor.

(h) So long as no Event of Default exists or has occurred and is continuing, a Borrower may (i) approve or resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance or rejection of any documents or goods, (iii) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, and (iv) with Agent's consent, grant any extensions of the maturity of, time of payment for, or time of presentation of, any drafts, acceptances, or documents, and agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or any letters of credit included in the Collateral.

(i) At any time an Event of Default exists or has occurred and is continuing, Agent shall have the right and authority to, and Borrowers shall not, without the prior written consent of Agent, (i) approve or resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance or rejection of any documents or goods, (iii) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders,
(iv) grant any extensions of the maturity of, time of payments for, or time of presentation of, any drafts,

acceptances, or documents, and (v) agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or any letters of credit included in the Collateral. Agent may take such actions either in its own name or in any Borrower's name.

(j) Any rights, remedies, duties or obligations granted or undertaken by any Borrower or Guarantor to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement in favor of any issuer or correspondent relating to any Letter of Credit Accommodation, shall be deemed to have been granted or undertaken by such Borrower or Guarantor to Agent for the ratable benefit of Lenders. Any duties or obligations undertaken by Agent to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement by Agent in favor of any issuer or correspondent to the extent relating to any Letter of Credit Accommodation, shall be deemed to have been undertaken by Borrowers and Guarantors to Agent for the ratable benefit of Lenders and to apply in all respects to Borrowers and Guarantors.

(k) Immediately upon the issuance or amendment of any Letter of Credit Accommodation, each Lender shall be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty, an undivided interest and participation to the extent of such Lender's Pro Rata Share of the liability with respect to such Letter of Credit Accommodation (including, without limitation, all Obligations with respect thereto).

(l) Each Borrower is irrevocably and unconditionally obligated, without presentment, demand or protest, to pay to Agent any amounts paid by an issuer of a Letter of Credit Accommodation with respect to such Letter of Credit Accommodation (whether through the borrowing of Loans in accordance with Section 2.2(a) or otherwise). In the event that any Borrower fails to pay Agent on the date of any payment under a Letter of Credit Accommodation in an amount equal to the amount of such payment, Agent (to the extent it has actual notice thereof) shall promptly notify each Lender of the unreimbursed amount of such payment and each Lender agrees, upon one (1) Business Day's notice, to fund to Agent the purchase of its participation in such Letter of Credit Accommodation in an amount equal to its Pro Rata Share of the unpaid amount. The obligation of each Lender to deliver to Agent an amount equal to its respective participation pursuant to the foregoing sentence is absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuance of any Event of Default, the failure to satisfy any other condition set forth in
Section 4 or any other event or circumstance. If such amount is not made available by a Lender when due, Agent shall be entitled to recover such amount on demand from such Lender with interest thereon, for each day from the date such amount was due until the date such amount is paid to Agent at the interest rate then payable by any Borrower in respect of Loans that are Prime Rate Loans as set forth in Section 3.1 (a) hereof.

2.3 COMMITMENTS. The aggregate amount of each Lender's Pro Rata Share of the Loans and Letter of Credit Accommodations shall not exceed the amount of such Lender's Commitment, as the same may from time to time be amended in accordance with the provisions hereof.

2.4 JOINT AND SEVERAL LIABILITY. Borrowers shall be jointly and severally liable for all amounts due to Agent and Lenders under this Agreement and the other Financing Agreements, regardless of which Borrower actually receives the Loans or Letter of Credit Accommodations hereunder or the amount of such Loans received or the manner in which Agent or any Lender accounts for such Loans, Letter of Credit Accommodations or other extensions of credit on its books and records. All references herein or in any of the other Financing Agreements to any of the obligation of Borrowers to make any payment hereunder or thereunder shall constitute joint and several obligations of Borrowers. The Obligations with respect to Loans made to a Borrower, and the Obligations arising as a result of the joint and several liability of a Borrower hereunder, with respect to Loans made to the other Borrower, shall be separate and distinct obligations, but all such other Obligations shall be primary obligations of both Borrowers. The Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to Loans, Letter of Credit Accommodations or other extensions of credit made to the other Borrower shall, to the fullest extent permitted by law, be unconditional irrespective of (a) the validity or enforceability, avoidance or subordination of the Obligations of the other Borrower or of any promissory note or other document evidencing all or any part of the Obligations of the other Borrower, (b) the absence of any attempt to collect the Obligations from the other Borrower, any Guarantor or any other security therefor, or the absence of any other action to enforce the same, (c) the waiver, consent, extension, forbearance or granting of any indulgence by Agent or any Lender with respect to any provisions of any instrument evidencing the Obligations of the other Borrower, or any part thereof, or any other agreement now or hereafter executed by the other Borrower and delivered to Agent or any Lender, (d) the failure by Agent or any Lender to take any steps to perfect and maintain its security interest in, or to preserve its rights and maintain its security or collateral for the Obligations of the other Borrower,
(e) the election of Agent and Lenders in any proceeding instituted under the Bankruptcy Code, of the application of Section 111l(b)(2) of the Bankruptcy Code, (f) the disallowance of all or any portion of the claim(s) of Agent or any Lender for the repayment of the Obligations of the other Borrower under Section 502 of the Bankruptcy Code, or (g) any other circumstances which might constitute a legal or equitable discharge or defense of a Guarantor or of the other Borrower other than to the extent of the gross negligence or willful misconduct of Agent or a Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. With respect to the Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to Loans, Letter of Credit Accommodations or other extensions of credit made to the other Borrower hereunder, each Borrower waives, until the Obligations shall have been paid in full and this Agreement shall have been terminated, any right to enforce any right of subrogation or any remedy which Agent or any Lender now has or may hereafter have against any Borrower or Guarantor and any benefit of, and any right to participate in, any security or collateral given to Agent or any Lender. Upon any Event of Default, and for so long as such Event of Default is continuing, Agent may proceed directly and at once, without notice, against any Borrower to collect and recover the full amount, or any portion of the Obligations, without first proceeding against the other Borrower or any other Person, or against any security or collateral for the Obligations. Each Borrower consents and agrees that Agent and Lenders shall be under no obligation to marshall any assets in favor of Borrower(s) or against or in payment of any or all of the Obligations.

2.5 REDUCTION OF MAXIMUM CREDIT.

(a) From time to time after the date hereof, upon not less than ten (10) days prior written notice to Agent, on or after the date which is sixty
(60) days after the date hereof, Borrowers may irrevocably request that the Maximum Credit be decreased by an amount equal to $5,000,000 or a greater integral multiple thereof up to $30,000,000, to an amount of not less than $30,000,000.

(b) Within ten (10) days of receipt by Agent of any written request by Administrative Borrower for a decrease in the Maximum Credit in accordance with Section 2.5(a) above, Agent shall give Administrative Borrower written notice of the decrease in the Maximum Credit to the amount so requested by Administrative Borrower (which decrease shall be effective on the date of such notice by Agent to Administrative Borrower); PROVIDED, THAT, (i) Agent shall not have received such request prior to the date which is sixty (60) days after the date hereof, (ii) the giving of such notice by Agent to Administrative Borrower of the decrease in the Maximum Credit shall not be deemed a waiver of any Event of Default which may exist or have occurred on or before the date of such notice or of any of Agent's or any Lender's rights or remedies with respect thereto, (iii) Agent shall not be required to give such notice to Administrative Borrower of the decrease in the Maximum Credit unless in the determination of Agent, each of the conditions set forth above are satisfied, and (iv) as of the effective date of any such decrease in the Maximum Credit, each reference to the term Maximum Credit in this Agreement, herein, and in any of the other Financing Agreements shall be deemed amended to mean the amount of the Maximum Credit specified in such recent written notice from Agent to Administrative Borrower of the decrease in the Maximum Credit.

SECTION 3. INTEREST AND FEES

3.1 INTEREST.

(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on the outstanding principal amount of the Loans at the Interest Rate. All interest accruing hereunder on and after the date of any Event of Default or termination hereof shall be payable on demand.

(b) Each Borrower (or Administrative Borrower on behalf of such Borrower) may from time to time request Eurodollar Rate Loans or may request that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans continue for an additional Interest Period. Such request from a Borrower (or Administrative Borrower on behalf of such Borrower) shall specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject to the limits set forth below) and the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and conditions contained herein, three (3) Business Days after receipt by Agent of such a request from a Borrower (or Administrative Borrower on behalf of such Borrower), such Eurodollar Rate Loans shall be made or Prime Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be; PROVIDED, THAT, (i) no Default or Event of Default shall exist or have occurred and be continuing, (ii) no party hereto shall have sent any notice of termination of this Agreement, such Borrower (or Administrative Borrower on behalf of such

Borrower) shall have complied with such customary procedures as are established by Agent and specified by Agent to Administrative Borrower from time to time for requests by Borrowers for Eurodollar Rate Loans, (iii) no more than five (5) Interest Periods may be in effect at any one time, (iv) the aggregate amount of the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, and (v) Agent and each Lender shall have determined that the Interest Period or Adjusted Eurodollar Rate is available to Agent and such Lender and can be readily determined as of the date of the request for such Eurodollar Rate Loan by such Borrower. Any request by or on behalf of a Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the contrary contained herein, Agent and Lenders shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate Loans.

(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon the last day of the applicable Interest Period, unless Agent has received and approved a request to continue such Eurodollar Rate Loan at least three (3) Business Days prior to such last day in accordance with the terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent to Atlas Holdings, be subsequently converted to Prime Rate Loans in the event that this Agreement shall terminate or not be renewed. Borrowers shall pay to Agent, for the benefit of Lenders, upon demand by Agent (or Agent may, at its option, charge any loan account of any Borrower) any amounts required to compensate any Lender or Participant for any loss (including loss of anticipated profits), cost or expense incurred by such person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate Loans (other than on the last day of the Interest Period therefor) pursuant to any of the foregoing.

(d) Interest shall be payable by Borrowers to Agent, for the account of Lenders, monthly in arrears not later than the first day of each calendar month and shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed. The interest rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an amount equal to each increase or decrease in the Prime Rate effective on the first day of the month after any change in such Prime Rate is announced based on the Prime Rate in effect on the last day of the month in which any such change occurs. In no event shall charges constituting interest payable by Borrowers to Agent and Lenders exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto.

3.2 FEES.

(a) Borrowers shall pay to Agent monthly, for the account of Lenders, an unused line fee equal to the applicable percentage per annum set forth in the definition of "Applicable Margin" herein, calculated upon the amount by which Maximum Credit exceeds the average daily principal balance of the outstanding Loans and Letter of Credit Accommodations during the immediately preceding month (or part thereof) while this Agreement is in effect and for so

long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears.

(b) Borrowers agree to pay to Agent the other fees and amounts set forth in the Fee Letter in the amounts and at the times specified therein.

3.3 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.

(a) If after the date hereof, either (i) any change in, or in the interpretation of, any law or regulation is introduced, including, without limitation, with respect to reserve requirements, applicable to Lender or any banking or financial institution from whom any Lender borrows funds or obtains credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies with any future guideline or request from any central bank or other Governmental Authority or (iii) a Funding Bank or any Lender determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or a Funding Bank or any Lender complies with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on any Lender's capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank's or Lender's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, and the result of any of the foregoing events described in clauses
(i), (ii) or (iii) is or results in an increase in the cost to any Lender of funding or maintaining the Loans, the Letter of Credit Accommodations or its Commitment, then Borrowers and Guarantors shall from time to time upon demand by Agent pay to Agent additional amounts sufficient to indemnify Lenders against such increased cost on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified). A certificate as to the amount of such increased cost shall be submitted to Administrative Borrower by Agent and shall be conclusive, absent manifest error.

(b) If prior to the first day of any Interest Period, (i) Agent shall have determined in good faith (which determination shall be conclusive and binding upon Borrowers and Guarantors) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, (ii) Agent has received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate Loans during such Interest Period, or (iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to which such Interest Period is to be applicable are not generally available in the London interbank market, Agent shall give telecopy or telephonic notice thereof to Administrative Borrower as soon as practicable thereafter, and will also give prompt written notice to Administrative Borrower when such conditions no longer exist. If such notice is given (A) any Eurodollar Rate Loans requested to be made on the first day of such Interest Period shall be made as Prime Rate Loans, (B) any Loans that were to have been converted on the first day of such Interest Period to or continued as

Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans and
(C) each outstanding Eurodollar Rate Loan shall be converted, on the last day of the then-current Interest Period thereof, to Prime Rate Loans. Until such notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued as such, nor shall any Borrower (or Administrative Borrower on behalf of any Borrower) have the right to convert Prime Rate Loans to Eurodollar Rate Loans.

(c) Notwithstanding any other provision herein, if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation or application thereof occurring after the date hereof shall make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly give written notice of such circumstances to Administrative Borrower (which notice shall be withdrawn whenever such circumstances no longer exist), (ii) the commitment of such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender shall then have a commitment only to make a Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii) such Lender's Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, Borrowers and Guarantors shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.3(d) below.

(d) Borrowers and Guarantors shall indemnify Agent and each Lender and hold Agent and each Lender harmless from any loss or expense which Agent or such Lender may sustain or incur as a consequence of (i) default by Borrower in making a borrowing of, conversion into or extension of Eurodollar Rate Loans after such Borrower (or Administrative Borrower on behalf of such Borrower) has given a notice requesting the same in accordance with the provisions of this Loan Agreement, (ii) default by any Borrower in making any prepayment of a Eurodollar Rate Loan after such Borrower has given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest Period with respect thereto. With respect to Eurodollar Rate Loans, such indemnification may include an amount equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or extended, for the period from the date of such prepayment or of such failure to borrow, convert or extend to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Rate Loans provided for herein over (B) the amount of interest (as determined by such Agent or such Lender) which would have accrued to Agent or such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. This covenant shall survive the termination or non-renewal of this Loan Agreement and the payment of the Obligations.

SECTION 4. CONDITIONS PRECEDENT

4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT ACCOMMODATIONS. Each of the following is a condition precedent to Agent and Lenders making the initial Loans and providing the initial Letter of Credit Accommodations hereunder:

(a) no court of competent jurisdiction shall have issued any injunction, restraining order or other order with respect to the Confirmation Order which otherwise prohibits the consummation of the transactions described herein, or modifies such transactions, and no governmental or other action or proceeding shall have been commenced, seeking any injunction, restraining order or other order which seeks to void or otherwise modify the transactions described herein which has or could reasonably be expected to have a material adverse effect upon the Reorganization Plan, the consummation of the Reorganization Plan, the business or operations of Borrowers or Guarantors or the transactions contemplated by the Financing Agreements, as determined by Agent in good faith;

(b) no motion, action or proceeding shall be pending against the Borrowers or Guarantors (or their predecessors) by any creditor or other party-in-interest in the Bankruptcy Court or in any other court of competent jurisdiction which has or could reasonably be expected to have a Material Adverse Effect;

(c) Agent shall have received a certified copy of the Confirmation Order as duly entered by the Bankruptcy Court and entered on the docket of the Clerk of the Bankruptcy Court in the Chapter 11 Cases, following due notice to such creditors and other parties-in-interest as required by the Bankruptcy Court, which order shall be in form and substance acceptable to Agent and shall provide that the Borrowers and Guarantors that are debtors in the Chapter 11 Cases are authorized to take any and all actions necessary or appropriate to implement, effectuate and consummate the financing arrangements evidenced by this Agreement and the other Financing Agreements and perform all of their obligations hereunder and thereunder;

(d) Agent shall have received evidence, in form and substance satisfactory to Agent, that prior to the date hereof or concurrently herewith,
(i) the Effective Date shall have occurred, the Confirmation Order shall be valid, subsisting and continuing and a Final Order and all conditions precedent to the effectiveness of the Reorganization Plan shall have been fulfilled, or validly waived, including, without limitation, the execution, delivery and performance of all of the conditions thereof other than conditions that have been validly waived (but not including conditions consisting of the effectiveness of this Agreement), and (ii) no motion, action or proceeding shall be pending or filed by any creditor or other party-in-interest to the Chapter 11 Cases which has or could reasonably be expected to have a material adverse effect upon the Reorganization Plan, the consummation of the Reorganization Plan, the business or operations of Borrowers or Guarantors or the transactions contemplated by the Financing Agreements, as determined by Agent in good faith;

(e) Agent shall have received, in form and substance satisfactory to Agent, all releases, terminations and such other documents as Agent may request to evidence and effectuate the termination and release by all persons of any interest in and to any assets and properties of each Borrower and Guarantor (other than liens and security interests permitted pursuant to

Section 9.8 hereof), duly authorized, executed and delivered by it or each of them, including, but not limited to, (i) UCC termination statements for all UCC financing statements previously filed by it or any of them or their predecessors, as secured party and any Borrower or Guarantor, as debtor; and
(ii) satisfactions and discharges of any mortgages, deeds of trust or deeds to secure debt by any Borrower or Guarantor in favor of it or any of them, in form acceptable for recording with the appropriate Governmental Authority;

(f) all requisite corporate action and proceedings in connection with this Agreement and the other Financing Agreements shall be satisfactory in form and substance to Agent, and Agent shall have received all information and copies of all documents, including records of requisite corporate action and proceedings which Agent may have requested in connection therewith, such documents where requested by Agent or its counsel to be certified by appropriate corporate officers or Governmental Authority (and including a copy of the certificate of incorporation of each Borrower and Guarantor certified by the Secretary of State (or equivalent Governmental Authority) which shall set forth the same complete corporate name of such Borrower or Guarantor as is set forth herein and such document as shall set forth the organizational identification number of each Borrower or Guarantor, if one is issued in its jurisdiction of incorporation);

(g) no material adverse change shall have occurred in the assets, business or financial condition of Borrowers and Guarantors (taken as a whole) since the date of Agent's latest field examination (not including for this purpose the field review referred to in the immediately succeeding clause (h) below) and no change or event shall have occurred which would impair the ability of any Borrower or Obligor to perform its obligations hereunder or under any of the other Financing Agreements to which it is a party or of Agent or any Lender to enforce the Obligations or realize upon the Collateral;

(h) not more than five (5) Business Days prior to the date thereof, Agent shall have completed a field review of the Records and such other information with respect to the Collateral as Agent may require to determine the amount of Loans available to Borrowers (including, without limitation, the most current perpetual inventory records and/or roll-forwards of Accounts and Inventory available prior to the date of closing in a manner satisfactory to Agent, together with such supporting documentation as may be necessary or appropriate, and other documents and information that will enable Agent to accurately identify and verify the Collateral), the results of which in each case shall not reflect any material adverse changes in the assets, business or financial condition of Borrowers and Guarantors (taken as a whole) from the results of the most recent similar field view conducted by Agent prior to the date hereof;

(i) Agent shall have received, in form and substance satisfactory to Agent, all consents, waivers, acknowledgments and other agreements from third persons which Agent may deem necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the Collateral or to effectuate the provisions or purposes of this Agreement and the other Financing Agreements, including, without limitation, Collateral Access Agreements that Agent determines are necessary to obtain access to and use any books or records related to the Accounts;

(j) without limiting the immediately preceding clause (i) above, Agent shall have received, in form and substance satisfactory to Agent, such agreements with CNS, IATA and other third parties that are party to Clearinghouse Agreements, as Agent may request, providing, among other things, for each such third party to perform for the benefit of Agent and its agents, services substantially similar to those it performs under the Clearinghouse Agreement to which it is a party, acknowledging the security interests and liens of Agent, for itself and the benefit of Lenders, and agreeing to follow the directions of Agent with respect to any amounts payable to Borrowers and Guarantors;

(k) Agent shall have received, in form and substance satisfactory to Agent, evidence that Polar is a member or an associate member in good standing of IATA and is a party to Clearinghouse Agreements with IATA;

(1) Excess Availability as determined by Agent in good faith, as of the date hereof, shall be not less than $25,000,000 after giving effect to the initial Loans made or to be made and Letter of Credit Accommodations issued or to be issued in connection with the initial transactions hereunder;

(m) Agent shall have received, in form and substance satisfactory to Agent, Deposit Account Control Agreements by and among Agent, each Borrower and Guarantor, as the case may be, and each domestic bank where such Borrower or Guarantor has a deposit account (other than such deposit accounts in which not more than $50,000 for any single account or $250,000 in the aggregate for all such accounts are maintained on deposit), in each case, duly authorized, executed and delivered by such bank and Borrower or Guarantor, as the case may be (or Agent shall be the bank's customer with respect to such deposit account as Agent may specify);

(n) Agent shall have received, in form and substance satisfactory to Agent, Investment Property Control Agreements by and among Agent, each Borrower and Guarantor, as the case may be, and each securities intermediary or commodity intermediary with which such Borrower or Guarantor maintains an investment account, securities account or other similar account;

(o) Agent shall have received evidence, in form and substance satisfactory to Agent, that Agent has a valid perfected first priority security interest in such Collateral as required by Agent;

(p) Agent shall have received and reviewed lien and judgment search results for the jurisdiction of organization of each Borrower and Guarantor, the jurisdiction of the chief executive office of each Borrower and Guarantor and all jurisdictions in which assets of Borrowers and Guarantors are located, which search results shall be in form and substance satisfactory to Agent;

(q) Agent shall have received originals of the shares of the stock certificates representing all of the issued and outstanding shares of the Capital Stock of each Borrower and Guarantor (other than Atlas Holdings) and owned by any Borrower or Guarantor, except as to Liege Global Cargo (Sales Co), a company organized under the laws of Belgium, and as

otherwise provided in Section 5.1(c) hereof, in each case together with stock powers duly executed in blank with respect thereto;

(r) Agent shall have received a Borrowing Base Certificate setting forth the Loans and Letter of Credit Accommodations available to Borrowers, as completed in a manner satisfactory to Agent;

(s) Agent shall have received evidence of insurance and loss payee endorsements required hereunder and under the other Financing Agreements, in form and substance satisfactory to Agent, and certificates of insurance policies and/or endorsements naming Agent as loss payee;

(t) Agent shall have received, in form and substance satisfactory to Agent, such opinion letters of counsel to Borrowers and Guarantors, including special FAA counsel, with respect to the Financing Agreements, the Confirmation Order, aviation law matters and such other matters as Agent may request;

(u) Agent shall have received the EETC Intercreditor Agreement;

(v) the Chief Executive Officer or the Chief Financial Officer of Atlas Holdings shall have certified to Agent that the EETC Effective Date shall have occurred contemporaneously herewith and not prior to the date hereof; and

(w) the other Financing Agreements (including the Aircraft Security Agreement, Engine Security Agreement, Spare Parts Agreement and Slots Agreement) and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Agent, in form and substance satisfactory to Agent and, in the case of the Aircraft Security Agreement, Engine Security Agreement and Spare Parts Agreement, filed and recorded with the FAA as appropriate to effect the perfection of the security interest of Agent, for the benefit of Lenders, with respect to the Collateral subject thereto.

4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT ACCOMMODATIONS. Each of the following is an additional condition precedent to the Loans and/or providing Letter of Credit Accommodations to Borrowers, including the initial Loans and Letter of Credit Accommodations and any future Loans and Letter of Credit Accommodations:

(a) all representations and warranties contained herein and in the other Financing Agreements shall be true and correct with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Loan or providing each such Letter of Credit Accommodation and after giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date);

(b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or otherwise affect (A) the making of the Loans or providing the Letter

of Credit Accommodations, or (B) the consummation of the transactions contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or has a reasonable likelihood of having a Material Adverse Effect; and

(c) no Default or Event of Default shall exist or have occurred and be continuing on and as of the date of the making of such Loan or providing each such Letter of Credit Accommodation and after giving effect thereto.

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

5.1 GRANT OF SECURITY INTEREST.

(a) To secure payment and performance of all Obligations, each Borrower and Guarantor hereby grants to Agent, for itself and the benefit of Lenders, a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Agent, for itself and the benefit of Lenders, as security, all personal property and fixtures, and interests in property and fixtures, of each Borrower and Guarantor, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral security for the Obligations at any time granted to or held or acquired by Agent or any Lender, collectively, the "Collateral"), including:

(i) all Accounts;

(ii) all general intangibles, including all Intellectual Property;

(iii) all goods, including Inventory and Equipment;

(iv) the Secured Aircraft;

(v) to the extent not included in Inventory or Equipment, Spare Parts and Engines;

(vi) all chattel paper (including each ACMI Contract, whether or not constituting chattel paper), including all tangible and electronic chattel paper;

(vii) all instruments, including all promissory notes;

(viii) all documents;

(ix) all deposit accounts;

(x) all letters of credit, banker's acceptances and similar instruments and including all letter-of-credit rights;

(xi) all supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Receivables and other Collateral, including (A) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (B) rights of stopPAGE in transit,

replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (C) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Receivables or other Collateral, including returned, repossessed and reclaimed goods, and (D) deposits by and property of account debtors or other persons securing the obligations of account debtors;

(xii) all (A) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity accounts) and (B) monies, credit balances, deposits and other property of any Borrower or Guarantor now or hereafter held or received by or in transit to Agent, any Lender or its Affiliates or at any other depository or other institution from or for the account of any Borrower or Guarantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise, and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Accounts and other Collateral, including (1) tickets, exchange orders, bills of lading and other transportation documents related to the air transportation of cargo, including mail and (2) settlement accounts or other deposit accounts maintained by CNS, CASS and/or IATA or the Clearing Bank and all sums now or hereafter credited to, in, payable to or withdrawable from, such accounts or deposit accounts;

(xiii) all commercial tort claims, including, without limitation, those identified in the Information Certificate;

(xiv) to the extent not otherwise described above, all Receivables;

(xv) all Records; and

(xvi) all products and proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind or nature of any or all of the other Collateral.

(b) Notwithstanding anything to the contrary set forth in Section 5.1(a) hereof, the Collateral shall not include (i) any Aircraft (other than the Secured Aircraft), (ii) any other asset or property described on Schedule 5.1 hereto and that is subject to a mortgage, lien or security interest in favor of a third person as specifically provided by the Reorganization Plan and the Confirmation Order, to the extent existing as of the Effective Date (such assets and property herein referred to as the "Excluded Property"); provided, however, that in no event shall such Excluded Property include or be deemed or construed to include (A) any Accounts or other rights to payment arising from the rendition of any charter or scheduled cargo transportation services or other services by any Borrower or Guarantor (other than any such services performed using the Aircraft bearing FAA registration numbers N494MC or N495MC), and (B) any ACMI Contracts and any Accounts or other rights to payment arising therefrom to the extent performed using any Aircraft, or (iii) more than sixty-five (65%) percent of the shares of Capital Stock entitled to vote of any Subsidiary of Atlas Holdings that is organized under the laws of a jurisdiction outside of the United States of America, to the extent that the pledge of any greater percentage thereof would result in additional tax liability to Borrowers or Guarantors under Section 956 of the Code.

(c) Notwithstanding anything to the contrary contained herein, the Collateral shall not include (i) any Real Property other than the leasehold interests and other rights and interests of Borrowers or Guarantors in the Collateral described in the Slots Agreement (whether or not such rights and interests may be deemed to constitute Real Property) or (ii) the equity interests of Borrowers or Guarantors in Atlas Freighter Leasing II, Inc. and Atlas Freighter Leasing III, Inc.

5.2 PERFECTION OF SECURITY INTERESTS.

(a) Each Borrower and Guarantor irrevocably and unconditionally authorizes Agent (or its agent) to file at any time and from time to time such financing statements with respect to the Collateral naming Agent or its designee as the secured party and such Borrower or Guarantor as debtor, as Agent may require, and including any other information with respect to such Borrower or Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may determine, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing statements filed on, prior to or after the date hereof. Each Borrower and Guarantor hereby ratifies and approves all financing statements naming Agent or its designee as secured party and such Borrower or Guarantor, as the case may be, as debtor with respect to the Collateral (and any amendments with respect to such financing statements) filed by or on behalf of Agent prior to the date hereof and ratifies and confirms the authorization of Agent to file such financing statements (and amendments, if any). Each Borrower and Guarantor hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any symbol required for authenticating any electronic filing. In the event that the description of the collateral in any financing statement naming Agent or its designee as the secured party and any Borrower or Guarantor as debtor includes assets and properties of such Borrower or Guarantor that do not at any time constitute Collateral, whether hereunder, under any of the other Financing Agreements or otherwise, the filing of such financing statement shall nonetheless be deemed authorized by such Borrower or Guarantor to the extent of the Collateral included in such description and it shall not render the financing statement ineffective as to any of the Collateral or otherwise affect the financing statement as it applies to any of the Collateral. In no event shall any Borrower or Guarantor at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Agent or its designee as secured party and such Borrower or Guarantor as debtor.

(b) Each Borrower and Guarantor does not have any chattel paper (whether tangible or electronic) or instruments as of the date hereof, except for any ACMI Contracts constituting chattel paper, existing on the date hereof and as set forth in the Information Certificate.

(i) In the event that any Borrower or Guarantor shall be entitled to or shall receive any chattel paper or instrument after the date hereof, Borrowers and Guarantors shall promptly notify Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any Borrower or Guarantor (including by any agent or representative), or a request from Agent with respect to any chattel paper existing on the date hereof, each Borrower and Guarantor shall deliver, or cause to be delivered to Agent, all tangible chattel paper and instruments that such Borrower or Guarantor has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify, in each case except as Agent may otherwise agree.

(ii) At Agent's option, each Borrower and Guarantor shall, or Agent may at any time on behalf of any Borrower or Guarantor, cause the original of any such instrument or chattel paper to be conspicuously marked in a form and manner acceptable to Agent with the following legend referring to chattel paper or instruments as applicable: "This [chattel paper][instrument] is subject to the security interest of Congress Financial Corporation and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured party."

(iii) No Borrower or Guarantor has delivered or at any time shall cause to be delivered to any Person which is not the account debtor with respect thereto, an original, executed ACMI Contract.

(c) In the event that any Borrower or Guarantor shall at any time hold or acquire an interest in any electronic chattel paper or any "transferable record" (as such term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent's request, such Borrower or Guarantor shall take, or cause to be taken, such actions as Agent may request to give Agent control of such electronic chattel paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.

(d) Each Borrower and Guarantor does not have any deposit accounts as of the date hereof, except as set forth in the Information Certificate. Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any deposit account unless each of the following conditions is satisfied: (i) Agent shall have received not less than five (5) Business Days prior written notice of the intention of any Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity acceptable to Agent the name of the account, the owner of the account, the name and address of the bank at which such account is to be opened or established, the individual at such bank with whom such Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank where such account is opened or maintained shall be acceptable to Agent, and
(iii) on or before the opening of such deposit account, such Borrower or Guarantor shall as Agent may specify either (A) deliver to Agent a Deposit Account Control Agreement with respect to such deposit account duly authorized, executed and delivered by such Borrower or Guarantor and the bank at which such deposit account is opened and maintained or (B) arrange for Agent to become the customer of the bank with respect to the deposit account on terms and conditions acceptable to Agent. The terms of this subsection (d) shall not apply to deposit accounts (i) held by financial institutions located in the United States of America at which Borrowers or Guarantors do not maintain more than $50,000 for any single account at any one time or $250,000 in the aggregate for all such deposit accounts, (ii) specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower's or Guarantor's salaried employees, and (iii) held by financial institutions located in (x) any Non-Preferred Foreign Jurisdiction or (y) for the first 180 days after the date hereof, any Preferred Foreign Jurisdiction.

(e) No Borrower or Guarantor owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or have any investment account, securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the date hereof, in each case except as set forth in the Information Certificate.

(i) In the event that any Borrower or Guarantor shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities constituting Collateral, such Borrower or Guarantor shall promptly endorse, assign and deliver the same to Agent, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify. If any securities constituting Collateral, now or hereafter acquired by any Borrower or Guarantor are uncertificated and are issued to such Borrower or Guarantor or its nominee directly by the issuer thereof, such Borrower or Guarantor shall immediately notify Agent thereof and shall as Agent may specify, either (A) cause the issuer to agree to comply with instructions from Agent as to such securities, without further consent of any Borrower or Guarantor or such nominee, or (B) arrange for Agent to become the registered owner of the securities.

(ii) Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity account or any other similar account (other than a deposit account) with any securities intermediary or commodity intermediary unless each of the following conditions is satisfied: (A) Agent shall have received not less than five (5) Business Days prior written notice of the intention of such Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity acceptable to Agent the name of the account, the owner of the account, the name and address of the securities intermediary or commodity intermediary at which such account is to be opened or established, the individual at such intermediary with whom such Borrower or Guarantor is dealing and the purpose of the account, (B) the securities intermediary or commodity intermediary (as the case may be) where such account is opened or maintained shall be acceptable to Agent, and (C) on or before the opening of such investment account, securities account or other similar account with a securities intermediary or commodity intermediary, such Borrower or Guarantor shall as Agent may specify either (i) execute and deliver, and cause to be executed and delivered to Agent, an Investment Property Control Agreement with respect thereto duly authorized, executed and delivered by such Borrower or Guarantor and such securities intermediary or commodity intermediary or (ii) arrange for Agent to become the entitlement holder with respect to such investment property on terms and conditions acceptable to Agent.

(f) Borrowers and Guarantors are not the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker's acceptance or similar instrument as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any right to payment under any letter of credit, banker's acceptance or any similar instrument, whether as beneficiary thereof or otherwise after the date hereof, such Borrower or Guarantor shall promptly notify Agent thereof in writing. Such Borrower or Guarantor shall immediately, as Agent may specify, either (i) deliver, or cause to be delivered to Agent, with respect to any such letter of credit, banker's acceptance or similar instrument, the written agreement of the issuer and any other nominated person obligated to

make any payment in respect thereof (including any confirming or negotiating bank), in form and substance satisfactory to Agent, consenting to the assignment of the proceeds of the letter of credit to Agent by such Borrower or Guarantor and agreeing to make all payments thereon directly to Agent or as Agent may otherwise direct or (ii) cause Agent to become, at Borrowers' expense, the transferee beneficiary of the letter of credit, banker's acceptance or similar instrument (as the case may be).

(g) Borrowers and Guarantors do not have any commercial tort claims as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall at any time after the date hereof have any commercial tort claims (excluding any such claims of their respective insurers, including insurers claiming in the name of a Borrower or Guarantor, pursuant to rights of subrogation or otherwise in respect of amounts paid to Borrowers or Guarantors under policies of insurance in respect of the conduct of third-party commercial tortfeasors) in an aggregate amount in excess of $5,000,000 for all such claims of all Borrowers and Guarantors, such Borrower or Guarantor shall promptly notify Agent thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and (ii) include the express grant by such Borrower or Guarantor to Agent of a security interest in such commercial tort claim (and the proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by such Borrower or Guarantor to Agent shall be deemed to constitute such grant to Agent. Upon the sending of such notice, any commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein. Without limiting the authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by the execution by such Borrower or Guarantor of this Agreement or any of the other Financing Agreements, Agent is hereby irrevocably authorized from time to time and at any time to file such financing statements naming Agent or its designee as secured party and such Borrower or Guarantor as debtor, or any amendments to any financing statements, covering any such commercial tort claim as Collateral. In addition, each Borrower and Guarantor shall promptly upon Agent's request, execute and deliver, or cause to be executed and delivered, to Agent such other agreements, documents and instruments as Agent may require in connection with such commercial tort claim.

(h) Borrowers and Guarantors do not have any goods constituting Collateral, documents of title or other Collateral in the custody, control or possession of a third party as of the date hereof, except as set forth in the Information Certificate and except for goods (i) leased to third parties to the extent permitted under the terms hereof, or (ii) located in the United States in transit to a location of a Borrower or Guarantor permitted herein in the ordinary course of business of such Borrower or Guarantor in the possession of the carrier transporting such goods. Promptly upon Agent's request, Borrowers and Guarantors shall deliver to Agent a Collateral Access Agreement that Agent determines in good faith is necessary to obtain access to and use any books or records related to the Accounts constituting Collateral, duly authorized, executed and delivered by such person and the appropriate Borrower or Guarantor.

(i) Except as otherwise expressly provided herein, Borrowers and Guarantors shall take any other actions reasonably requested by Agent from time to time to cause the attachment, perfection and first priority of, and the ability of Agent to enforce, the security interest of Agent in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC or other

applicable law, to the extent, if any, that any Borrower's or Guarantor's signature thereon is required therefor, (ii) causing Agent's name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iii) without limitation upon Section 1.70(1) hereof complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iv) obtaining the consents and approvals of any Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions required by any earlier versions of the UCC or by other law, as applicable in any relevant jurisdiction.

5.3 NO ASSUMPTION. Nothing contained herein or in any of the other Financing Agreements nor any grant of a security interest in the Collateral to Agent and Lenders or otherwise shall constitute or be deemed an assumption by Agent or any Lender of any liability or obligation under any ACMI Contract or any other agreement, contract or obligation of any Borrower or Guarantor.

SECTION 6. COLLECTION AND ADMINISTRATION

6.1 BORROWERS' LOAN ACCOUNTS. Agent shall maintain one or more loan account(s) on its books in which shall be recorded (a) all Loans, Letter of Credit Accommodations and other Obligations and the Collateral, (b) all payments made by or on behalf of any Borrower or Guarantor and (c) all other appropriate debits and credits as provided in this Agreement, including fees, charges, costs, expenses and interest. All entries in the loan account(s) shall be made in accordance with Agent's customary practices as in effect from time to time.

6.2 STATEMENTS. Agent shall render to Administrative Borrower each month a statement setting forth the balance in the Borrowers' loan account(s) maintained by Agent for Borrowers pursuant to the provisions of this Agreement, including principal, interest, fees, costs and expenses. Each such statement shall be subject to subsequent adjustment by Agent but shall, absent manifest errors or omissions, be considered correct and deemed accepted by Borrowers and Guarantors and conclusively binding upon Borrowers and Guarantors as an account stated except to the extent that Agent receives a written notice from Administrative Borrower of any specific exceptions of Administrative Borrower thereto within thirty (30) days after the date such statement has been received by Administrative Borrower. Until such time as Agent shall have rendered to Administrative Borrower a written statement as provided above, the balance in any Borrower's loan account(s) shall be presumptive evidence of the amounts due and owing to Agent and Lenders by Borrowers and Guarantors.

6.3 COLLECTION OF ACCOUNTS.

(a) Borrowers shall establish and maintain, at their expense, blocked accounts or lockboxes and related blocked accounts (in either case, "Blocked Accounts"), as Agent may specify, with such banks as are acceptable to Agent into which Borrowers shall promptly deposit and direct their respective account debtors (including, in the case of Polar, account debtors in respect of Accounts settled through the Clearing Bank) to directly remit all payments on

Receivables and all payments constituting proceeds of Inventory constituting Collateral or other Collateral in the identical form in which such payments are made, whether by cash, check or other manner. Borrowers shall deliver, or cause to be delivered to Agent a Deposit Account Control Agreement duly authorized, executed and delivered by each bank where a Blocked Account is maintained as provided in Section 5.2 hereof or at any time and from time to time Agent may become the bank's customer with respect to any of the Blocked Accounts and promptly upon Agent's request, Borrowers shall execute and deliver such agreements and documents as Agent may require in connection therewith. In the case of Accounts, the payment of which is settled through CNS and/or CASS and the Clearing Bank, Polar shall cause CNS and/or CASS, as applicable, to enter into and continue effective an agreement in favor of and in form and substance satisfactory to Agent, providing for the automatic remittance directly to the Agent Payment Account (unless Agent otherwise instructs the Clearing Bank) of all credit balances available to Polar under the Clearinghouse Agreements on each scheduled or other settlement date in accordance with the terms hereof. Agent will only instruct the depository banks at which the Blocked Accounts are maintained to transfer all funds received or deposited into the Blocked Accounts to the Agent Payment Account and will only instruct the Clearing Bank to remit funds directly to the Agent Payment Account, at any time that either of the following events (each, a "Sweep Event") has occurred: (i) a Default or Event of Default shall exist or have occurred which has not been waived by Agent in writing, or (ii) Excess Availability shall be less than $20,000,000. Each Borrower and Guarantor agrees that all payments made to such Agent Payment Account or other funds received and collected by Agent or any Lender, whether in respect of the Receivables, as proceeds of Inventory constituting Collateral or other Collateral or otherwise shall be treated as payments to Agent and Lenders in respect of the Obligations and therefore shall constitute the property of Agent and Lenders to the extent of the then outstanding Obligations.

(b) For purposes of calculating the amount of the Loans available to each Borrower, such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Agent of immediately available funds in the Agent Payment Account provided such payments and notice thereof are received in accordance with Agent's usual and customary practices as in effect from time to time and within sufficient time to credit such Borrower's loan account on such day, and if not, then on the next Business Day. For the purposes of calculating interest on the Obligations, such payments or other funds received will be applied (conditional upon final collection) to the Obligations on the date of receipt of immediately available funds by Agent in the Agent Payment Account provided such payments or other funds and notice thereof ARE received in accordance with Agent's usual and customary practices as in effect from time to time and within sufficient time to credit such Borrower's loan account on such day, and if not, then on the next Business Day. The economic benefit of the timing in the application of payments shall be for the sole benefit of Agent.

(c) Each Borrower and Guarantor and their respective shareholders, directors, employees, agents, Subsidiaries or other Affiliates shall, acting as trustee for Agent, receive, as the property of Agent, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Accounts constituting Collateral or other Collateral which come into their possession or under their control and immediately upon receipt thereof, shall deposit or cause the same to be deposited in the Blocked Accounts, or remit the same or cause the same to be remitted, in kind, to Agent. In no event shall the same be commingled with any Borrower's or Guarantor's own

funds. Borrowers agree to reimburse Agent on demand for any amounts owed or paid to any bank or other financial institution at which a Blocked Account or any other deposit account or investment account is established or any other bank, financial institution or other person involved in the transfer of funds to or from the Blocked Accounts arising out of Agent's payments to or indemnification of such bank, financial institution or other person. The obligations of Borrowers to reimburse Agent for such amounts pursuant to this Section 6.3 shall survive the termination of this Agreement.

(d) Without limiting anything contained in Section 6.3(c) hereof, each Borrower shall, at its expense and on behalf of Agent, collect as Agent's property and hold in trust for Agent all exchange orders, bills of lading or other transportation documents with respect to the air transportation by such Borrower of cargo, including mail. Promptly upon each Borrower's receipt of such exchange orders, bills of lading or other transportation documents, such Borrower shall submit those applicable to any Accounts settled under the Clearinghouse Agreements in batches, to the CNS and/or CASS Clearing Bank, together with such supporting or accompanying summaries, schedules and reports, as required by the applicable Clearinghouse Agreement, the Clearing Bank or the account debtor, as applicable.

6.4 PAYMENTS.

(a) All Obligations shall be payable to the Agent Payment Account as provided in Section 6.3 or such other place as Agent may designate from time to time. Subject to the other terms and conditions contained herein, Agent shall apply payments received or collected from any Borrower or Guarantor or for the account of any Borrower or Guarantor (including the monetary proceeds of collections or of realization upon any Collateral) as follows: FIRST, to pay any fees, indemnities or expense reimbursements then due to Agent and Lenders from any Borrower or Guarantor; SECOND, to pay interest due in respect of any Loans (and including any Special Agent Advances); THIRD, to pay or prepay principal in respect of Special Agent Advances; FOURTH, to pay principal due in respect of the Loans and to pay Obligations then due (and after a Default or Event of Default to prepay any such Obligations whether or not then due and owing) arising under or pursuant to any Interest Rate Protection Agreements of a Borrower or Guarantor with an Affiliate of Agent (up to the amount of any then effective Reserve established in respect of such Obligations whether or not then due and owing), on a pro rata basis; FIFTH, to pay any other Obligations then due (and after a Default or Event of Default to prepay any other Obligations whether or not then due and owing), in such order and manner as Agent determines and SIXTH, to pay any Obligations then due (and after a Default or Event of Default to prepay any such Obligations) arising under or pursuant to Interest Rate Protection Agreements (other than to the extent provided for above) on a pro rata basis. Notwithstanding anything to the contrary contained in this Agreement, (i) unless so directed by Administrative Borrower, or unless a Default or an Event of Default shall exist or have occurred and be continuing, Agent shall not apply any payments which it receives to any Eurodollar Rate Loans, except (A) on the expiration date of the Interest Period applicable to any such Eurodollar Rate Loans or (B) in the event that there are no outstanding Prime Rate Loans, (ii) to the extent any Borrower uses any proceeds of the Loans or Letter of Credit Accommodations to acquire rights in or the use of any Collateral or to repay any Indebtedness used to acquire rights in or the use of any Collateral, payments in respect of the Obligations shall be deemed applied first to the Obligations arising from Loans and Letter of Credit Accommodations that were not used for such purposes and second to the

Obligations arising from Loans and Letter of Credit Accommodations the proceeds of which were used to acquire rights in or the use of any Collateral in the chronological order in which such Borrower acquired such rights in or the use of such Collateral, and (iii) if a Default or Event of Default has occurred that is continuing, Agent shall apply any payments received or collected to the outstanding Obligations in such order and manner as Agent may determine and, if all such outstanding Obligations have been repaid, at Agent's option to be held as cash collateral for any unmatured or contingent Obligations.

(b) At Agent's option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged directly to the loan account(s) of any Borrower maintained by Agent. Borrowers and Guarantors shall make all payments to Agent and Lenders on the Obligations free and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, withholding, restrictions or conditions of any kind. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Agent or any Lender is required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Agent or such Lender. Borrowers and Guarantors shall be liable to pay to Agent, and do hereby indemnify and hold Agent and Lenders harmless for the amount of any payments or proceeds surrendered or returned. This Section 6.4(b) shall remain effective notwithstanding any contrary action which may be taken by Agent or any Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive the payment of the Obligations and the termination of this Agreement.

6.5 AUTHORIZATION TO MAKE LOANS. Agent and Lenders are authorized to make the Loans and provide the Letter of Credit Accommodations based upon telephonic or other instructions received from anyone purporting to be an officer of Administrative Borrower or any Borrower or other authorized person or, at the discretion of Agent, if such Loans are necessary to satisfy any Obligations. All requests for Loans or Letter of Credit Accommodations hereunder shall specify the date on which the requested advance is to be made or Letter of Credit Accommodations established (which day shall be a Business Day) and the amount of the requested Loan. Requests received after 11:00 a.m. New York City time on any day shall be deemed to have been made as of the opening of business on the immediately following Business Day. Agent and Lenders shall use commercially reasonable efforts in accordance with its regular business practices, subject to the terms and conditions of this Agreement and the other Financing Agreements, to (a) make Loans requested before 11:00 a.m. New York City time on any Business Day, prior to the end of such Business Day and (b) establish Letter of Credit Accommodations requested before 11:00 a.m. New York City time on any Business Day, prior to the close of business on the day which is two (2) Business Days after the day on which such Letter of Credit Accommodations are requested. All Loans and Letter of Credit Accommodations under this Agreement shall be conclusively presumed to have been made to, and at the request of and for the benefit of, any Borrower or Guarantor when deposited to the credit of any Borrower or Guarantor or otherwise disbursed or established in accordance with the instructions of any Borrower or Guarantor or in accordance with the terms and conditions of this Agreement.

6.6 USE OF PROCEEDS. Borrowers shall use the initial proceeds of the Loans provided by Agent to Borrowers hereunder only for: (a) payments to each of the persons listed in the disbursement direction letter furnished by Borrowers to Agent on or about the date hereof and (b) costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Financing Agreements. All other Loans made or Letter of Credit Accommodations provided to or for the benefit of any Borrower pursuant to the provisions hereof shall be used by such Borrower only for general operating, working capital and other proper corporate purposes of such Borrower not otherwise prohibited by the terms hereof. None of the proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or for the purposes of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Loans to be considered a "purpose credit" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended.

6.7 APPOINTMENT OF ADMINISTRATIVE BORROWER AS AGENT FOR REQUESTING LOANS AND RECEIPTS OF LOANS AND STATEMENTS.

(a) Each Borrower hereby irrevocably appoints and constitutes Administrative Borrower as its agent to request and receive Loans and Letter of Credit Accommodations pursuant to this Agreement and the other Financing Agreements from Agent or any Lender in the name or on behalf of such Borrower. Agent and Lenders may disburse the Loans to such bank account of Administrative Borrower or a Borrower or otherwise make such Loans to a Borrower and provide such Letter of Credit Accommodations to a Borrower as Administrative Borrower may designate or direct, without notice to any other Borrower or Obligor. Notwithstanding anything to the contrary contained herein, Agent may at any time and from time to time require that Loans to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

(b) Administrative Borrower hereby accepts the appointment by Borrowers to act as the agent of Borrowers pursuant to this Section 6.7. Administrative Borrower shall ensure that the disbursement of any Loans to each Borrower requested by or paid to or for the account of Atlas Holdings, or the issuance of any Letter of Credit Accommodations for a Borrower hereunder, shall be paid to or for the account of such Borrower.

(c) Each Borrower and other Guarantor hereby irrevocably appoints and constitutes Administrative Borrower as its agent to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Financing Agreements.

(d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any other Borrower or any Guarantor by Administrative Borrower shall be deemed for all purposes to have been made by such Borrower or Guarantor, as the case may be, and shall be binding upon and enforceable against such Borrower or Guarantor to the same extent as if made directly by such Borrower of Guarantor.

(e) No purported termination of the appointment of Administrative Borrower as agent as aforesaid shall be effective, except after ten (10) days' prior written notice to Agent.

6.8 PRO RATA TREATMENT. Except to the extent otherwise provided in this Agreement: (a) the making and conversion of Loans shall be made among the Lenders based on their respective Pro Rata Shares as to the Loans and (b) each payment on account of any Obligations to or for the account of one or more of Lenders in respect of any Obligations due on a particular day shall be allocated among the Lenders entitled to such payments based on their respective Pro Rata Shares and shall be distributed accordingly.

6.9 SHARING OF PAYMENTS, ETC.

(a) Each Borrower and Guarantor agrees that, in addition to (and without limitation of) any right of setoff, banker's lien or counterclaim Agent or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b) hereof), to offset balances held by it for the account of such Borrower or Guarantor at any of its offices, in dollars or in any other currency, against any principal of or interest on any Loans owed to such Lender or any other amount payable to such Lender hereunder, that is not paid when due (regardless of whether such balances are then due to such Borrower or Guarantor), in which case it shall promptly notify Administrative Borrower and Agent thereof; PROVIDED, THAT, such Lender's failure to give such notice shall not affect the validity thereof.

(b) If any Lender (including Agent) shall obtain from any Borrower or Guarantor payment of any principal of or interest on any Loan owing to it or payment of any other amount under this Agreement or any of the other Financing Agreements through the exercise of any right of setoff, banker's lien or counterclaim or similar right or otherwise (other than from Agent as provided herein), and, as a result of such payment, such Lender shall have received more than its Pro Rata Share of the principal of the Loans or more than its share of such other amounts then due hereunder or thereunder by any Borrower or Guarantor to such Lender than the percentage thereof received by any other Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount of such excess and simultaneously purchase from such other Lenders a participation in the Loans or such other amounts, respectively, owing to such other Lenders (or such interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) in accordance with their respective Pro Rata Shares or as otherwise agreed by Lenders. To such end all Lenders shall make appropriate adjustments among themselves (by the resale of participation sold or otherwise) if such payment is rescinded or must otherwise be restored.

(c) Each Borrower and Guarantor agrees that any Lender purchasing a participation (or direct interest) as provided in this Section may exercise, in a manner consistent with this Section, all rights of setoff, banker's lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans or other amounts (as the case may be) owing to such Lender in the amount of such participation.

(d) Nothing contained herein shall require any Lender to exercise any right of setoff, banker's lien, counterclaims or similar rights or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other

Indebtedness or obligation of any Borrower or Guarantor. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, assign such rights to Agent for the benefit of Lenders and, in any event, exercise its rights in respect of such secured claim in a manner consistent with the rights of Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

6.10 SETTLEMENT PROCEDURES.

(a) In order to administer the Credit Facility in an efficient manner and to minimize the transfer of funds between Agent and Lenders, Agent may, at its option, subject to the terms of this Section, make available, on behalf of Lenders, the full amount of the Loans requested or charged to any Borrower's loan account(s) or otherwise to be advanced by Lenders pursuant to the terms hereof, without requirement of prior notice to Lenders of the proposed Loans.

(b) With respect to all Loans made by Agent on behalf of Lenders as provided in this Section, the amount of each Lender's Pro Rata Share of the outstanding Loans shall be computed weekly, and shall be adjusted upward or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m. New York City time on the Business Day immediately preceding the date of each settlement computation; PROVIDED, THAT, Agent retains the absolute right at any time or from time to time to make the above described adjustments at intervals more frequent than weekly, but in no event more than twice in any week. Agent shall deliver to each of the Lenders after the end of each week, or at such lesser period or periods as Agent shall determine, a summary statement of the amount of outstanding Loans for such period (such week or lesser period or periods being hereinafter referred to as a "Settlement Period"). If the summary statement is sent by Agent and received by a Lender prior to 12:00 p.m. New York City time, then such Lender shall make the settlement transfer described in this
Section by no later than 3:00 p.m. New York City time on the same Business Day and if received by a Lender after 12:00 p.m. New York City time, then such Lender shall make the settlement transfer by not later than 3:00 p.m. New York City time on the next Business Day following the date of receipt. If, as of the end of any Settlement Period, the amount of a Lender's Pro Rata Share of the outstanding Loans is more than such Lender's Pro Rata Share of the outstanding Loans as of the end of the previous Settlement Period, then such Lender shall forthwith (but in no event later than the time set forth in the preceding sentence) transfer to Agent by wire transfer in immediately available funds the amount of the increase. Alternatively, if the amount of a Lender's Pro Rata Share of the outstanding Loans in any Settlement Period is less than the amount of such Lender's Pro Rata Share of the outstanding Loans for the previous Settlement Period, Agent shall forthwith transfer to such Lender by wire transfer in immediately available funds the amount of the decrease. The obligation of each of the Lenders to transfer such funds and effect such settlement shall be irrevocable and unconditional and without recourse to or warranty by Agent. Agent and each Lender agrees to mark its books and records at the end of each Settlement Period to show at all times the dollar amount of its Pro Rata Share of the outstanding Loans and Letter of Credit Accommodations. Each Lender shall only be entitled to receive interest on its Pro Rata Share of the Loans to the extent such Loans have been funded by such Lender. Because the Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to the time when Lenders will actually advance and/or be repaid such Loans, interest with respect to Loans shall be allocated by Agent in accordance with the amount of Loans

actually advanced by and repaid to each Lender and the Agent and shall accrue from and including the date such Loans are so advanced to but excluding the date such Loans are either repaid by Borrowers or actually settled with the applicable Lender as described in this Section.

(c) To the extent that Agent has made any such amounts available and the settlement described above shall not yet have occurred, upon repayment of any Loans by a Borrower, Agent may apply such amounts repaid directly to any amounts made available by Agent pursuant to this Section. In lieu of weekly or more frequent settlements, Agent may, at its option, at any time require each Lender to provide Agent with immediately available funds representing its Pro Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower. In such event, all Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares. No Lender shall be responsible for any default by any other Lender in the other Lender's obligation to make a Loan requested hereunder nor shall the Commitment of any Lender be increased or decreased as a result of the default by any other Lender in the other Lender's obligation to make a Loan hereunder.

(d) If Agent is not funding a particular Loan to a Borrower (or Administrative Borrower for the benefit of such Borrower) pursuant to Sections 6.10(a) and 6.10(b) above on any day, but is requiring each Lender to provide Agent with immediately available funds on the date of such Loan as provided in
Section 6.10(c) above, Agent may assume that each Lender will make available to Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on such day and Agent may, in its discretion, but shall not be obligated to, cause a corresponding amount to be made available to or for the benefit of such Borrower on such day. If Agent makes such corresponding amount available to a Borrower and such corresponding amount is not in fact made available to Agent by such Lender, Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agent's option based on the arithmetic mean determined by Agent of the rates for the last transaction in overnight federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of the three leading brokers of federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate Loans. During the period in which such Lender has not paid such corresponding amount to Agent, notwithstanding anything to the contrary contained in this Agreement or any of the other Financing Agreements, the amount so advanced by Agent to or for the benefit of any Borrower shall, for all purposes hereof, be a Loan made by Agent for its own account. Upon any such failure by a Lender to pay Agent, Agent shall promptly thereafter notify Administrative Borrower of such failure and Borrowers shall pay such corresponding amount to Agent for its own account within five (5) Business Days of Administrative Borrower's receipt of such notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans made available by the Agent on such Lender's behalf, or any Lender who fails to pay any other amount owing by it to Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, relend to a Borrower the amount of all such payments received or

retained by it for the account of such Defaulting Lender. For purposes of voting or consenting to matters with respect to this Agreement and the other Financing Agreements and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be zero (0). This Section shall remain effective with respect to a Defaulting Lender until such default is cured. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by any Borrower or Obligor of their duties and obligations hereunder.

(e) Nothing in this Section or elsewhere in this Agreement or the other Financing Agreements shall be deemed to require Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that any Borrower may have against any Lender as a result of any default by any Lender hereunder in fulfilling its Commitment.

6.11 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS. The obligation of each Lender hereunder is several, and no Lender shall be responsible for the obligation or commitment of any other Lender hereunder. Nothing contained in this Agreement or any of the other Financing Agreements and no action taken by the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders to be a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and subject to Section 12.3 hereof, each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

SECTION 7. COLLATERAL REPORTING AND COVENANTS

7.1 CNS/CASS AND COLLATERAL REPORTING.

(a) Borrowers shall provide Agent with the following documents in a form satisfactory to Agent:

(i) on a regular basis as required by Agent, a schedule of Accounts indicating sales made, credits issued and cash received;

(ii) as soon as possible after the end of each month (but in any event within thirteen (13) Business Days after the end thereof), on a monthly basis or more frequently as Agent may request, (A) a Borrowing Base Certificate setting forth the calculation of the Borrowing Base as of the last Business Day of the immediately preceding month, duly completed and executed by the chief financial officer, chief executive officer, vice president of finance, treasurer or controller of Administrative Borrower, together with all schedules required pursuant to the terms of the Borrowing Base Certificate duly completed (including a schedule of all Accounts created, collections received and credit memos issued for each day of the immediately preceding month); (B) aging of accounts receivable (together with a reconciliation to the previous month's aging and general ledger), (C) aging of accounts payable (and including information indicating the amounts owing to owners and lessors of leased premises, warehouses, processors and other third parties from time to time in possession of any Collateral) and (D) a listing of each ACMI Contract in effect as of the last day of such month setting forth on such

listing the name of the account debtor and the amount of contractual monthly rental for each such ACMI Contract;

(iii) as soon as possible after the end of each calendar quarter (but in any event within thirteen (13) Business Days after the end thereof, if Loans or Letter of Credit Accommodations are then outstanding), (A) perpetual Inventory, Engines and Spare Parts reports of Inventory, Engines and Spare Parts constituting Collateral, and (B) Inventory, Engines and Spare Parts reports by location and category of Inventory, Engines and Spare Parts constituting Collateral (and including the amounts thereof and the value thereof at any leased locations and at premises of warehouses, processors or other third parties).

(iv) upon Agent's request, (A) copies of customer statements, purchase orders, sales invoices, credit memos, remittance advices and reports, and copies of deposit slips and bank statements, (B) copies of shipping and delivery documents, (C) copies of purchase orders, invoices and delivery documents for Spare Parts, Inventory and Engines and Equipment for Spare Parts, Inventory and Engines and Equipment constituting Collateral acquired by any Borrower or Guarantor and (D) with respect to Accounts constituting Eligible Accounts as to which the account debtor is the United States of America, any state, political subdivision, department, agency or instrumentality thereof, copies of all agreements, invoices and other documents and materials related thereto, together with such other information with respect thereto as Agent may request, for the purpose of verifying the validity, amount or any other matter related to such Accounts;

(v) such other reports as to the Collateral as Agent shall request from time to time in good faith.

(b) Without limiting any of the provisions contained in Section 7.1(a) hereof, Polar shall, twice each month, forward to Agent copies of the data submitted by Polar to CASS and/or CNS in connection with and pursuant to and in accordance with the Clearinghouse Agreements with respect to the preceding bi-monthly period (the "Recap Sheet"). Polar shall promptly present the Recap Sheet to CASS and/or CNS, as applicable, together with all related supporting documents properly batched in accordance with the Clearinghouse Agreements or as otherwise required by CNS and/or CASS, the Clearing Bank, or the account debtor. Polar shall submit the Recap Sheet to the Clearing Bank so that the Recap Sheet is received by the Clearing Bank on or before the bi-monthly due date therefor as provided in the Clearinghouse Agreements. Agent shall have the right, in its discretion, at any time on or after the occurrence of an Event of Default, to require that Polar deliver to Agent or its designee at such place and in such manner as Agent may direct, all original exchange orders, bills of lading or other transportation documents relating to the air transportation of cargo, including mail, by Polar, whether before or after having been grouped or otherwise processed by Polar, prior to the presentation of such items to the Clearing Bank, CNS or CASS, IATA or any account debtor.

(c) Polar shall, upon Agent's request, promptly after submitting the Recap Sheet to CNS or CASS deliver a copy of the Recap Sheet to Agent, together with such other information, schedules, reports, or other materials with respect thereto, as Agent may from time to time request in good faith.

(d) Polar shall furnish, or cause to be furnished to Agent, all settlement statements and other material printouts, notices, correspondence or documents at any time received by Polar (promptly after receipt thereof) or sent by Polar (concurrently with the sending thereof), as the case may be, from or to the Clearing Bank, CNS, CASS or IATA.

(e) If any Borrower's or Guarantor's records or reports of the Collateral are prepared or maintained by an accounting service, contractor, shipper or other agent, including pursuant to any Clearinghouse Agreement, such Borrower and Guarantor hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such records, reports, and related documents to Agent and to follow Agent's instructions with respect to further services at any time that an Event of Default exists or has occurred and is continuing.

7.2 ACCOUNTS COVENANTS.

(a) Borrowers shall notify Agent promptly of: (i) any material delay in any Borrower's performance of any of its material obligations to any account debtor or the assertion of any material claims, offsets, defenses or counterclaims by any account debtor, or any material disputes with account debtors, or any settlement, adjustment or compromise thereof, (ii) all material adverse information known to any Borrower or Guarantor relating to the financial condition of any account debtor and (iii) any event or circumstance which, to the best of any Borrower's or Guarantor's knowledge, would cause Agent to consider any then existing Eligible Accounts as no longer constituting Eligible Accounts. No credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor without Agent's consent, except in the ordinary course of a Borrower's or Guarantor's business in accordance with practices and policies previously disclosed in writing to Agent and except as set forth in the schedules delivered to Agent pursuant to Section
7.1 (a) above. So long as no Event of Default exists or has occurred and is continuing, Borrowers and Guarantors shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any account debtor. At any time that an Event of Default exists or has occurred and is continuing, Agent shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with account debtors or grant any credits, discounts or allowances.

(b) With respect to each Account constituting Collateral: (i) the amounts shown on any invoice delivered to Agent or schedule thereof delivered to Agent shall be true and complete, (ii) no payments shall be made thereon except payments made in accordance with the terms and conditions of this Agreement,
(iii) no credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor except as reported to Agent in accordance with this Agreement and except for credits, discounts, allowances or extensions made or given in the ordinary course of each Borrower's business in accordance with practices and policies previously disclosed to Agent, (iv) there shall be no setoffs, deductions, contras, defenses, counterclaims or disputes existing or asserted with respect thereto except as reported to Agent in accordance with the terms of this Agreement, (v) none of the transactions giving rise thereto will violate any applicable foreign, federal, state or local laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms.

(c) Agent shall have the right at any time or times, in Agent's name or in the name of a nominee of Agent, to verify the validity, amount or any other matter relating to any Receivables constituting Collateral or other Collateral, by mail, telephone, facsimile transmission or otherwise.

(d) Polar represents, warrants and covenants to Agent and Lenders that not less than thirty (30%) percent of all Accounts and other sums payable by IATA members to Polar in respect of transportation services rendered by Polar are and shall be settled through CNS and/or CASS and remitted by the Clearing Bank in accordance herewith.

(e) Agent may, at any time or times that an Event of Default exists or has occurred and is continuing, (i) notify any or all account debtors, CNS, CASS and/or the Clearing Bank that the Accounts constituting Collateral of Polar have been assigned to Agent and that Agent has a security interests therein and Agent may direct any or all account debtors, CNS, CASS, IATA and/or the Clearing Bank to make payment of such Accounts of Polar directly to Agent,
(ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Accounts or other obligations included in the Collateral and thereby discharge or release the account debtor, CNS, CASS, IATA and/or the Clearing Bank or any other party or parties in any way liable for payment or settlement thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Accounts constituting Eligible Accounts or such other obligations, but without any duty to do so, and Agent shall not be liable for its failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other action Agent may deem necessary or desirable for the protection of its interests. At any time that an Event of Default exists or has occurred and is continuing, at Agent's request, all invoices and statements sent to any account debtor, CNS, CASS, IATA and/or the Clearing Bank shall state that the Accounts constituting Collateral and such other obligations have been assigned to Agent and are payable directly and only to Agent and Polar shall deliver to Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any such Accounts as Agent may require.

(f) Borrowers and Guarantors represent, warrant and covenant with, to and in favor of Agent that all of the Accounts and Receivables (other than any such Accounts or Receivables which are Excluded Property) shall at all times constitute Collateral in which Agent has a first priority security interest.

7.3 ENGINES, SPARE PARTS AND INVENTORY COVENANTS. With respect to that portion of the Collateral consisting of Engines, Spare Parts and Inventory, in addition to, and not in limitation of any of the provisions contained in the Engine Security Agreement, Spare Parts Agreement or any other Financing Agreement: (a) Borrowers shall at all times maintain inventory records, logs and other materials in accordance with the past practices of Borrowers as previously disclosed to Agent (i) that are necessary or appropriate to preserve in full force and effect any warranties with respect to the Engines, Spare Parts and Inventory constituting Collateral and (ii) itemizing and describing the kind, type, quality and quantity of Engines, Spare Parts and Inventory constituting Collateral, each Borrower's and Guarantor's cost therefor and periodic withdrawals therefrom and additions thereto; (b) Borrowers shall conduct a cycle count of the Engines, Spare Parts and Inventory constituting Collateral at least once each year, but at any time or times as

Agent may request on or after an Event of Default, and promptly following such cycle count shall supply Agent with a report in the form and with such specificity as may be satisfactory to Agent concerning such cycle count; (c) each Borrower and Guarantor shall store and maintain the Secured Aircraft or Engines and Spare Parts constituting Collateral in accordance with and in compliance in all material respects with the requirements of such Borrower's or Guarantor's maintenance program approved by the FAA to the extent required by applicable law; (d) Borrowers and Guarantors shall perform all material overhauls, checks, inspections, recertifications and maintenance service to all Engines or Spare Parts constituting Collateral as are required to be performed under all applicable Federal Aviation Laws, manufacturers' service bulletins, manuals and notices relating to the Engines or Spare Parts; (e) no Borrower or Guarantor shall remove any Engines, Spare Parts or Inventory constituting Collateral from the locations set forth or permitted herein, without the prior written consent of Agent, except, prior to an Event of Default (or, after an Event of Default, with Agent's prior written consent) to (A) deliver possession to any third party lessee pursuant to the lease thereof to the extent such lease is otherwise permitted herein, and (B) move Engines, Spare Parts or Inventory constituting Collateral directly from one location set forth or permitted herein to another such location for use or consumption in the ordinary course of a Borrower's or Guarantor's business, including installation upon Aircraft, and except for the refurbishment, repair and/or recertification of any Engines or Spare Parts constituting Collateral removed from Aircraft; (f) Borrowers shall, at their expense, deliver or cause to be delivered to Agent annual updated desktop Appraisals as to the Engines and Spare Parts constituting Collateral, or more frequent updated or new Appraisals at Agent's request at any time or times on or after an Event of Default, in form, scope and methodology acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent or upon which Agent is expressly permitted to rely; (g) each Borrower and Guarantor shall use, store and maintain Engines, Spare Parts and Inventory constituting Collateral consistent with customary industry standards and in accordance in all material respects with applicable standards of any insurance and in conformity with applicable laws (including, but not limited to, the requirements of the Federal Aviation Laws and the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (h) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the maintenance, use, and operation of Engines, Spare Parts and Inventory constituting Collateral; (i) each Borrower and Guarantor shall keep all material Engines, Spare Parts and Inventory constituting Collateral in good condition, reasonable wear and tear excepted; and (j) the Spare Parts that are required to be subject to the first priority, perfected security interest of Agent pursuant to this Agreement and the other Financing Agreements, shall at all times have a value (determined on the basis of the lower of cost or market value) of not less than $50,000,000 in the aggregate.

7.4 AIRCRAFT COVENANTS.

(a) With respect to the Secured Aircraft: (i) upon Agent's request, each Borrower shall, at its expense, at any time or times as Agent may request on or after an Event of Default, deliver or cause to be delivered to Agent written reports or desktop appraisals as to the Secured Aircraft; (ii) Borrowers and Guarantors shall keep the Secured Aircraft in good order, repair, running and marketable condition (ordinary wear and tear excepted) in compliance in all material respects with the requirements of such Borrower's maintenance program approved by the FAA, Foreign Aviation Authorities and all of the manufacturers' manuals and mandatory and non-mandatory service bulletins; (iii) Borrowers and Guarantors shall perform all material overhauls,

checks, inspections and maintenance service to all Secured Aircraft as are required under all Air Carrier Certificates, all Federal Aviation Laws and all manufacturers' service manuals and bulletins; (iv) Borrowers and Guarantors shall use the Secured Aircraft with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with all Air Carrier Certificates, Federal Aviation Laws and all other applicable laws;
(v) the Secured Aircraft are and shall be used in a Borrower's business and not for personal, family, household or farming use; (vi) Borrowers and Guarantors shall not remove any Secured Aircraft except for the movement of such Secured Aircraft used by or for the benefit of a Borrower in the ordinary course of business; (vii) the Secured Aircraft are now and shall remain personal property and Borrowers and Guarantors shall not permit any of the Secured Aircraft to be or become a part of or affixed to real property; and (viii) each Borrower and Guarantor assumes all responsibility and liability arising from the use of the Secured Aircraft.

(b) Borrowers shall provide to Agent a quarterly report setting forth the usage of the EETC Aircraft and such information with respect thereto as Agent may request.

7.5 POWER OF ATTORNEY. Each Borrower and Guarantor hereby irrevocably designates and appoints Agent (and all persons designated by Agent) as such Borrower's and Guarantor's true and lawful attorney-in-fact, and authorizes Agent, in such Borrower's, Guarantor's or Agent's name, to: (a) at any time an Event of Default exists or has occurred and is continuing (i) demand payment on Receivables constituting Collateral or other Collateral, including from CNS, CASS, IATA and/or the Clearing Bank, payment on Accounts or other proceeds of Collateral, (ii) enforce payment of Receivables constituting Collateral by legal proceedings or otherwise, (iii) exercise all of such Borrower's or Guarantor's rights and remedies to collect any Receivable constituting Collateral or other Collateral, (iv) sell or assign any Receivable constituting Collateral upon such terms, for such amount and at such time or times as the Agent deems advisable,
(v) settle, adjust, compromise, extend or renew an Account constituting Collateral, (vi) discharge and release any Receivable constituting Collateral,
(vii) prepare, file and sign such Borrower's or Guarantor's name on any proof of claim in bankruptcy or other similar document against an account debtor, the CNS, CASS, IATA, the Clearing Bank or other obligor in respect of any Receivables constituting Collateral or other Collateral, (viii) notify the post office authorities to change the address for delivery of remittances from account debtors or other obligors in respect of Receivables constituting Collateral or other proceeds of Collateral to an address designated by Agent, and open and dispose of all mail addressed to such Borrower or Guarantor and handle and store all mail relating to the Collateral; and (ix) do all acts and things which are necessary, in Agent's determination, to fulfill such Borrower's or Guarantor's obligations under this Agreement and the other Financing Agreements and (b) at any time to (i) take control in any manner of any item of payment in respect of Receivables constituting Collateral or other Collateral or otherwise received in or for deposit in the Blocked Accounts or otherwise received by Agent or any Lender, (ii) have access to any lockbox or postal box into which remittances from account debtors or other obligors in respect of Receivables constituting Collateral or other proceeds of Collateral are sent or received, (iii) endorse such Borrower's or Guarantor's name upon any items of payment in respect of Receivables constituting Collateral or Collateral or otherwise received by Agent and any Lender and deposit the same in Agent's account for application to the Obligations, (iv) endorse such Borrower's or Guarantor's name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Receivable constituting Collateral or any goods pertaining thereto or any other

Collateral, including any warehouse or other receipts, or bills of lading and other negotiable or non-negotiable documents, (v) clear Inventory the purchase of which was financed with Letter of Credit Accommodations through U.S. Customs or foreign export control authorities in such Borrower's or Guarantor's name, Agent's name or the name of Agent's designee, and to sign and deliver to customs officials powers of attorney in such Borrower's or Guarantor's name for such purpose, and to complete in such Borrower's or Guarantor's or Agent's name, any order, sale or transaction, obtain the necessary documents in connection therewith and collect the proceeds thereof, (vi) file and submit in any Borrower's or Guarantor's name, any statements, Recap Sheets or reports and take any other action required to be taken by a Borrower or Guarantor under the Clearinghouse Agreements, in order to effect payment of sums to be settled and paid by or through the CNS, CASS, IATA or the Clearing Bank, and (vii) sign such Borrower's or Guarantor's name on any verification of Receivables constituting Collateral and notices thereof to account debtors or any secondary obligors or other obligors in respect thereof. Each Borrower and Guarantor hereby releases Agent and Lenders and their respective officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Agent's or any Lender's own gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

7.6 RIGHT TO CURE. Agent may, at its option, upon notice to Administrative Borrower, (a) cure any default by any Borrower or Guarantor under any material agreement with a third party that affects the Collateral, its value or the ability of Agent to collect, sell or otherwise dispose of the Collateral or the rights and remedies of Agent or any Lender therein or the ability of any Borrower or Guarantor to perform its obligations hereunder or under any of the other Financing Agreements, (b) pay or bond on appeal any judgment entered against any Borrower or Guarantor, (c) discharge taxes, liens, security interests or other encumbrances at any time levied on or existing with respect to the Collateral and pay any amount, incur any expense or perform any act which, in Agent's judgment, is necessary or appropriate to preserve, protect, insure or maintain the Collateral and the rights of Agent and Lenders with respect thereto. Agent may add any amounts so expended to the Obligations and charge any Borrower's account therefor, such amounts to be repayable by Borrowers on demand. Agent and Lenders shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any Borrower or Guarantor. Any payment made or other action taken by Agent or any Lender under this Section shall be without prejudice to any right to assert an Event of Default hereunder and to proceed accordingly.

7.7 ACCESS TO PREMISES. From time to time as requested by Agent, at the cost and expense of Borrowers, (a) Agent or its designee shall have complete access to all of each Borrower's and Guarantor's premises during normal business hours and after reasonable notice to Atlas Holdings, or at any time and without notice to Administrative Borrower if an Event of Default exists or has occurred and is continuing, for the purposes of inspecting, verifying and auditing the Collateral and all of each Borrower's and Guarantor's books and records, including the Records, and (b) each Borrower and Guarantor shall promptly furnish to Agent such copies of such books and records or extracts therefrom as Agent may request, and Agent or any Lender or Agent's designee may use during normal business hours such of any Borrower's and Guarantor's personnel, equipment, supplies and premises as may be reasonably necessary for the

foregoing and if an Event of Default exists or has occurred and is continuing for the collection of Receivables constituting Collateral and realization of other Collateral.

SECTION 8. REPRESENTATIONS AND WARRANTIES

Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of which are a continuing condition of the making of Loans and providing Letter of Credit Accommodations to Borrowers:

8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY. Each Borrower and Guarantor is a corporation duly organized and in good standing under the laws of its state of incorporation and is duly qualified as a foreign corporation and in good standing in all states or other jurisdictions where the nature and extent of the business transacted by it or the ownership of assets makes such qualification necessary, except for those jurisdictions in which the failure to so qualify would not have a Material Adverse Effect. The execution, delivery and performance of this Agreement, the other Financing Agreements and the transactions contemplated hereunder and thereunder (i) are all within each Borrower's and Guarantor's corporate powers, (ii) have been duly authorized,
(iii) are not in contravention of law or the terms of any Borrower's or Guarantor's certificate of incorporation, by-laws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound and (iv) will not result in the creation or imposition of, or require or give rise to any obligation to grant, any lien, security interest, charge or other encumbrance upon any property of any Borrower or Guarantor other than in favor of Agent, for itself and the benefit of Lenders. This Agreement and the other Financing Agreements to which any Borrower or Guarantor is a party constitute legal, valid and binding obligations of such Borrower and Guarantor enforceable in accordance with their respective terms.

8.2 NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS.

(a) The exact legal name of each Borrower and Guarantor is as set forth on the signature page of this Agreement and in the Information Certificate. No Borrower or Guarantor has, during the five years prior to the date of this Agreement, been known by or used any other corporate or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in the Information Certificate.

(b) Each Borrower and Guarantor is an organization of the type and organized in the jurisdiction set forth in the Information Certificate. The Information Certificate accurately sets forth the organizational identification number of each Borrower and Guarantor or accurately states that such Borrower or Guarantor has none and accurately sets forth the federal employer identification number of each Borrower and Guarantor.

(c) The chief executive office and mailing address of each Borrower and Guarantor and each Borrower's and Guarantor's Records concerning Accounts are located only at the address identified as such in Schedule 8.2 to the Information Certificate and its only other places

of business and the only other locations of Collateral, if any, are the addresses set forth in Schedule 8.2 to the Information Certificate, subject to the rights of any Borrower or Guarantor to establish new locations in accordance with Section 9.2 below. The Information Certificate correctly identifies any of such locations which are not owned by a Borrower or Guarantor and sets forth the owners and/or operators thereof.

8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial statements relating to any Borrower or Guarantor (including financial statements with respect to Atlas Holdings and its Subsidiaries) which have been or may hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have been prepared in accordance with GAAP (except as to (a) any forecasted financial statements, or (b) any interim financial statements, to the extent such statements are subject to post period adjustments and do not include any notes) and fairly present in all material respects the financial condition and the results of operation of Atlas Holdings, on a consolidated basis, as at the dates and for the periods set forth therein. Except as disclosed in any interim financial statements or written report specifically identifying a Material Adverse Effect, in either case furnished by Borrowers and Guarantors to Agent prior to the date of this Agreement, there has been no act, condition or event which has had or is reasonably likely to have a Material Adverse Effect since the date of the most recent audited financial statements of Atlas Holdings furnished by any Borrower or Guarantor to Agent prior to the date of this Agreement.

8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests and liens granted to Agent under this Agreement and the other Financing Agreements constitute valid and perfected first priority liens and security interests in and upon the Collateral subject only to the liens indicated on Schedule 8.4 to the Information Certificate and the other liens permitted under Section 9.8 hereof. Each Borrower and Guarantor has good and marketable fee simple title to or valid leasehold interests in all of its Real Property and good, valid and merchantable title to all of its other material properties and assets subject to no liens, mortgages, pledges, security interests, encumbrances or charges of any kind, except those granted to Agent and such others as are specifically listed on Schedule 8.4 to the Information Certificate or permitted under Section 9.8 hereof.

8.5 TAX RETURNS. Except as disclosed in the Information Certificate, (a) each Borrower and Guarantor has filed, or caused to be filed, in a timely manner all tax returns, reports and declarations which are required to be filed by it,
(b) all information in such tax returns, reports and declarations is complete and accurate in all material respects, (c) each Borrower and Guarantor has paid or caused to be paid all taxes due and payable or claimed due and payable in any assessment received by it, except taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower or Guarantor and with respect to which adequate reserves have been set aside on its books, and (d) adequate provision has been made for the payment of all accrued and unpaid federal, state, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed.

8.6 LITIGATION. Except as set forth on Schedule 8.6 to the Information Certificate, (a) there is no investigation by any Governmental Authority pending, or to the best of any Borrower's or Guarantor's knowledge threatened, against or affecting any Borrower or Guarantor, its or their assets or business and (b) there is no action, suit, proceeding or claim by

any Person pending, or to the best of any Borrower's or Guarantor's knowledge threatened, against any Borrower or Guarantor or its or their assets or goodwill, or against or affecting any transactions contemplated by this Agreement, in each case as to clauses (a) and (b), which has or could reasonably be expected to have a Material Adverse Effect.

8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.

(a) Borrowers and Guarantors are not in default in any respect under, or in violation in any respect of the terms of, any agreement, contract, instrument, lease or other commitment to which it is a party or by which it or any of its assets are bound where such default or violation has or could reasonably be expected to have a Material Adverse Effect. Borrowers and Guarantors are in compliance with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including the FAA and the DOT) relating to their respective businesses, including those set forth in or promulgated pursuant to the Federal Aviation Laws, Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, and the rules and regulations thereunder, and all Environmental Laws where the failure to so comply has or could reasonably be expected to have a Material Adverse Effect.

(b) Borrowers and Guarantors have obtained all material permits, licenses, approvals, consents, certificates (including Air Carrier Certificates), orders or authorizations of any Governmental Authority (including the FAA and DOT) required for the lawful conduct of their businesses (the "Permits"). Exhibit F hereto sets forth the Permits issued to Borrowers or Guarantors by the FAA, the DOT or other domestic Governmental Authority as of the date hereof, and Borrowers and Guarantors represent, warrant and agree that, upon the request of Agent, Borrowers and Guarantors shall update such Exhibit F hereto to reflect any additions to or deletions from such Exhibit F including, on or after an Event of Default, any Permits issued to Borrowers or Guarantors by all foreign Governmental Authorities. All of the Permits are valid and subsisting and in full force and effect. There are no actions, claims or proceedings pending or to the best of any Borrower's or Guarantor's knowledge, threatened that seek the revocation, cancellation, suspension or modification of any of the Permits except as disclosed on Schedule 8.7 to the Information Certificate.

8.8 AIR CARRIER OPERATIONS.

(a) Each Borrower has all necessary Air Carrier Certificates in connection with the transportation cargo, including mail, and the operation, maintenance and repair of its Aircraft, Engines, Spare Parts and related Equipment, in the ordinary course of its business as presently conducted or proposed to be conducted, in accordance with all requirements of the Federal Aviation Laws and other applicable laws and regulations.

(b) Except at set forth on Schedule 8.8 to the Information Certificate, no Borrower has received any notice or citation for non-compliance with any Air Carrier Certificates or any Federal Aviation Laws in connection with the air transportation of cargo, including mail, and the use, operation and maintenance of its Aircraft, Engines, Spare Parts and related Equipment, where the failure to so comply has or could reasonably be expected to have a Material Adverse Effect.

(c) All Aircraft have been duly registered with the FAA and/or the applicable Foreign Aviation Authority pursuant to an Aircraft registration, and such Aircraft registration has been affixed or placed therein, and each Aircraft in use or to be used by a Borrower has been issued an Airworthiness Certificate (as defined in the Federal Aviation Laws) by the FAA or an equivalent certificate issued by an equivalent Foreign Aviation Authority having jurisdiction with respect thereto.

(d) Except as permitted under Section 9.3(a), each Borrower is and shall at all times remain a Certificated Air Carrier.

8.9 SLOT AND ROUTE UTILIZATION.

(a) Each Borrower is utilizing its Slots in a manner consistent with applicable laws, regulations and contracts in order to preserve its right to hold and operate its Slots. As of the Effective Date, no Borrower has received any notice from the FAA, DOT or any applicable Foreign Aviation Authority, or is aware of any other event or circumstance, that would be reasonably likely to impair its right to hold and operate any of its Slots.

(b) Each Borrower holds the requisite authority to operate over each of its Routes pursuant to the Federal Aviation Laws, applicable foreign law, and the applicable regulations, orders and directives of the FAA, the DOT and, to the extent applicable, the Foreign Aviation Authorities having jurisdiction over its operations, and has, at all times after being awarded each such Route, complied in all material respects with all of the terms, conditions and limitations of each such certificate, order, permit or license issued by the DOT and the applicable Foreign Aviation Authorities regarding such Route and with all applicable provisions of the Federal Aviation Laws or applicable foreign law. There exists no violation by any Borrower of such terms, conditions or limitations that could reasonably be expected to cause the FAA, DOT or any applicable Foreign Aviation Authorities to terminate, cancel, withdraw or modify the rights of any Borrower in any of its Routes.

8.10 CASS/IATA OPERATIONS.

(a) Atlas is a member in good standing of IATA and is in compliance in all material respects with the rules and procedures of IATA applicable to Atlas;

(b) Polar is a CASS participant and is not required in connection with such CASS participation or otherwise, to be a member of IATA;

(c) From time to time, as Agent may request, Polar shall promptly provide to Agent a schedule of the offices of CASS with respect to which Polar has entered into and maintains Clearinghouse Agreements;

(d) From time to time, as Agent may request, Polar shall promptly provide to Agent a schedule of the Cargo Agents acting on behalf of Polar, which schedule shall indicate which Cargo Agents remit payments to Polar through CASS and which Cargo Agents remit payments to Polar directly (outside of CASS); and

(e) In respect of their rendition of services for the benefit of Polar, each Cargo Agent, as applicable, is responsible for the payment of all monies due to the applicable air carrier resulting from the issuance of any transportation documents in the name of such air carrier, irrespective of whether such monies are collected by such Cargo Agent.

8.11 ENVIRONMENTAL COMPLIANCE.

(a) Except as set forth on Schedule 8.11 to the Information Certificate, Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor have not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or off its premises (whether or not owned by it) in any manner which at any time violates in any material respect any applicable Environmental Law or Permit, and the operations of Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor complies in all material respects with all Environmental Laws and all Permits.

(b) Except as set forth on Schedule 8.11 to the Information Certificate, there has been no investigation by any Governmental Authority or any proceeding, complaint, order, directive, claim, citation or notice by any Governmental Authority or any other person nor is any pending or to the best of any Borrower's or Guarantor's knowledge threatened, with respect to any non-compliance with or violation of the requirements of any Environmental Law by any Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor or the release, spill or discharge, threatened or actual, of any Hazardous Material or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials or any other environmental, health or safety matter, which has or could reasonably be expected to have a Material Adverse Effect.

(c) Except as set forth on Schedule 8.11 to the Information Certificate, Borrowers, Guarantors and their Subsidiaries have no liability (contingent or otherwise) in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials which has or could reasonably be expected to have a Material Adverse Effect.

(d) Borrowers, Guarantors and their Subsidiaries have all Permits required to be obtained or filed in connection with the operations of Borrowers and Guarantors under any Environmental Law and all of such licenses, certificates, approvals or similar authorizations and other Permits are valid and in full force and effect except where the failure to obtain or maintain any Permit has or could reasonably be expected to have a Material Adverse Effect.

8.12 EMPLOYEE BENEFITS.

(a) To the best of each Borrower's and Guarantor's knowledge, each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. Each Plan which is intended to qualify under Section 401 (a) of the Code has received a favorable determination letter from the Internal Revenue Service and to the best of any Borrower's or Guarantor's knowledge, nothing has occurred which would cause the loss of such qualification. Each Borrower and its ERISA Affiliates have made all required contributions

to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending, or to the best of any Borrower's or Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan.

(c) (i) To the best of each Borrower's and Guarantor's knowledge, no ERISA Event has occurred or is reasonably expected to occur that has resulted in or could reasonably be expected to result in liability of any Borrower or Guarantor in an aggregate amount in excess of $250,000; (ii) the current value of each Plan's assets (determined in accordance with the assumptions used for funding such Plan pursuant to Section 412 of the Code) are not less than such Plan's liabilities under Section 4001(a)(16) of ERISA; (iii) each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any liability under Title IV of ERISA with respect to any Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv) each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) each Borrower and Guarantor, and their ERISA Affiliates, have not engaged in a transaction that would be subject to Section 4069 or 4212(c) of ERISA.

8.13 BANK ACCOUNTS. All of the deposit accounts, investment accounts or other accounts in the name of or used by any Borrower or Guarantor maintained at any bank or other financial institution are set forth on Schedule 8.13 to the Information Certificate, subject to the right of each Borrower and Guarantor to establish new accounts in accordance with Section 5.2 hereof.

8.14 INTELLECTUAL PROPERTY. Each Borrower and Guarantor owns or licenses or otherwise has the right to use all Intellectual Property necessary for the operation of its business as presently conducted or proposed to be conducted. As of the date hereof, Borrowers and Guarantors do not have any Intellectual Property registered, or subject to pending applications, in the United States Patent and Trademark Office or any similar office or agency in the United States, any state thereof, any political subdivision thereof or in any other country, other than those described in Schedule 8.14 to the Information Certificate and has not granted any licenses with respect thereto other than as set forth in Schedule 8.14 to the Information Certificate. No event has occurred which permits or would permit after notice or passage of time or both, the revocation, suspension or termination of such rights. To the best of any Borrower's and Guarantor's knowledge, no slogan or other advertising device, product, process, method, substance or other Intellectual Property or goods bearing or using any Intellectual Property presently contemplated to be sold by or employed by any Borrower or Guarantor infringes any patent, trademark, servicemark, tradename, copyright, license or other Intellectual Property owned by any other Person presently and as of the date hereof no claim or litigation is pending or threatened against or affecting any Borrower or Guarantor contesting its right to sell or use any such Intellectual Property, except as set forth on Schedule 8.14 to the Information Certificate. Schedule 8.14 to the Information Certificate sets forth all of the agreements or other arrangements of each Borrower and Guarantor pursuant to which such Borrower or Guarantor

has a license or other right to use any trademarks, logos, designs, representations or other Intellectual Property owned by another person as in effect on the date hereof and the dates of the expiration of such agreements or other arrangements of such Borrower or Guarantor as in effect on the date hereof (collectively, together with such agreements or other arrangements as may be entered into by any Borrower or Guarantor after the date hereof, collectively, the "License Agreements" and individually, a "License Agreement"). All trademarks and other Intellectual Property used by any Borrower or Guarantor that are owned by another Person are being used in all material respects in accordance with the terms of the License Agreement applicable thereto.

8.15 SUBSIDIARIES; AFFILIATES: CAPITALIZATION: SOLVENCY.

(a) As of the date hereof, each Borrower and Guarantor does not have any direct or indirect Subsidiaries or Affiliates and is not engaged in any joint venture or partnership except as set forth in Schedule 8.15 to the Information Certificate.

(b) As of the date hereof, each Borrower and Guarantor is the record and beneficial owner of all of the issued and outstanding shares of Capital Stock of each of the Subsidiaries listed on Schedule 8.15 to the Information Certificate as being owned by such Borrower or Guarantor and there are no proxies, irrevocable or otherwise, with respect to such shares and no equity securities of any of the Subsidiaries are or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any kind or nature and there are no contracts, commitments, understandings or arrangements by which any Subsidiary is or may become bound to issue additional shares of it Capital Stock or securities convertible into or exchangeable for such shares.

(c) As of the date hereof, the issued and outstanding shares of Capital Stock of each Borrower and Guarantor (other than Atlas Holdings) are directly and beneficially owned and held by the persons indicated in the Information Certificate, and in each case all of such shares have been duly authorized and are fully paid and non-assessable, free and clear of all claims, liens, pledges and encumbrances of any kind, except as disclosed in writing to Agent prior to the date hereof.

(d) Each Borrower and Guarantor (i) is Solvent and will continue to be Solvent after the creation of the Obligations, the security interests of Agent and the other transactions contemplated hereby, (ii) does not have unreasonably small capital after the consummation of the transactions contemplated hereby, and (iii) has not incurred liabilities as a result of the transactions contemplated hereby that are beyond its ability to pay as such liabilities mature.

8.16 INTERRELATED BUSINESSES. Borrowers and Guarantors make up a related organization of various entities constituting a single economic and business enterprise so that Borrowers and Guarantors share an identity of interests such that any benefit received by any one of them benefits the others. Borrowers and Guarantors render services to or for the benefit of the other Borrowers and/or Guarantors, as the case may be, purchase or sell and supply services to or from or for the benefit of the others, make loans, advances and provide other financial accommodations to or for the benefit of the other Borrowers and Guarantors (including INTER ALIA, the payment by Borrowers and Guarantors of creditors of the other Borrowers or Guarantors and guarantees by Borrowers and Guarantors of indebtedness of the other Borrowers and Guarantors

and provide administrative, marketing, payroll and management services to or for the benefit of the other Borrowers and Guarantors). Borrowers and Guarantors have the same chief executive office, centralized accounting and legal services, certain common officers and directors and generally do not provide consolidating financial statements to creditors.

8.17 LABOR DISPUTES.

(a) Set forth on Schedule 8.17 to the Information Certificate is a list (including dates of termination) of all collective bargaining or similar agreements between or applicable to each Borrower and Guarantor and any union, labor organization or other bargaining agent in respect of the employees of any Borrower or Guarantor on the date hereof.

(b) Except as set forth on Schedule 8.17 to the Information Certificate, there is (i) no significant unfair labor practice complaint pending against any Borrower or Guarantor or, to the best of any Borrower's or Guarantor's knowledge, threatened against it, before the National Labor Relations Board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is pending on the date hereof against any Borrower or Guarantor or, to best of any Borrower's or Guarantor's knowledge, threatened against it, and (ii) no strike, labor dispute, slowdown or stoppage is pending against any Borrower or Guarantor or, to the best of any Borrower's or Guarantor's knowledge, threatened against any Borrower or Guarantor which would have or could reasonably be expected to have a Material Adverse Effect.

8.18 RESTRICTIONS ON SUBSIDIARIES. Except for restrictions contained in this Agreement or any other agreement with respect to Indebtedness of any Borrower or Guarantor permitted hereunder as in effect on the date hereof, there are no contractual or consensual restrictions on any Borrower or Guarantor or any of its Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or other assets (i) between any Borrower or Guarantor and any of its or their Subsidiaries or (ii) between any Subsidiaries of any Borrower or Guarantor or (b) the ability of any Borrower or Guarantor or any of its or their Subsidiaries to incur Indebtedness or grant security interests to Agent or any Lender in the Collateral.

8.19 MATERIAL CONTRACTS. Schedule 8.19 to the Information Certificate sets forth all Material Contracts to which any Borrower or Guarantor is a party or is bound as of the date hereof. Borrowers and Guarantors have delivered true, correct and complete copies of such Material Contracts (subject to any confidentiality provisions contained therein) to Agent on or before the date hereof. Borrowers and Guarantors are not in breach or in default in any material respect of or under any Material Contract and have not received any notice of the intention of any other party thereto to terminate any Material Contract prior to the expiration of its stated term.

8.20 PAYABLE PRACTICES. Each Borrower and Guarantor have not made any material change in the historical accounts payable practices from those in effect immediately prior to the date hereof.

8.21 ACCURACY AND COMPLETENESS OF INFORMATION. All information furnished by or on behalf of any Borrower or Guarantor in writing to Agent or any Lender in connection with this

Agreement or any of the other Financing Agreements or any transaction contemplated hereby or thereby, including all information on the Information Certificate is true and correct in all material respects on the date as of which such information is dated or certified and does not omit any material fact necessary in order to make such information not misleading. No event or circumstance has occurred since the Effective Date which has had or could reasonably be expected to have a Material Adverse Effect, which has not been fully and accurately disclosed to Agent in writing prior to the date hereof.

8.22 INACTIVE SUBSIDIARIES. None of the Inactive Subsidiaries owns (or will own) any material assets or conducts or engages (or will engage) in any business.

8.23 EETC DOCUMENTS. To the extent that: (a) any of the EETC Documents delivered to Agent hereunder have been redacted in accordance with Section 9.9(h)(ii) hereof, or (b) any of the EETC Documents were not delivered to Agent hereunder in accordance with Section 9.9(h)(ii) hereof, none of the redacted language nor the provisions of the EETC Documents not delivered creates, grants or evidences the creation or grant of any lien, claim, security interest or other encumbrance with respect to any assets or properties of any of Borrowers or Guarantors.

8.24 SURVIVAL OF WARRANTIES: CUMULATIVE. All representations and warranties contained in this Agreement or any of the other Financing Agreements shall survive the execution and delivery of this Agreement and shall be deemed to have been made again to Agent and Lenders on the date of each additional borrowing or other credit accommodation hereunder and shall be conclusively presumed to have been relied on by Agent and Lenders regardless of any investigation made or information possessed by Agent or any Lender. The representations and warranties set forth herein shall be cumulative and in addition to any other representations or warranties which any Borrower or Guarantor shall now or hereafter give, or cause to be given, to Agent or any Lender.

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

9.1 MAINTENANCE OF EXISTENCE.

(a) Without limitation upon the provisions of Section 9.7 hereof, each Borrower and Guarantor shall at all times preserve, renew and keep in full force and effect its corporate existence and rights and franchises with respect thereto and maintain in full force and effect all licenses, trademarks, tradenames, approvals, authorizations, leases, contracts (including the Clearinghouse Agreements) and Permits (including Air Carrier Certificates) necessary to carry on the business as presently or proposed to be conducted. Borrowers shall not enter into any amendment or supplement to any of the Clearinghouse Agreements without the consent of Agent, which consent Agent agrees shall not be unreasonably withheld if Agent determines that any such proposed amendment or supplement does not adversely affect any of the Collateral or the rights of Agent or Lenders with respect thereto; PROVIDED, THAT Borrowers may after prior written notice to Agent enter into any amendment or supplement to any of the Clearinghouse Agreements that does not adversely affect the Collateral or Agent's rights with respect thereto.

(b) No Borrower or Guarantor shall change its name unless each of the following conditions is satisfied: (i) Agent shall have received not less than thirty (30) days prior written

notice from Administrative Borrower of such proposed change in its corporate name, which notice shall accurately set forth the new name; and (ii) Agent shall have received a copy of the amendment to the Certificate of Incorporation of such Borrower or Guarantor providing for the name change certified by the Secretary of State of the jurisdiction of incorporation or organization of such Borrower or Guarantor as soon as it is available.

(c) No Borrower or Guarantor shall change its chief executive office or its mailing address or organizational identification number (or if it does not have one, shall not acquire one) unless Agent shall have received not less than thirty (30) days' prior written notice from Administrative Borrower of such proposed change, which notice shall set forth such information with respect thereto as Agent may require and Agent shall have received such agreements as Agent may reasonably require in connection therewith. No Borrower or Guarantor shall change its type of organization, jurisdiction of organization or other legal structure unless Agent shall have received not less than thirty (30) Business Days' prior written notice from Administrative Borrower of such proposed change, which notice shall set forth such information with respect thereto as Agent may require and Agent shall have received such agreements as Agent may reasonably require in connection therewith; provided, that, in no event shall any Borrower or Guarantor change its type of organization so that it is other than a registered organization or change its jurisdiction to a jurisdiction outside the United States of America.

9.2 NEW COLLATERAL LOCATIONS. Each Borrower and Guarantor may only open any new location provided such Borrower or Guarantor (a) such Borrower or Guarantor gives Agent thirty (30) days prior written notice of the intended opening of any such new location, and (b) with respect to any new location in the United States, its territories or possessions, such Borrower or Guarantor executes and delivers, or causes to be executed and delivered, to Agent such agreements, documents, and instruments as Agent may deem reasonably necessary or desirable to protect its interests in the Collateral at such location, including amended or supplemental chattel mortgages for recordation with the FAA and UCC Financing Statements.

9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all times, comply in all material respects with all laws, rules, regulations, licenses, approvals, orders and Permits (including, in the case of Borrowers, the maintenance of Air Carrier Certificates unless a Borrower is required to surrender such Air Carrier Certificate as required by applicable Federal Aviation Laws upon the consummation of a merger of Borrowers to the extent permitted by and in accordance with the terms and conditions of Section 9.7(b) hereof), approvals and orders applicable to it, including the Federal Aviation Laws, and duly observe in all material respects all requirements of any foreign, federal, state or local Governmental Authority.

(b) Borrowers and Guarantors shall give written notice to Agent promptly upon any Borrower's or Guarantor's receipt of any notice of, or any Borrower's or Guarantor's otherwise obtaining knowledge of, (i) the occurrence of any event involving the release, spill or discharge, threatened or actual, of any Hazardous Material or (ii) any investigation, proceeding, complaint, order, directive, claims, citation or notice with respect to: (A) any non-compliance with or violation of any Environmental Law by any Borrower or Guarantor or (B) the release, spill or discharge, threatened or actual, of any Hazardous Material other than in the ordinary course of

business and other than as permitted under any applicable Environmental Law. Unless otherwise agreed by Agent and Administrative Borrower, copies of all environmental surveys, audits, assessments, feasibility studies and results of remedial investigations shall be promptly furnished, or caused to be furnished, by such Borrower or Guarantor to Agent. Each Borrower and Guarantor shall take prompt action to respond to any material non-compliance with any of the Environmental Laws and shall regularly report to Agent on such response.

(c) Without limiting the generality of the foregoing, whenever Agent reasonably determines that there is material non-compliance, or any condition which requires any action by or on behalf of any Borrower or Guarantor in order to avoid any material non-compliance, with any Environmental Law, Borrowers shall, at Agent's request and Borrowers' expense: (i) cause an independent environmental engineer reasonably acceptable to Agent to conduct such tests of the site where material non-compliance or alleged material non-compliance with such Environmental Laws has occurred as to such non-compliance and prepare and deliver to Agent a report as to such non-compliance setting forth the results of such tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to Agent a supplemental report of such engineer whenever the scope of such non-compliance, or such Borrower's or Guarantor's response thereto or the estimated costs thereof, shall change in any material respect.

(d) Each Borrower and Guarantor shall indemnify and hold harmless Agent and Lenders and their respective directors, officers, employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses) directly or indirectly arising out of or attributable to the use, generation, manufacture, reproduction, storage, release, threatened release, spill, discharge, disposal or presence of a Hazardous Material, including the costs of any required or necessary repair, cleanup or other remedial work with respect to any property of any Borrower or Guarantor and the preparation and implementation of any closure, remedial or other required plans. All representations, warranties, covenants and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination of this Agreement.

9.4 PAYMENT OF TAXES AND CLAIMS. Each Borrower and Guarantor shall, and shall cause any Subsidiary to, duly pay and discharge all taxes, assessments, contributions and governmental charges upon or against it or its properties or assets, except for taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, Guarantor or Subsidiary, as the case may be, and with respect to which adequate reserves have been set aside on its books. Each Borrower and Guarantor shall be liable for any tax or penalties imposed on Agent or any Lender as a result of the financing arrangements provided for herein and each Borrower and Guarantor agrees to indemnify and hold Agent harmless with respect to the foregoing, and to repay to Agent, for the benefit of Lenders, on demand the amount thereof, and until paid by such Borrower or Guarantor such amount shall be added and deemed part of the Loans; PROVIDED, THAT, nothing contained herein shall be construed to require any Borrower or Guarantor to pay any income or franchise taxes attributable to the income or capital of Lenders from any amounts charged or paid hereunder to Lenders. The foregoing indemnity shall survive the payment of the Obligations and the termination of this Agreement.

9.5 INSURANCE. Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all times, maintain with financially sound and reputable insurers insurance with respect to the Collateral against loss or damage and all other insurance of the kinds and in the amounts customarily insured against or carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. Said policies of insurance shall be reasonably satisfactory to Agent as to form, amount and insurer (whose approval will not be unreasonably withheld). Borrowers and Guarantors shall furnish certificates to Agent as Agent shall reasonably require as proof of such insurance, and, if any Borrower or Guarantor fails to do so, Agent is authorized, but not required, to obtain such insurance at the expense of Borrowers. All policies shall provide for at least thirty (30) days (ten (10) days for non-payment of premium) prior written notice to Agent of any cancellation or reduction of coverage and that Agent may act as attorney for each Borrower and Guarantor in obtaining, and at any time an Event of Default exists or has occurred and is continuing, adjusting, settling and amending such insurance. Borrowers and Guarantors shall cause Agent to be named as a loss payee and an additional insured (but without any liability for any premiums) under such insurance policies and Borrowers and Guarantors shall obtain non-contributory lender's loss payable endorsements to all insurance policies in form and substance satisfactory to Agent (whose approval will not be unreasonably withheld). Such lender's loss payable endorsements shall specify that the proceeds of such insurance shall be payable to Agent as its interests may appear and further specify that Agent and Lenders shall be paid regardless of any act or omission by any Borrower, Guarantor or any of its or their Affiliates. Without limiting any other rights of Agent or Lenders, any insurance proceeds received by Agent at any time may be applied to payment of the Obligations, whether or not then due, in any order and in such manner as Agent may determine. Upon application of such proceeds to the Loans, Loans may be available subject and pursuant to the terms hereof to be used for the costs of repair or replacement of the Collateral lost or damages resulting in the payment of such insurance proceeds.

9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, keep proper books and records in which true and complete entries shall be made of all dealings or transactions of or in relation to the Collateral and the business of such Borrower, Guarantor and its Subsidiaries in accordance with GAAP. Borrowers and Guarantors shall promptly furnish to Agent and Lenders all such financial and other information as Agent shall reasonably request relating to the Collateral and the assets, business and operations of Borrowers and Guarantors, and Borrower shall notify the auditors and accountants of Borrowers and Guarantors that Agent is authorized to obtain such information directly from them. Without limiting the foregoing, Borrowers and Guarantors shall furnish or cause to be furnished to Agent, the following: (i) within thirty (30) days after the end of each fiscal month, monthly unaudited consolidated financial statements (including in each case balance sheets, statements of income and loss, statements of cash flow, and statements of shareholders' equity), all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Atlas Holdings and its Subsidiaries on a consolidated basis as of the end of and through such fiscal month, certified to be correct in all material respects by the chief executive officer or chief financial officer of Atlas Holdings, subject to post period adjustments and no footnotes and accompanied by a compliance certificate substantially in the form of Exhibit D hereto, along with a schedule in a form satisfactory to Agent of the calculations used in determining, as of the

end of such month, whether Borrowers and Guarantors are in compliance with the covenant set forth in Section 9.17 of this Agreement for such month in which such covenant is required by the terms of such Section 9.17 to be tested and
(ii) within one hundred fifty (150) days after the end of the fiscal year of Atlas Holdings ending December 31, 2004 and ninety (90) days after the end of each fiscal year thereafter, audited consolidated financial statements of Atlas Holdings and its Subsidiaries (including in each case balance sheets, statements of income and loss, statements of cash flow, and statements of shareholders' equity), and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Atlas Holdings and its Subsidiaries as of the end of and for such fiscal year, together with the unqualified opinion of independent certified public accountants with respect to the audited consolidated financial statements, which accountants shall be an independent accounting firm selected by Borrowers and acceptable to Agent, that such audited consolidated financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Atlas Holdings and its Subsidiaries as of the end of and for the fiscal year then ended.

(b) Borrowers and Guarantors shall promptly notify Agent in writing of the details of (i) any loss, damage, investigation, action, suit, proceeding or claim relating to Collateral having a value of more than $1,000,000 or which if adversely determined would result in any Material Adverse Effect, (ii) any Material Contract being terminated or amended or any new Material Contract entered into (in which event, unless otherwise agreed by Agent and Borrowers, Borrowers and Guarantors shall provide Agent with a copy of such Material Contract), (iii) any order, judgment or decree in excess of $2,500,000 shall have been entered against any Borrower or Guarantor any of its or their properties or assets, (iv) any notification of a material violation of laws or regulations received by any Borrower or Guarantor, (v) any ERISA Event, and (vi) the occurrence of any Default or Event of Default.

(c) Borrowers and Guarantors shall promptly after the sending or filing thereof furnish or cause to be furnished to Agent copies of all reports which any Borrower or Guarantor sends to its stockholders generally and copies of all reports and registration statements which any Borrower or Guarantor files with the Securities and Exchange Commission, any national securities exchange or the National Association of Securities Dealers, Inc., it being understood and agreed that Borrowers and Guarantors shall be deemed to have delivered to Agent the documents required by this Section 9.6(c) by posting such documents on the company website of Atlas Holdings (www.atlasair.com) and advising Agent in writing of such posting.

(d) Borrowers and Guarantors shall furnish or cause to be furnished to Agent such budgets, forecasts, projections and other information respecting the Collateral and the business of Borrowers and Guarantors, as Agent may, from time to time, reasonably request. Subject to the terms and conditions of the confidentiality provisions of Section 13.5 hereof, Agent is hereby authorized to deliver a copy of any financial statement or any other information relating to the business of Borrowers and Guarantors to any court or other Governmental Authority or to any Lender or Participant or prospective Lender or Participant or any Affiliate of any Lender or Participant. Subject to the terms and conditions of the confidentiality provisions of Section 13.5 hereof, each Borrower and Guarantor hereby irrevocably authorizes and directs all of its accountants or auditors to deliver to Agent, at Borrowers' expense, copies of the financial statements of any Borrower and Guarantor and any reports or management letters prepared by

such accountants or auditors on behalf of any Borrower or Guarantor and to disclose to Agent and Lenders such information as they may have regarding the business of any Borrower and Guarantor. Any documents, schedules, invoices or other papers delivered to Agent or any Lender may be destroyed or otherwise disposed of by Agent or such Lender one (1) year after the same are delivered to Agent or such Lender, except as otherwise designated by Administrative Borrower to Agent or such Lender in writing.

9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, directly or indirectly,

(a) merge into or with or consolidate with any other Person or permit any other Person to merge into or with or consolidate with it, EXCEPT THAT:

(i) any Subsidiary of Atlas Holdings which is not a Borrower or Guarantor may merge with or consolidate into any other Subsidiary of Atlas Holdings which is not a Borrower or Guarantor, and any wholly-owned Subsidiary of Atlas Holdings which is a Borrower or Guarantor may merge with and into or consolidate with any other wholly-owned Subsidiary of Atlas Holdings; PROVIDED, THAT, each of the following conditions is satisfied as determined by Agent in good faith: (A) Agent shall have received not less than ten (10) Business Days' prior written notice of the intention of such entities to so merge or consolidate, which notice shall set forth in reasonable detail satisfactory to Agent, the persons that are merging or consolidating, which person will be the surviving entity, the locations of the assets of the persons that are merging or consolidating, and the material agreements and documents relating to such merger or consolidation, (B) Agent shall have received such other information with respect to such merger or consolidation as Agent may reasonably request, (C) as of the effective date of the merger or consolidation and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (D) Agent shall have received, true, correct and complete copies of all agreements, documents and instruments relating to such merger or consolidation, including, but not limited to, the certificate or certificates of merger to be filed with each appropriate Secretary of State (with a copy as filed promptly after such filing), (E) the surviving corporation shall expressly confirm, ratify and assume the Obligations and the Financing Agreements to which it is a party in writing, in form and substance satisfactory to Agent, and Borrowers and Guarantors shall execute and deliver such other agreements, documents and instruments as Agent may request in connection therewith; and

(ii) nothing set forth in Section 9.7(a)(i) above shall be construed as a limitation upon Section 9.7(c) below.

(b) sell, issue, assign, lease, license, transfer, abandon or otherwise dispose of any Capital Stock or Indebtedness to any other Person or any of its assets to any other Person; EXCEPT FOR

(i) sales, transfers or other dispositions of assets other than Accounts or Receivables by a Borrower or a Guarantor to another Borrower or Guarantor;

(ii) sales of Inventory in the ordinary course of business,

(iii) customary pooling, exchange and similar arrangements with respect to Engines, Spare Parts and components consistent with the practices of Borrowers as of the date hereof;

(iv) asset swaps with respect to Engines, Spare Parts and components; PROVIDED, THAT, the assets received by Atlas Holdings or any of its Subsidiaries shall have a fair market value at least equal to that of the assets transferred and; PROVIDED, FURTHER, that with respect to any asset swap or series of related asset swaps involving assets of Atlas Holdings or any of its Subsidiaries having a market value in excess of $10,000,000, such determination shall be made by the Board of Directors of Atlas Holdings;

(v) asset sales by Atlas Freighter Leasing III, Inc. for the purpose of replacing its assets pursuant to and in accordance with the terms and conditions set forth in subsection 9.21 of the AFL III Financing Agreement as in effect on the date hereof; PROVIDED, THAT, the net cash proceeds of such sale (if any) are concurrently therewith applied in full to the repayment of Indebtedness described in the AFL III Financing Agreement and related chattel mortgages or other security agreements or in accordance with the terms and conditions of the AFL III Financing Agreement as in effect on the date hereof;

(vi) the sale by Atlas Freighter Leasing III, Inc. of up to four (4) AFL III Aircraft (as defined in the AFL III Financing Agreement) pursuant to and in accordance with the terms and conditions set forth in subsection 6.6(i) of the AFL III Financing Agreement as in effect on the date hereof; PROVIDED, THAT, the net cash proceeds of such sale, if any are concurrently therewith applied in full to the repayment of Indebtedness described in the AFL III Financing Agreement and related chattel mortgages or other security agreements;

(vii) the sale by Atlas Air of one (1) Financed Aircraft (as described in the Aircraft Credit Facility Agreement) pursuant to and in accordance with the terms and conditions set forth in subsection 6.7(iv) of the Aircraft Credit Facility Agreement as in effect on the date hereof; PROVIDED, THAT, the net cash proceeds of such sale, if any are concurrently therewith applied in full to the repayment of Indebtedness described in the Aircraft Credit Facility Agreement and related chattel mortgages or other security agreements;

(viii) the sale by Atlas Holdings and its Subsidiaries of up to three (3) Aircraft other than the Secured Aircraft if so required pursuant to the EETC Documents as in effect on the date hereof and in accordance with the terms thereof;

(ix) the sale or other disposition of Equipment (including worn-out or obsolete Equipment or Equipment no longer used or useful in the business of any Borrower or Guarantor) so long as such sales or other dispositions do not involve Equipment having an aggregate fair market value in excess of $5,000,000 for all such Equipment disposed of in any fiscal year of Borrowers or as Agent may otherwise agree,

(x) without limitation upon Section 9.7(b)(iii), 9.7(b)(v), 9.7(b)(vi), 9.7(b)(vii), 9.7(b)(viii) or 9.7(b)(ix) above, the sale or other disposition of (I) Spare Parts, provided that, after giving effect thereto the Borrowers shall be in compliance with the terms of Section 7.3(i) hereof, and
(II) assets not consisting of Accounts by Atlas Holdings and its Subsidiaries having a

fair market value in an aggregate amount not to exceed $25,000,000 during the term hereof; PROVIDED, THAT, (A) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof; (B) the consideration received shall be at least 75% cash; (C) upon any such sale or disposition and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, and (D) all Net Cash Proceeds of any such sale or other disposition shall be paid promptly to Agent for application to the then outstanding Obligations in accordance with Section 6.4 hereof,

(xi) leases by Borrowers as lessors or sublessors, of Aircraft and Engines on terms and otherwise in a manner consistent with the conduct of their respective businesses as conducted on the date hereof, including under ACMI Contracts,

(xii) the issuance and sale by Atlas Holdings of Capital Stock after the date hereof; PROVIDED, THAT, (A) other than with respect to the issuance of Capital Stock pursuant to the terms of the Reorganization Plan as approved by the Confirmation Order, Agent shall have received not less than ten
(10) Business Days' prior written notice of such issuance and sale by such Borrower or Guarantor, which notice shall specify the parties to whom such shares are to be sold, the terms of such sale, the total amount which it is anticipated will be realized from the issuance and sale of such stock and the net cash proceeds, if any, which it is anticipated will be received by such Borrower or Guarantor from such sale, (B) such Borrower or Guarantor shall not be required to pay any cash dividends or repurchase or redeem such Capital Stock or make any other payments in respect thereof, except as otherwise permitted in
Section 9.11 hereof, (C) the terms of such Capital Stock, and the terms and conditions of the purchase and sale thereof, shall not include any terms that include any limitation on the right of any Borrower to request or receive Loans or Letter of Credit Accommodations or the right of any Borrower and Guarantor to amend or modify any of the terms and conditions of this Agreement or any of the other Financing Agreements or otherwise in any way relate to or affect the arrangements of Borrowers and Guarantors with Agent and Lenders or are more restrictive or burdensome to any Borrower or Guarantor than the terms of any Capital Stock in effect on the date hereof, (D) except as Agent may otherwise agree in writing, all of the net cash proceeds of the sale and issuance of such Capital Stock shall be paid to Agent for application to the Obligations in accordance with the terms and conditions of Section 6.4 hereof and (E) as of the date of such issuance and sale and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing,

(xiii) the issuance and/or sale by any Subsidiary of Atlas Holdings (other than a Borrower or Guarantor) of any Capital Stock of such Subsidiary or the sale by any Subsidiary of Atlas Holdings (other than a Borrower or Guarantor) of any other assets; provided, that, (A) no Borrower or Guarantor shall have any liability in respect thereof, and (B) in the event of any sale of Capital Stock of a Subsidiary of Atlas Holdings which is subject to a security interest, lien, charge, pledge or other encumbrance of any Lender, such sale thereof shall be subject to such interest, the purchaser thereof shall be acceptable to Agent in all respects and Agent shall receive, in form and substance satisfactory to Agent, the express written assumption and acknowledgement by such purchaser of the interests of Agent and Lenders and the written agreement of such purchaser to be bound by all of the terms and conditions of the Financing Agreements to the extent of the Capital Stock acquired by such purchaser, and

(xiv) the issuance of Capital Stock of any Borrower or Guarantor consisting of common stock pursuant to an employee stock option or grant or similar equity plan or 401(k) plans of such Borrower or Guarantor for the benefit of its employees, directors and consultants; PROVIDED, THAT, in no event shall such Borrower or Guarantor be required to issue, or shall such Borrower or Guarantor issue, Capital Stock pursuant to such stock plans or 401(k) plans which would result in a Change of Control or other Event of Default;

(c) wind up, liquidate or dissolve except that any Subsidiary of Atlas Holdings (other than a Borrower or a Guarantor) and any Guarantor (other than Atlas Holdings) may wind up, liquidate and dissolve; PROVIDED, THAT, with respect to any liquidation or dissolution of any Guarantor, each of the following conditions is satisfied, (i) the winding up, liquidation and dissolution of such Guarantor shall not violate any law or any order or decree of any court or other Governmental Authority in any material respect and shall not conflict with or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, or any other agreement or instrument to which any Borrower or Guarantor is a party or may be bound, (ii) such winding up, liquidation or dissolution shall be done in accordance with the requirements of all applicable laws and regulations, (iii) effective upon such winding up, liquidation or dissolution, all of the assets and properties of such Guarantor shall be duly and validly transferred and assigned to a Borrower or another Guarantor, free and clear of any liens, restrictions or encumbrances other than the security interest and liens of Agent (and Agent shall have received such evidence thereof as Agent may require) and Agent shall have received such deeds, assignments or other agreements as Agent may request to evidence and confirm the transfer of such assets of such Guarantor to a Borrower or other Guarantor, as applicable, (iv) Agent shall have received all documents and agreements that any Borrower or Guarantor has filed with any Governmental Authority or as are otherwise required to effectuate such winding up, liquidation or dissolution,
(v) no Borrower or Guarantor shall assume any Indebtedness, obligations or liabilities as a result of such winding up, liquidation or dissolution, or otherwise become liable in respect of any obligations or liabilities of the entity that is winding up, liquidating or dissolving, unless such Indebtedness is otherwise expressly permitted hereunder, (vi) Agent shall have received not less than ten (10) Business Days prior written notice of the intention of such Guarantor to wind up, liquidate or dissolve, and (vii) as of the date of such winding up, liquidation or dissolution and after giving effect thereto, no Default or Event of Default shall exist or have occurred; or

(d) agree to do any of the foregoing.

9.8 ENCUMBRANCES. Each Borrower and Guarantor shall not, and shall not permit any other Obligor to, create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets or properties, including the Collateral, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any security interest or lien with respect to any such assets or properties, except:

(a) the security interests and liens of Agent for itself and the benefit of Lenders and the security interests and liens of Agent for the benefit of any Affiliate of Agent, any Lender, any Affiliate of any Lender or any other financial institution acceptable to Agent that is party to an

Interest Rate Protection Agreement to the extent provided for herein and subject to the terms hereof;

(b) liens securing the payment of taxes, assessments or other governmental charges or levies either not yet overdue or the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, or Guarantor or other Obligor, as the case may be and with respect to which adequate reserves have been set aside on its books;

(c) non-consensual statutory liens (other than liens securing the payment of taxes) arising in the ordinary course of such Borrower's, Guarantor's or other Obligor's business to the extent: (i) such liens secure Indebtedness which is not overdue or (ii) such liens secure Indebtedness relating to claims or liabilities which are fully insured (subject to customary deductibles) and being defended at the sole cost and expense and at the sole risk of the insurer or being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, Guarantor or other Obligor, in each case prior to the commencement of foreclosure or other similar proceedings and with respect to which adequate reserves have been set aside on its books;

(d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of Real Property which do not interfere in any material respect with the use of such Real Property or ordinary conduct of the business of such Borrower, Guarantor or other Obligor as presently conducted thereon or materially impair the value of the Real Property which may be subject thereto;

(e) purchase money security interests in Aircraft or other Equipment (including Capital Leases) and purchase money mortgages on Real Property to secure Indebtedness permitted under Sections 9.9(b) and 9.9(g) hereof;

(f) liens and security interests in favor of EETC Trustee, for itself and the benefit of EETC Certificate Holders, to secure the Indebtedness of Atlas Air to EETC Certificate Holders under the EETC Documents as in effect on the date hereof, as permitted under Section 9.9(h) below, which liens and security interests are subject and subordinate to the liens and security interests of Agent, for itself and the benefit of Lenders, pursuant to and in accordance with the terms of the provisions of the EETC Intercreditor Agreement, the Reorganization Plan, the Confirmation Order and the EETC Documents;

(g) liens and security interests in favor of mortgagees, lessors and sublessors of Aircraft and Engines identified as such on Schedule 9.9 to the Information Certificate or acquired on a purchase money basis in accordance with
Section 9.9(b) hereof to Borrowers pursuant to the Existing Aircraft Financings, in each case subject to and in accordance with the terms thereof as in effect on the date hereof, to secure the Indebtedness permitted under Sections 9.9(b) and 9.9(i) hereof;

(h) pledges and deposits of cash by any Borrower or Guarantor after the date hereof in the ordinary course of business in connection with workers' compensation, unemployment

insurance and other types of social security benefits consistent with the current practices of such Borrower or Guarantor as of the date hereof;

(i) pledges and deposits of cash by any Borrower or Guarantor after the date hereof to secure the performance of tenders, bids, leases, trade contracts (other than for the repayment of Indebtedness), overflight fees, landing fees statutory obligations and other similar obligations, in each case in the ordinary course of business consistent with the current practices of such Borrower or Guarantor as of the date hereof; PROVIDED, THAT, in connection with any performance bonds issued by a surety or other person, the issuer of such bond shall not have any rights in or to, or other interest in, any of the Collateral other than such cash;

(j) liens arising from (i) operating leases and the precautionary UCC financing statement filings in respect thereof and (ii) equipment or other materials which are not owned by any Borrower or Guarantor located on the premises of such Borrower or Guarantor (but not in connection with, or as part of, the financing thereof) from time to time in the ordinary course of business and consistent with current practices of such Borrower or Guarantor and the precautionary UCC financing statement filings in respect thereof;

(k) judgments and other similar liens arising in connection with court proceedings that do not constitute an Event of Default; PROVIDED, THAT,
(i) such liens are being contested in good faith and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate provision, if any, as are required by GAAP have been made therefor, (iii) a stay of enforcement of any such liens is in effect and (iv) Agent may establish a Reserve with respect thereto;

(1) the security interests and liens to secure Refinancing Indebtedness to the extent permitted under Section 9.9 below;

(m) pledges and deposits by Borrowers and Guarantors of cash in an aggregate amount not to exceed $2,500,000 to secure Indebtedness of any Borrower or Guarantor arising under Interest Rate Protection Agreements to the extent permitted by Section 9.9(e) hereof;

(n) pledges and deposits by Borrowers and Guarantors of cash in an aggregate amount of $2,500,000 as of the date hereof to secure the Indebtedness arising in respect of the Existing Letters of Credit as provided by Section 9.9(k) hereof; and

(o) the security interests and liens set forth on Schedule 8.4 to the Information Certificate.

(p) 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.

9.9 INDEBTEDNESS. Each Borrower and Guarantor shall not, and shall not permit any other Obligor to, incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly), the Indebtedness, performance, obligations or dividends of any other Person, except:

(a) the Obligations;

(b) purchase money Indebtedness (including Capital Leases) arising after the date hereof to the extent secured by purchase money security interests in Aircraft and other Equipment, consistent with the conduct of the businesses of Borrowers and Guarantors as of the date hereof (including Capital Leases) and purchase money mortgages on Real Property not to exceed $10,000,000 in the aggregate at any time outstanding so long as such security interests and mortgages do not apply to any property of such Borrower, Guarantor or Subsidiary other than the Equipment or Real Property so acquired and the proceeds of the disposition thereof, and the Indebtedness secured thereby does not exceed the cost of the Equipment or Real Property so acquired, as the case may be;

(c) guarantees by any Borrower or Guarantor of the Obligations of the other Borrowers or Guarantors in favor of Agent for the benefit of Lenders;

(d) the Indebtedness of any Borrower or Guarantor to any other Borrower or Guarantor arising after the date hereof pursuant to loans by any Borrower or Guarantor permitted under Section 9.10(g) hereof;

(e) Indebtedness of any Borrower or Guarantor entered into in the ordinary course of business pursuant to Interest Rate Protection Agreements; PROVIDED, THAT, (i) such arrangements are either with a Lender or an Affiliate thereof or with banks or other financial institutions that have combined capital and surplus and undivided profits of not less than $250,000,000 and are reasonably acceptable to Agent, (ii) are not for speculative purposes and (iii) such Indebtedness shall be unsecured, except (A) as to obligations under Interest Rate Protection Agreements with a Lender or an Affiliate of a Lender or another financial institution, in each case approved by Agent, to the extent of the security interest of Agent in the Collateral as provided herein or (B) to the extent permitted pursuant to and in accordance with Section 9.8(m) hereof;

(f) unsecured Indebtedness of any Borrower or Guarantor (consistent with the business practices of such Borrower or Guarantor as of the date hereof and arising after the date hereof) to any third person (but not to any other Borrower or Guarantor); PROVIDED, THAT, each of the following conditions is satisfied as determined by Agent: (i) such Indebtedness shall be on terms and conditions acceptable to Agent and shall be subject and subordinate in right of payment to the right of Agent and Lenders to receive the prior indefeasible payment and satisfaction in full payment of all of the Obligations pursuant to the terms of an intercreditor agreement between Agent and such third party, in form and substance satisfactory to Agent, (ii) Agent shall have received not less than ten (10) days prior written notice of the intention of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in reasonable detail satisfactory to Agent the amount of such Indebtedness, the person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of repayments and maturity date with respect thereto and such other information as Agent may request with respect thereto, (iii) Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, (iv) except as Agent may otherwise agree in writing, all of the proceeds of the loans or other accommodations giving rise to such Indebtedness shall be paid to Agent for application to the outstanding Obligations in

accordance with Section 6.4 hereof, (v) in no event shall the aggregate principal amount of such Indebtedness incurred during the term of this Agreement exceed $10,000,000, (vi) as of the date of incurring such Indebtedness and after giving effect thereto, no Default or Event of Default shall exist or have occurred, (vii) such Borrower and Guarantor shall not, directly or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto, except, that, such Borrower or Guarantor may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or to amend or waive any non-monetary covenant compliance or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to regularly scheduled payments permitted herein), or set aside or otherwise deposit or invest any sums for such purpose, and (viii) Borrowers and Guarantors shall furnish to Agent all material notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

(g) Indebtedness of any Borrower or Guarantor to any third person (but not to any other Borrower or Guarantor) in addition to the unsecured Indebtedness referred to in Section 9.9(f) above; PROVIDED, THAT, each of the following conditions is satisfied as determined by Agent in good faith: (i) Agent shall have received not less than ten (10) days prior written notice of the intention of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in reasonable detail satisfactory to Agent the amount of such Indebtedness, the person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of repayments and maturity date with respect thereto and such other information as Agent may request with respect thereto,
(ii) Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness promptly after their execution and delivery, (iii) except as Agent may otherwise agree in writing, all of the proceeds of the loans or other accommodations giving rise to such Indebtedness shall be paid to Agent for application to the outstanding Obligations in accordance with Section 6.4 hereof, (iv) such Indebtedness is permitted under and subject to the terms and conditions of Section 6.1(v) of the Aircraft Credit Facility Agreement (as in effect on the date hereof), (v) in no event shall the aggregate principal amount of such Indebtedness incurred during the term of this Agreement exceed $10,000,000, unless, in addition to all other conditions set forth in this
Section 9.9(g), as of the date of the incurrence of such Indebtedness and after giving effect thereto, Excess Availability shall be not less than $20,000,000,
(vi) as of the date of the incurrence of such Indebtedness and after giving effect thereto, no Default or Event of Default shall exist or have occurred,
(vii) such Borrower and Guarantor shall not, directly or indirectly, amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto, except, that, such Borrower or Guarantor may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or to amend or waive any non-monetary covenant compliance, and (viii) Borrowers and Guarantors shall furnish to Agent all material notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly

after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

(h) the Indebtedness of Atlas Air incurred with respect to the EETC Transactions; PROVIDED, THAT, each of the following conditions is satisfied as determined by Agent:

(i) the aggregate principal amount of such Indebtedness shall not exceed $506,224,889 less the aggregate amount of all repayments, repurchases or redemptions, whether optional or mandatory, in respect thereof,

(ii) Agent shall have received true, correct and complete copies of all EETC Documents (subject to redaction or non-delivery as required by any confidentiality provisions contained therein or with respect thereto), each as duly authorized, executed and/or delivered, as applicable, by the parties thereto,

(iii) Agent shall have received the EETC Intercreditor Agreement,

(iv) Borrowers and Guarantors shall not, directly or indirectly, make, or be required to make, any payments in respect of such Indebtedness, EXCEPT, THAT. Borrowers and Guarantors may make regularly scheduled monthly payments in respect of Aircraft subject to the EETC Transactions, in an aggregate amount in each month not to exceed the amount specified for such month in Schedule 9.9 to the Information Certificate with respect to such regularly scheduled payments plus payments required using proceeds of sales of Aircraft to the extent permitted by and in accordance with the terms and conditions of Section 9.7(b)(viii) hereof; PROVIDED, THAT, as of the date of each such payment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing or would result therefrom; EXCEPT, FURTHER, THAT. Borrowers and Guarantors may make prepayments with respect thereto in addition to such regularly scheduled payments; PROVIDED, THAT, (A) commencing on and after January 1, 2006, as of the date of each such prepayment and after giving affect thereto, the aggregate amount of (1) such prepayments (on a consolidated basis) with respect to any fiscal year of Borrowers and Guarantors (each, a "Reference Year") PLUS (2) the sum of all prepayments and other payments made with respect to such Reference Year in respect of dividends, redemptions or repurchases of Capital Stock pursuant to
Section 9.11 hereof PLUS all prepayments of Indebtedness pursuant to Sections 9.9(g),9.9(i),9.9(j) and 9.9(m) hereof, shall not in the aggregate exceed fifty (50%) percent of the amount of the Consolidated Net Income of Atlas Holdings for the immediately preceding Reference Year, and (B) as of the date of each such payment and after giving effect thereto, Excess Availability shall be not less than $25,000,000, and (C) as of the date of each such prepayment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing or would result therefrom,

(v) Borrowers and Guarantors shall not, directly or indirectly, (A) materially amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto, except, that, Borrower may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees

in connection therewith, or to amend or waive any non-monetary covenant compliance or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to payments permitted in Sections 9.9(h)(iv) hereof), or set aside or otherwise deposit or invest any sums for such purpose, and

(vi) Administrative Borrower shall furnish to Agent all material demands or notices in connection with such Indebtedness either received by a Borrower or Guarantor promptly after the receipt thereof, or sent by a Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

(i) the Indebtedness of Borrowers and Guarantors evidenced by or arising under the Aircraft Credit Facility Agreement (as in effect on the date hereof); PROVIDED, THAT, each of the following conditions is satisfied as determined by Agent:

(i) the aggregate principal amount of such Indebtedness shall not exceed $40,667,209 less the aggregate amount of all repayments, repurchases or redemptions, whether optional or mandatory, in respect thereof,

(ii) Agent shall have received a true, correct and complete copy of the Aircraft Facility Agreement and all agreements, documents and instruments requested by it related to the Aircraft Credit Facility Agreement (subject to any confidentiality provisions contained therein), each as duly authorized, executed and/or delivered, as applicable, by the parties thereto,

(iii) Borrowers and Guarantors shall not, directly or indirectly, make, or be required to make, any payments in respect of such Indebtedness, EXCEPT, THAT, Borrowers and Guarantors may make regularly scheduled monthly payments in respect of Aircraft subject to such Aircraft Credit Facility Agreement, in an aggregate amount in each month not to exceed the amount specified for such month in Schedule 9.9 to the Information Certificate with respect to such regularly scheduled monthly payments plus payments required using proceeds of sales of Aircraft to the extent permitted by and in accordance with the terms and conditions of Section 9.7(b)(vii) hereof; PROVIDED, THAT, as of the date of each such payment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing or would result therefrom; EXCEPT, FURTHER, THAT, Borrowers and Guarantors may make prepayments with respect thereto in addition to such regularly scheduled payments; PROVIDED, THAT. (A) commencing on and after January 1, 2006, as of the date of each such prepayment and after giving affect thereto, the aggregate amount of (1) such prepayments (on a consolidated basis) with respect to any fiscal year of Borrowers and Guarantors (each, a "Reference Year") PLUS (2) the sum of all prepayments and other payments made with respect to such Reference Year in respect of dividends, redemptions or repurchases of Capital Stock pursuant to Section 9.11 hereof PLUS all prepayments of Indebtedness pursuant to Sections 9.9(g), 9.9(h), 9.9(j), and 9.9(m) hereof, shall not in the aggregate exceed fifty (50%) percent of the amount of the Consolidated Net Income of Atlas Holdings for the immediately preceding Reference Year, and (B) as of the date of each such payment and after giving effect thereto, Excess Availability shall be not less than $25,000,000, and (C) as of the date of each such prepayment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing or would result therefrom,

(iv) Borrowers and Guarantors shall not, directly or indirectly, (A) materially amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto, except, that, Borrower may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or to amend or waive any non-monetary covenant compliance or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to regularly scheduled payments permitted by Section 9.9(i)(iii) hereof), or set aside or otherwise deposit or invest any sums for such purpose, and

(v) Administrative Borrower shall furnish to Agent all material demands or notices in connection with such Indebtedness either received by a Borrower or Guarantor promptly after the receipt thereof, or sent by a Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

(j) the Indebtedness of Borrowers and Guarantors evidenced by or arising under the Existing Aircraft Financings (as in effect on the date hereof); PROVIDED, THAT, each of the following conditions is satisfied as determined by Agent:

(i) the aggregate principal amount of such Indebtedness shall not exceed $47,619,910 less the aggregate amount of all repayments, repurchases or redemptions, whether optional or mandatory, in respect thereof,

(ii) Agent shall have received true, correct and complete copies of all agreements, documents and instruments requested by it related to the Existing Aircraft Financings (subject to any confidentiality provisions contained therein), each as duly authorized, executed and/or delivered, as applicable, by the parties thereto,

(iii) Borrowers and Guarantors shall not, directly or indirectly, make, or be required to make, any payments in respect of such Indebtedness, EXCEPT, THAT, Borrowers and Guarantors may make regularly scheduled monthly payments in respect of Aircraft subject to such Existing Aircraft Financings, in an aggregate amount in each month not to exceed the amount specified for such month in Schedule 9.9 to the Information Certificate with respect to such month; PROVIDED, THAT, as of the date of each such payment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing or would result therefrom; EXCEPT, FURTHER, THAT, Borrowers and Guarantors may make prepayments with respect thereto in addition to such regularly scheduled payments; PROVIDED, THAT. (A) commencing on and after January 1, 2006, as of the date of each such prepayment and after giving affect thereto, the aggregate amount of (1) such prepayments (on a consolidated basis) with respect to any fiscal year of Borrowers and Guarantors (each, a "Reference Year") PLUS (2) the sum of all prepayments and other payments made with respect to such Reference Year in respect of dividends, redemptions or repurchases of Capital Stock pursuant to Section 9.11 hereof PLUS all prepayments of Indebtedness pursuant to Sections 9.9(g), 9.9(h), 9.9(i), and 9.9(m) hereof, shall not in the aggregate exceed fifty (50%) percent of the amount of the Consolidated Net Income of Atlas Holdings for the immediately preceding Reference Year, and (B) as of the date of each such payment and after giving effect thereto, Excess Availability shall be not less than

$25,000,000, and (C) as of the date of each such prepayment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing or would result therefrom,

(iv) Borrowers and Guarantors shall not, directly or indirectly, (A) materially amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto, except, that, Borrower may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or to amend or waive any non-monetary covenant compliance or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to payments permitted by
Section 9.9(j)(iii) hereof), or set aside or otherwise deposit or invest any sums for such purpose, and

(v) Administrative Borrower shall furnish to Agent all material demands or notices in connection with such Indebtedness either received by a Borrower or Guarantor promptly after the receipt thereof, or sent by a Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

(k) Indebtedness of Atlas Holdings and its Subsidiaries in respect of the Existing Letters of Credit; PROVIDED, THAT, none of the Existing Letters of Credit shall be amended, renewed or extended and Borrowers and Guarantors shall not cause to be issued during the term hereof for the account of any Borrower or Guarantor or in respect of which any of them shall be liable, letters of credit other than Letter of Credit Accommodations;

(l) Indebtedness of any Borrower or Guarantor arising after the date hereof issued in exchange for, or the proceeds of which are used to extend, refinance, replace or substitute for Indebtedness permitted under Section 9.9(b), Section 9.9(f), Section 9.9(g), Section 9.9(h), Section 9.9(i), Section 9.9(j) and Section 9.9(m) hereof (the "Refinancing Indebtedness"); PROVIDED, THAT, as to any such Refinancing Indebtedness, each of the following conditions is satisfied: (A) Agent shall have received not less than thirty (30) days prior written notice of the intention to incur such Indebtedness, which notice shall set forth in reasonable detail satisfactory to Agent, the amount of such Indebtedness, the schedule of repayments and maturity date with respect thereto and such other information with respect thereto as Agent may reasonably request, (B) promptly upon Agent's request, Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, as duly authorized, executed and delivered by the parties thereto, (C) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity and a final maturity equal to or greater than the Weighted Average Life to Maturity and the final maturity, respectively, of the Indebtedness being extended, refinanced, replaced, or substituted for, (D) the Refinancing Indebtedness shall rank in right of payment no more senior than, and be at least subordinated (if subordinated) to, the Obligations as the Indebtedness being extended, refinanced, replaced or substituted for, (E) the Refinancing Indebtedness shall not include terms and conditions with respect to any Borrower or Guarantor which are more burdensome or restrictive in any material respect than those included in the Indebtedness so extended, refinanced, replaced or substituted for, (F) such Indebtedness incurred by any Borrower or

Guarantor shall be at rates and with fees or other charges that are commercially reasonable, (G) the incurring of such Indebtedness shall not result in an Event of Default, (H) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of the Indebtedness so extended, refinanced, replaced or substituted for (plus the amount of refinancing fees and expenses incurred in connection therewith outstanding on the date of such event), (I) the Refinancing Indebtedness shall be secured by substantially the same assets (or less of such assets) that secure the Indebtedness so extended, refinanced, replaced or substituted for, provided, that, such security interests with respect to the Refinancing Indebtedness shall have a priority no more senior than, and be at least as subordinated, if subordinated (on terms and conditions substantially similar to the subordination provisions applicable to the Indebtedness so extended, refinanced, replaced or substituted for or as is otherwise acceptable to Agent) as the security interest with respect to the Indebtedness so extended, refinanced, replaced or substituted for, (J) in the case of Refinancing Indebtedness with respect to an Aircraft, Agent shall have received from the secured party with respect thereto a lien clarification agreement, in form and substance satisfactory to Agent, duly authorized, executed and delivered to Agent by such secured party, (K) Borrowers and Guarantors may only make payments of principal, interest and fees, if any, in respect of such Indebtedness to the extent such payments would have been permitted hereunder in respect of the Indebtedness so extended, refinanced, replaced or substituted for (and except as otherwise permitted below), (L) Borrowers and Guarantors shall not, directly or indirectly, (1) materially amend, modify, alter or change any terms of the agreements with respect to such Refinancing Indebtedness, except that Borrowers and Guarantors may, after prior written notice to Agent, amend, modify, alter or change the terms thereof to the extent permitted with respect to the Indebtedness so extended, refinanced, replaced or substituted for, or (2) redeem, retire, defease, purchase or otherwise acquired such Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose (other than with Refinancing Indebtedness to the extent permitted herein and to the extent permitted with respect to the Indebtedness so extended, refinanced, replaced or substituted for), and (M) Borrowers and Guarantors shall furnish to Agent copies of all material notices or demands in connection with Indebtedness received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be; and

(m) the Indebtedness set forth on Schedule 9.9(m) to the Information Certificate; PROVIDED, THAT, (i) Borrowers and Guarantors may only make regularly scheduled payments of principal and interest in respect of such Indebtedness in accordance with the terms of the agreement or instrument evidencing or giving rise to such Indebtedness as in effect on the date hereof, EXCEPT, THAT, commencing on and after January 1, 2006, Borrowers and Guarantors may make prepayments with respect thereto in addition to such regularly scheduled payments; PROVIDED, THAT, (A) as of the date of each such prepayment and after giving affect thereto, the aggregate amount of (1) such prepayments (on a consolidated basis) with respect to any fiscal year of Borrowers and Guarantors (each, a "Reference Year") PLUS (2) the sum of all prepayments and other payments made with respect to such Reference Year in respect of dividends, redemptions or repurchases of Capital Stock pursuant to Section 9.11 hereof PLUS all prepayments of Indebtedness pursuant to Sections 9.9(g), 9.9(h), 9.9(i), and 9.9(j) hereof, shall not in the aggregate exceed fifty (50%) percent of the amount of the Consolidated Net Income of Atlas Holdings for the immediately preceding Reference Year, and (B) as of the date of each such payment and after giving effect thereto, Excess Availability shall be not less than

$25,000,000, and (C) as of the date of each such prepayment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing or would result therefrom, (ii) Borrowers and Guarantors shall not, directly or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto as in effect on the date hereof except, that, Borrowers and Guarantors may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose (except with respect to regularly scheduled payments or other payments as may be permitted hereunder), and (iii) Borrowers and Guarantors shall furnish to Agent all material notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf, concurrently with the sending thereof, as the case may be.

9.10 LOANS, INVESTMENTS, ETC. Each Borrower and Guarantor shall not, and shall not permit any other Obligor to, directly or indirectly, make any loans or advance money or property to any person, or invest in (by capital contribution, dividend or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all or a substantial part of the assets or property of any person, or create, form or acquire any new Subsidiary, or agree to do any of the foregoing, except:

(a) the endorsement of instruments for collection or deposit in the ordinary course of business;

(b) the Domestic Cash Reserve; PROVIDED, THAT, the terms and conditions of Section 5.2 hereof shall have been satisfied with respect to the deposit account, investment account or other account in which such cash or Cash Equivalents are held;

(c) the Foreign Cash Reserve;

(d) investments in cash or Cash Equivalents other than the Domestic Cash Reserve or the Foreign Cash Reserve; PROVIDED, THAT, (i) no Loans are then outstanding or, if Loans are then outstanding, no Sweep Event has occurred and
(ii) the terms and conditions of Section 5.2 hereof shall have been satisfied with respect to the deposit account, investment account or other account in which such cash or Cash Equivalents are held;

(e) the existing loans, advances and equity investments of each Borrower and Guarantor as of the date hereof in its Subsidiaries, the Polar Air Cargo, Inc. General Unsecured Creditors Trust and GSS; PROVIDED, THAT, no Borrower or Guarantor shall have any further obligations or liabilities to make any capital contributions or other additional investments or other payments to or in or for the benefit of any of the foregoing except for those, if any, expressly contemplated by the Plan, and other additional loans, advances and investments in an aggregate amount not to exceed $2,000,000 for such Subsidiaries, the Polar Air Cargo, Inc. General Unsecured Creditors Trust and
GSS;

(f) loans and advances by any Borrower or Guarantor to employees of such Borrower or Guarantor not to exceed the principal amount of $1,000,000 in the aggregate at any time outstanding for: (i) reasonably and necessary work-related travel or other ordinary business expenses to be incurred by such employee in connection with their work for such Borrower or Guarantor and (ii) reasonable and necessary relocation expenses of such employees (including home mortgage financing for relocated employees);

(g) stock or obligations issued to any Borrower or Guarantor by any Person (or the representative of such Person) in respect of Indebtedness of such Person owing to such Borrower or Guarantor in connection with the insolvency, bankruptcy, receivership or reorganization of such Person or a composition or readjustment of the debts of such Person; PROVIDED, THAT, the original of any such stock or instrument evidencing such obligations shall be promptly delivered to Agent, upon Agent's request, together with such stock power, assignment or endorsement by such Borrower or Guarantor as Agent may request;

(h) obligations of (i) account debtors to any Borrower or Guarantor arising from Accounts which are past due evidenced by a promissory note made by such account debtor payable to such Borrower or Guarantor, and (ii) purchasers of assets owed to any Borrower or Guarantor pursuant to any sale of assets permitted hereunder, which obligations are evidenced by a promissory note made by such purchaser payable to such Borrower or Guarantor; PROVIDED, THAT, promptly upon the receipt of the original of any such promissory note by such Borrower or Guarantor, such promissory note shall be endorsed to the order of Agent by such Borrower or Guarantor and promptly delivered to Agent as so endorsed;

(i) loans, advances or investments by a Borrower to another Borrower after the date hereof; PROVIDED, THAT,

as to all of such loans, advances or investments (A) within thirty (30) days after the end of each fiscal month, Borrowers shall provide to Agent a report in form and substance satisfactory to Agent of the outstanding amount of such loans as of the last day of the immediately preceding month and indicating any loans made and payments received during the immediately preceding month, and (B) the Indebtedness arising pursuant to any such loan shall not be evidenced by a promissory note or other instrument, unless the single original of such note or other instrument is promptly delivered to Agent upon its request to hold as part of the Collateral, with such endorsement and/or assignment by the payee of such note or other instrument as Agent may require,

(j) (i) loans, advances or investments by a Borrower to a Guarantor or loans, advances or investments by a Guarantor to a Borrower or another Guarantor after the date hereof; PROVIDED, THAT, as to all of such loans, advances or investments, (A) within thirty (30) days after the end of each fiscal month, Borrowers shall provide to Agent a report in form and substance satisfactory to Agent of the outstanding amount of such loans, advances or investments as of the last day of the immediately preceding month and indicating any loans, advances or investments made and payments received during the immediately preceding month, (B) the Indebtedness arising pursuant to any such loan or advance shall not be evidenced by a promissory note or other instrument, unless the single original of such note or other instrument is promptly delivered to Agent upon its request to hold as part of the Collateral, with such

endorsement and/or assignment by the payee of such note or other instrument as Agent may require, and (C) as of the date of any such loan, advance or investment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing;

(ii) as to loans by a Guarantor to a Borrower, (A) the Indebtedness arising pursuant to such loan shall be subject to, and subordinate in right of payment to, the right of Agent and Lenders to receive the prior final payment and satisfaction in full of all of the Obligations on terms and conditions acceptable to Agent, (B) promptly upon Agent's request, Agent shall have received a subordination agreement, in form and substance satisfactory to Agent, providing for the terms of the subordination in right of payment of such Indebtedness of such Borrower to the prior final payment and satisfaction in full of all of the Obligations, duly authorized, executed and delivered by such Guarantor and such Borrower, and (C) such Borrower shall not, directly or indirectly make, or be required to make, any payments in respect of such Indebtedness at any time that a Default or Event of Default shall exist or have occurred and be continuing.

(k) the formation or acquisition by a Borrower or Guarantor after the date hereof of one or more Subsidiaries incorporated or organized under the laws of any state of the United States of America; PROVIDED, THAT: (i) such Borrower or Guarantor (as the case may be) shall cause any such Subsidiary to execute and deliver to Agent, in form and substance satisfactory to Agent, (A) an absolute and unconditional guarantee of payment of the Obligations, (B) a security agreement granting to Agent a first priority security interest and lien (except as otherwise consented to in writing by Agent) upon all of the assets of any such Subsidiary, (C) related UCC financing and FAA registration statements, and (D) such other agreements, documents and instruments as Agent may require, including, but not limited to, supplements and amendments hereto and other loan agreements or instruments evidencing Indebtedness of such new Subsidiaries to Agent, (ii) such Borrower or Guarantor (as the case may be) shall (A) execute and deliver to Agent, in form and substance satisfactory to Agent, a pledge and security agreement granting to Agent a first pledge of and lien on all of the issued and outstanding shares of Capital Stock of any such Subsidiary, and (B) deliver the original stock certificates evidencing such shares of Capital Stock (or such other evidence as may be issued in the case of a limited liability company), together with stock powers with respect thereto duly executed in blank (or the equivalent thereof in the case of a limited liability company in which such interests are certificated, or otherwise take such actions as Agent shall require with respect to Agent's security interests therein), (iii) the Subsidiary formed or acquired shall be engaged in a business related, ancillary or complimentary to the businesses of Borrowers as conducted on the date hereof,
(iv) the sum of (A) the aggregate amount of all loans, advances, capital contributions or other investments or payments by Borrowers and Guarantors to, or for the acquisition of, all of such Subsidiaries or otherwise in connection therewith, plus (B) the aggregate amount of all loans or investments made which are permitted under Section 9.10(l) below, plus (C) the aggregate of all amounts paid in connection with purchases permitted under Section 9.10(m) below, shall not in the aggregate exceed $10,000,000 during the term of this Agreement, (v) in the case of loans and advances, the original of any promissory note or other instrument evidencing the Indebtedness arising pursuant to such loans and advances shall be delivered, or caused to be delivered, to Agent, at Agent's option, together with an appropriate endorsement and with full recourse to the payee thereof, (vi) as of the date of any such loan, advance, capital contribution or other investment or payment by such Borrower or Guarantor to, or for the acquisition of, any

such Subsidiary or otherwise in connection therewith and after giving effect thereto, Excess Availability shall be not less than $25,000,000, (vii) Agent shall have received (A) not less than ten (10) Business Days' prior written notice of the formation or acquisition of any such Subsidiary and such information with respect thereto as Agent may request, and (B) true, correct and complete copies of all agreements, documents and instruments relating thereto and (viii) as of the date of any such loan, advance, capital contribution or other investment or payment, no Default or Event of Default shall exist or have occurred and be continuing;

(l) loans, advances or investments (but not in any case of Accounts or Receivables) by any Borrower or Guarantor to any Person (other than another Borrower or Guarantor) after the date hereof or investment by any Borrower or Guarantor by capital contribution in any Person after the date hereof (other than another Borrower or Guarantor); PROVIDED, THAT, as to any such loans or investments, each of the following conditions is satisfied as determined by Agent (except as Agent may otherwise agree): (i) the Person receiving such loan or investment is engaged in a business related, ancillary or complimentary to the businesses of Borrowers as conducted on the date hereof, (ii) the sum of (A) the aggregate amount of any such loans or investments, plus (B) all loans, advances, capital contributions or other investments or payments permitted under
Section 9.10(k) above, plus (C) the aggregate of all amounts paid in connection with purchases permitted under Section 9.10(m) below, shall not in the aggregate exceed $10,000,000 during the term of this Agreement, (iii) as of the date of any such loan or investment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (iv) in the case of an investment by capital contribution, unless otherwise prohibited by the terms of such capital contribution or the organizational documents of the entity to which such capital contribution is made, at Agent's option, the original stock certificate or other instrument evidencing such capital contribution (or such other evidence as may be issued in the case of a limited liability company) shall be promptly delivered to Agent, together with such stock power, assignment or endorsement as Agent may request, and promptly upon Agent's request, such Borrower or Guarantor shall execute and deliver to Agent in form and substance satisfactory to Agent, a pledge and security agreement granting to Agent a first pledge of and lien on all of the issued and outstanding shares of such stock or other instrument or interest (and in the case of a limited liability company take such other actions as Agent shall require with respect to Agent's security interests therein), (v) in the case of loans of money or property, the original of any promissory note or other instrument evidencing the Indebtedness arising pursuant to such loans shall be delivered, or caused to be delivered, to Agent, at Agent's option, together with an appropriate endorsement and with full recourse to the payee thereof, (vi) as of the date of any such loan or investment and after giving effect thereto, Excess Availability shall be not less than $25,000,000 and (vii) Agent shall have received (A) not less than ten
(10) Business Days' prior written notice thereof setting forth in reasonable detail the nature and terms thereof, (B) true, correct and complete copies of all agreements, documents and instruments relating thereto and (C) such other information with respect thereto as Agent may request;

(m) the purchase by any Borrower or Guarantor of all or a substantial part of the assets or property of any person located in the United States (other than Capital Stock); PROVIDED, THAT, each of the following conditions is satisfied as determined by Agent;

(i) Agent shall have received not less than ten (10) Business Days' prior written notice of the proposed acquisition and such information with respect thereto as Agent

may request, including (A) the proposed date and amount of the acquisition, (B) a list and description of the assets to be acquired, and (C) the total purchase price for the assets to be purchased (and the terms of payment of such purchase price),

(ii) as of the date of such purchase and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing,

(iii) promptly upon Agent's request, such Borrower or Guarantor shall deliver, or cause to be delivered to Agent, true, correct and complete copies of all agreements, documents and instruments relating to such acquisition,

(iv) the assets and properties being acquired by such Borrower or Guarantor shall be substantially consistent with, and related to, the business of such Borrower or Guarantor as conducted on the date hereof,

(v) the assets acquired by such Borrower or Guarantor shall be free and clear of any security interest, mortgage, pledge, lien, charge or other encumbrance and Agent shall have received evidence satisfactory to it of the same (other than security interests and liens permitted under Section 9.8 hereof),

(vi) the acquisition by such Borrower or Guarantor of such assets shall not violate any law or regulation or any order or decree of any court or Governmental Authority in any respect and shall not and will not conflict with or result in the breach of, or constitute a default in any respect under, any agreement, document or instrument to which any Borrower, Guarantor or any Affiliate is a party or may be bound, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property of any Borrower, Guarantor or any Affiliate or violate any provision of the certificate of incorporation or by-laws of any Borrower or Guarantor,

(vii) such purchase shall be on commercially reasonable prices and terms and in a BONA FIDE arms' length transaction,

(viii) Borrowers and Guarantors shall not become obligated with respect to any Indebtedness, nor any of their property become subject to any security interest or lien, pursuant to such acquisition unless Borrowers and Guarantors could incur such Indebtedness or create such security interest or lien hereunder or under the other Financing Agreements,

(ix) Agent shall have received, in form and substance satisfactory to Agent, (A) evidence that Agent has valid and perfected security interests in and liens upon the assets purchased, (B) UCC Financing Statements and FAA registrations, (C) all Collateral Access Agreements for locations where books and records are kept in respect of Accounts or Receivables that Borrowers wish to have considered by Agent as the basis for the making of Loans, and other consents, waivers, acknowledgments and other agreements from third persons which Agent may reasonably deem necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the assets purchased, (D) the agreement of the seller consenting to the collateral assignment by Borrower or Guarantor of all rights and remedies and claims for damages of Borrower or Guarantor relating to the Collateral (including, without limitation, any bulk sales indemnification) under the agreements, documents and instruments

relating to such acquisition and (E) such other agreements, documents and instruments as Agent may request in connection therewith,

(x) in no event shall any Accounts so acquired by a Borrower pursuant to such acquisition be deemed Eligible Accounts unless and until Agent shall have conducted a field examination with respect thereto and then only to the extent the criteria for Eligible Accounts set forth herein are satisfied with respect thereto (or such other or additional criteria as Agent may, at its option, establish with respect thereto), and upon the request of Agent, the Accounts acquired by such Borrower pursuant to such acquisition shall at all times after such acquisition be separately identified and reported to Agent in a manner satisfactory to Agent,

(xi) not less than ten (10) Business Days' prior to the date of such acquisition, Agent shall have received projected financial statements approved by the Board of Directors of such Borrower or Guarantor reflecting the projected effect of such acquisition on Borrowers for the remaining portion of the then current year and for the succeeding years after giving effect to the acquisition (including forecasted income statements, cash flow statements and balance sheets) prepared on a summary basis as to the current year and the immediately succeeding year, in each case, all in reasonable detail, together with such supporting information as Agent may reasonably request, which projections shall represent Borrowers' reasonable best estimate of the future financial performance of Borrowers for the periods set forth therein and shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable in light of current and reasonably foreseeable business conditions,

(xii) the sum of (A) the aggregate amount of all payments by Borrowers and Guarantors in connection with all of such acquisitions, plus (B) the aggregate amount of all loans, advances, capital contributions or other investments or payments permitted under Section 9.10(k) above, plus (C) the aggregate amount of all loans or investments permitted under Section 9.10(1) above, shall not exceed $10,000,000 outstanding at any time during the term of this Agreement, and

(xiii) as of the date of any such acquisition and after giving effect thereto, the Excess Availability shall be not less than $25,000,000;

(n) the loans, advances and investments set forth on Schedule 9.10 to the Information Certificate and all renewals, extensions or replacements thereof; PROVIDED, THAT, as to such loans, advances and investments, Borrowers and Guarantors shall not, directly or indirectly, materially amend, modify, alter or change the terms of such loans and advances or any agreement, document or instrument related thereto and Borrowers and Guarantors shall furnish to Agent all notices or demands in connection with such loans and advances either received by any Borrower or Guarantor or on its behalf, promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf, concurrently with the sending thereof, as the case may be.

9.11 DIVIDENDS AND REDEMPTIONS. Each Borrower and Guarantor shall not, directly or indirectly, declare or pay any dividends on account of any shares or class of any Capital Stock of such Borrower or Guarantor now or hereafter outstanding, or set aside or otherwise deposit or invest any sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire any

shares of any class of Capital Stock (or set aside or otherwise deposit or invest any sums for such purpose) for any consideration or apply or set apart any sum, or make any other distribution (by reduction of capital or otherwise) in respect of any such shares or agree to do any of the foregoing, except that:

(a) any Borrower or Guarantor may declare and pay such dividends or redeem, retire, defease, purchase or otherwise acquire any shares of any class of Capital Stock for consideration in the form of shares of common stock (so long as after giving effect thereto no Change of Control or other Default or Event of Default shall exist or occur);

(b) Borrowers and Guarantors may pay dividends, purchase, redeem or repurchase any of their Capital Stock to the extent permitted in Section 9.12 below;

(c) any Subsidiary of a Borrower or Guarantor may pay dividends to a Borrower or Guarantor;

(d) Borrowers and Guarantors may repurchase Capital Stock consisting of common stock held by employees pursuant to any employee stock ownership plan thereof upon the termination, retirement or death of any such employee in accordance with the provisions of such plan; PROVIDED, THAT, as to any such repurchase, each of the following conditions is satisfied: (i) as of the date of the payment for such repurchase and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (ii) such repurchase shall be paid with funds legally available therefor, (iii) such repurchase shall not violate any law or regulation or the terms of any indenture, agreement or undertaking to which such Borrower or Guarantor is a party or by which such Borrower or Guarantor or its or their property are bound, and (iv) the aggregate amount of all payments for such repurchases in any calendar year shall not exceed $1,000,000; and

(e) Atlas Holdings may pay dividends or may redeem or repurchase any of its Capital Stock; PROVIDED, THAT, as to any payment of such dividend or for such redemption or repurchase each of the following conditions is satisfied:

(i) such payment shall be made with funds legally available therefor,

(ii) such dividend or redemption or repurchase shall not violate any law or regulation or the terms of any indenture, agreement or undertaking to which a Borrower or Guarantor is a party or by which a Borrower or Guarantor or its properties are bound,

(iii) as of the date of the payment of each such dividend or redemption or repurchase, and after giving effect thereto, the aggregate amount of (A) all such payments (on a consolidated basis) made in any fiscal year of Borrowers and Guarantors PLUS (B) commencing after January 1, 2006, all payments and prepayments with respect to Indebtedness made pursuant to the exception set forth in Section 9.9(g)(iv) hereof with respect to repayments or prepayments of Indebtedness made in such fiscal year, shall not exceed the amount equal to fifty (50%) percent of the Consolidated Net Income of Atlas Holdings in the immediately preceding Reference Year (and as to which such payments relate),

(iv) as of the date of the payment of such dividend or redemption or repurchase and after giving effect thereto, the aggregate amount of the Excess Availability shall not be less than $25,000,000, and

(v) as of the date of the payment of such dividend or redemption or repurchase and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing,

9.12 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 9.12, each Borrower and Guarantor shall not, directly or indirectly:

(a) purchase, acquire or lease any property from, or sell, transfer or lease any property to, any officer, director or other Affiliate of such Borrower or Guarantor, except in the ordinary course of and pursuant to the reasonable requirements of such Borrower's or Guarantor's business (as the case may be) and upon fair and reasonable terms no less favorable to such Borrower or Guarantor than such Borrower or Guarantor would obtain in a comparable arm's length transaction with an unaffiliated person; or

(b) make any payments (whether by dividend, loan or otherwise) of management, consulting or other fees for management or similar services, or of any Indebtedness owing to any officer, employee, shareholder, director or any other Affiliate of such Borrower or Guarantor, EXCEPT, in each case, for (i) reasonable compensation to officers, employees and directors for services rendered to such Borrower or Guarantor in the ordinary course of business, and
(ii) payments by any Subsidiary of Atlas Holdings to Atlas Holdings for actual and necessary reasonable out-of-pocket legal and accounting, insurance, marketing, payroll and similar types of services paid for by Atlas Holdings on behalf of such Subsidiary, in the ordinary course of their respective businesses or as the same may be directly attributable to such Subsidiary and for the payment of taxes by or on behalf of Atlas Holdings.

9.13 COMPLIANCE WITH ERISA. Each Borrower and Guarantor shall, and shall cause each of its ERISA Affiliates, to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal and state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; (c) not terminate any of such Plans so as to incur any material liability to the Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any prohibited transaction involving any of such Plans or any trust created thereunder which would subject such Borrower, Guarantor or such ERISA Affiliate to a material tax or penalty or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA; (e) make all required contributions to any Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated funding deficiency, whether or not waived, with respect to any such Plan; or (g) allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any such Plan that is a single employer plan, which termination could result in any material liability to the Pension Benefit Guaranty Corporation.

9.14 END OF FISCAL YEARS; FISCAL QUARTERS. Each Borrower and Guarantor shall, for financial reporting purposes, cause its, and each of its Subsidiaries' (a) fiscal years to end on

December 31 of each year and (b) fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year.

9.15 CHANGE IN BUSINESS. Each Borrower and Guarantor shall not engage in any business other than the business of such Borrower or Guarantor on the date hereof and any business reasonably related, ancillary or complimentary to the business in which such Borrower or Guarantor is engaged on the date hereof.

9.16 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES. Each Borrower and Guarantor shall not, directly, or indirectly, create or otherwise cause or suffer to exist any encumbrance or restriction which prohibits or limits the ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or make other distributions or pay any Indebtedness owed to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or advances to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (c) transfer any of its properties or assets to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; or (d) create, incur, assume or suffer to exist any lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than encumbrances and restrictions arising under (i) applicable law, (ii) this Agreement, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor and customary provisions restricting the disposition or encumbrance of property subject to purchase money financing arrangements otherwise permitted under this Agreement, (iv) customary restrictions on dispositions of real property interests found in reciprocal easement agreements of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor,
(v) any agreement relating to permitted Indebtedness incurred by a Subsidiary of such Borrower or Guarantor prior to the date on which such Subsidiary was acquired by such Borrower or such Guarantor and outstanding on such acquisition date, and (vi) all contractual obligations in existence on the date hereof and the extension or continuation thereof; PROVIDED, THAT, any such encumbrances or restrictions contained in such extension or continuation are no less favorable to Agent and Lenders than those encumbrances and restrictions under or pursuant to the contractual obligations so extended or continued.

9.17 EBITDAR. At any time Excess Availability is less than $30,000,000, the EBITDAR of Atlas Holdings and its Subsidiaries on a consolidated basis shall be measured monthly for the immediately preceding twelve (12) month period and shall be not less than the amount specified on Schedule 9.17 hereto with respect to each such period.

9.18 EXCESS AVAILABILITY. Borrowers shall at all times have and maintain Excess Availability of not less than $5,000,000.

9.19 CAPITAL EXPENDITURES.

(a) Borrowers shall not directly or indirectly, make or commit to make, whether through purchase, capital leases or otherwise, Capital Expenditures on a non-cumulative basis in excess of a total aggregate amount of $25,000,000 (the "Base Amount") during any fiscal year of Borrowers (exclusive of mandatory Capital Expenditures for avionics improvements or compliance prescribed by the FAA or Federal Aviation Act Laws of up to the aggregate amount

of $7,000,000 during the term hereof); provided, that, (i) if the aggregate amount of Capital Expenditures expended by Borrowers during the fiscal year of Borrowers ending December 31, 2004, is less than the Base Amount for such fiscal year, then the amount of Capital Expenditures permitted to be expended pursuant to this Section 9.19 in the immediately succeeding fiscal year of Borrowers and Guarantors shall be increased by the lesser of (A) such shortfall and (B) $6,000,000 and (ii) if the aggregate amount of Capital Expenditures expended by Borrowers during any fiscal year thereafter, commencing with the fiscal year of Borrowers ending December 31, 2005 is less than the Base Amount for such fiscal year, then the amount of Capital Expenditures permitted to be expended pursuant to this Section 9.19 in the immediately succeeding fiscal year of Borrowers and Guarantors shall be increased by the lesser of (A) such shortfall and (B) $12,500,000.

(b) Notwithstanding anything to the contrary set forth in this Loan Agreement (including Section 9.19(a) above) or any of the other Financing Agreements, Blade and Disk Expenditures (as hereinafter defined) and Back to Birth Expenditures (as hereinafter defined) shall not constitute Capital Expenditures for purposes of calculating compliance with Section 9.19(a) above except: (i) in the case of Blade and Disk Expenditures, to the extent such expenditures exceed $15,000,000 in the aggregate during the term hereof and (ii) in the case of Back to Birth Expenditures, to the extent such expenditures exceed $8,000,000 in the aggregate during the term hereof. For purposes of this
Section 9.19(b), "Blade and Disk Expenditures" shall mean Capital Expenditures to address under-platform cracking, including blade and disk replacement, required for CF6-80C2 Engines. For purposes of this Section 9.19(b), "Back to Birth Expenditures" shall mean Capital Expenditures to resolve issues related to any failure by Atlas Air to maintain with respect to any Part (as defined in the Aircraft Credit Facility Agreement) records dating back to the date of manufacture of such Part.

9.20 LICENSE AGREEMENTS.

(a) Each Borrower and Guarantor shall (i) promptly and faithfully observe and perform all of the material terms, covenants, conditions and provisions of the material License Agreements to which it is a party to be observed and performed by it, at the times set forth therein, if any, (ii) not do, permit, suffer or refrain from doing anything that could reasonably be expected to result in a default under or breach of any of the terms of any material License Agreement, (iii) not cancel, surrender, modify, amend, waive or release any material License Agreement in any material respect or any term, provision or right of the licensee thereunder in any material respect, or consent to or permit to occur any of the foregoing; EXCEPT, THAT, subject to
Section 9.20(b) below, such Borrower or Guarantor may cancel, surrender or release any material License Agreement in the ordinary course of the business of such Borrower or Guarantor; PROVIDED, THAT, such Borrower or Guarantor (as the case may be) shall give Agent not less than thirty (30) days prior written notice of its intention to so cancel, surrender and release any such material License Agreement, (iv) give Agent prompt written notice of any material License Agreement entered into by such Borrower or Guarantor after the date hereof, together with a true, correct and complete copy thereof and such other information with respect thereto as Agent may request, (v) give Agent prompt written notice of any material breach of any obligation, or any default, by any party under any material License Agreement, and deliver to Agent (promptly upon the receipt thereof by such Borrower or Guarantor in the case of a notice to such Borrower or Guarantor and concurrently with the sending thereof in the case of a notice

from such Borrower or Guarantor) a copy of each notice of default and every other material notice or other communication received or delivered by such Borrower or Guarantor in connection with any material License Agreement which relates to the right of such Borrower or Guarantor to continue to use the property subject to such License Agreement, and (vi) furnish to Agent, promptly upon the request of Agent, such information and evidence as Agent may reasonably require from time to time concerning the observance, performance and compliance by such Borrower or Guarantor or the other party or parties thereto with the material terms, covenants or provisions of any material License Agreement.

(b) Each Borrower and Guarantor will either exercise any option to renew or extend the term of each material License Agreement (other than those which are no longer used or useful in its business) to which it is a party in such manner as will cause the term of such material License Agreement to be effectively renewed or extended for the period provided by such option and give prompt written notice thereof to Agent or give Agent prior written notice that such Borrower or Guarantor does not intend to renew or extend the term of any such material License Agreement or that the term thereof shall otherwise be expiring, not less than sixty (60) days prior to the date of any such non-renewal or expiration. In the event of the failure of such Borrower or Guarantor to extend or renew any such material License Agreement to which it is a party, Agent shall have, and is hereby granted, the irrevocable right and authority, at its option, to renew or extend the term of such material License Agreement, whether in its own name and behalf, or in the name and behalf of a designee or nominee of Agent or in the name and behalf of such Borrower or Guarantor, as Agent shall determine at any time that an Event of Default shall exist or have occurred and be continuing. At any time that a Default or Event of Default exists, Agent may, but shall not be required to, perform any or all of such obligations of such Borrower or Guarantor under any of the License Agreements, including, but not limited to, the payment of any or all sums due from such Borrower or Guarantor thereunder. Any sums so paid by Agent shall constitute part of the Obligations.

9.21 SLOT UTILIZATION; ROUTE UTILIZATION; LEASEHOLD UTILIZATION.

(a) Each Borrower shall (i) utilize its Slots in a manner consistent with applicable laws, regulations and contracts in order reasonably to preserve its right to hold and operate the Slots, taking into account any waivers or other relief granted to any Borrower by the FAA and any applicable Foreign Aviation Authority, (ii) cause to be done all things reasonably necessary to preserve and keep in full force and effect its rights in and use of its Slots, including satisfying the Use or Lose Rule and other regulations, as may be modified, amended or superseded from time to time, and (iii) without in any way limiting the foregoing, promptly take all such steps as may be reasonably necessary now or in the future to maintain, renew and obtain the rights, licenses, authorizations or certifications as are necessary to the continued and future holding and operation by any Borrower of its Slots. Notwithstanding the foregoing, the Slot assignments of Borrowers may be modified from time to time in the ordinary course of the businesses of Borrower and in a manner consistent with the prior operation by Borrowers of such businesses and Borrowers shall not be required to satisfy Use or Lose Rules in order to retain Slots which Borrowers determine in their good faith business judgment are no longer useful in the conduct of their businesses.

(b) Each Borrower shall (i) utilize the Routes in a manner consistent in all material respects with the Federal Aviation Laws and applicable foreign law, and the applicable rules and regulations of the FAA, DOT and any applicable Foreign Aviation Authorities, including the terms and conditions of any operating authorizations, certificates, bilateral authorizations and bilateral agreements with any applicable Foreign Aviation Authorities and contracts with respect to such Routes, in order reasonably to preserve its rights with respect to Routes and Supporting Route Facilities for Routes, in each case which are used or useful in the operations of a Borrower,
(ii) cause to be done all things reasonably necessary to preserve and keep in full force and effect its rights in and to use those Routes and Supporting Route Facilities for such Routes, in each case which are used or useful in the operations of a Borrower, (iii) without in any way limiting the foregoing, (A) take all such steps as may be reasonably necessary to obtain renewal from the DOT and any applicable Foreign Aviation Authorities, within a reasonable time prior to the expiration of such authority (as prescribed by law or regulation, if any), of each Route authority necessary to the continued or future operations of a Borrower and notify the Agent of the status of such renewal and (B) take all such other steps as may be necessary to maintain, renew and obtain any and all Supporting Route Facilities for such Routes as needed for the continued and future operations of any Borrower. Each Borrower shall further take all actions reasonably necessary or, in the reasonable judgment of the Agent, advisable in order to maintain all such rights referred to in this Section 9.2l(b). Notwithstanding the foregoing, each Borrower may make adjustments to its flight routings and schedules and, in the case of Fifth Freedom Rights and to change designated points, in each case in the ordinary course of the businesses of Borrowers and consistent with the prior operation by Borrowers of such businesses.

(c) Each Borrower and any applicable Guarantor shall pay any applicable filing fees and other expenses related to the submission of applications, renewal requests, and other filings as may be reasonably necessary to maintain or obtain such entity's rights in such Routes and Supporting Route Facilities for such Routes.

(d) Each Borrower shall utilize all of its Airport Leaseholds in a manner sufficient to comply in all material respects with applicable lease provisions governing such Airport Leaseholds.

9.22 COSTS AND EXPENSES. Borrowers and Guarantors shall pay to Agent on demand all costs, expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation, execution, delivery, recording, syndication, administration, collection, liquidation, enforcement and defense of the Obligations, Agent's rights in the Collateral, this Agreement, the other Financing Agreements and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) all costs and expenses of filing or recording (including Uniform Commercial Code financing statement filing taxes and fees, documentary taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits, title insurance premiums, surveys, assessments, engineering reports and inspections, appraisal fees and search fees, costs and expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing and maintaining the Blocked Accounts, together with Agent's customary charges and fees with respect thereto; (c) charges, fees or expenses charged by any bank or issuer in connection with the Letter of Credit Accommodations; (d) costs and expenses

of preserving and protecting the Collateral; (e) costs and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the security interests and liens of Agent, selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this Agreement and the other Financing Agreements or defending any claims made or threatened against Agent or any Lender arising out of the transactions contemplated hereby and thereby (including preparations for and consultations concerning any such matters); (f) all out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Agent during the course of periodic field examinations of the Collateral and such Borrower's or Guarantor's operations, plus a per diem charge at Agent's then standard rate for Agent's examiners in the field and office (which rate as of the date hereof is $850 per person per day); and (g) the fees and disbursements of counsel (including legal assistants) to Agent in connection with any of the foregoing.

9.23 DISSOLUTION OF INACTIVE SUBSIDIARIES. On or before the date which is ninety (90) days after the date hereof, Borrowers shall cause each Inactive Subsidiary to (a) be dissolved in accordance with all applicable laws and regulations and (b) assign all of its assets to its shareholder.

9.24 FURTHER ASSURANCES. At the request of Agent at any time and from time to time, Borrowers and Guarantors shall, at their expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be necessary or proper to evidence, perfect, maintain and enforce the security interests and the priority thereof in the Collateral and to otherwise effectuate the provisions or purposes of this Agreement or any of the other Financing Agreements. Agent may at any time and from time to time request a certificate from an officer of any Borrower or Guarantor representing that all conditions precedent to the making of Loans and providing Letter of Credit Accommodations contained herein are satisfied. In the event of such request by Agent, Agent and Lenders may, at Agent's option, cease to make any further Loans or provide any further Letter of Credit Accommodations until Agent has received such certificate and, in addition, Agent has determined that such conditions are satisfied.

SECTION 10. EVENTS OF DEFAULT AND REMEDIES

10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more of the following events are referred to herein individually as an "Event of Default", and collectively as "Events of Default":

(a) (i) any Borrower fails to pay any principal amount of the Loans when due or fails to pay any other Obligations when due and such failure continues for three Business Days or (ii) any Borrower or Obligor fails to perform any of the covenants contained in Sections 7.3, 7.4, 9.2, 9.3, 9.4, 9.5, 9.6, 9.13, 9.14, 9.15, 9.16, 9.20, 9.21 and 9.22 of this Agreement and such failure shall continue for fifteen (15) days; PROVIDED, THAT, such fifteen (15) day period shall not apply in the case of any failure to observe any such covenant which is not capable of being cured at all or within such fifteen (15) day period or which has been the subject of a prior failure within a six (6) month period or (iii) any Borrower or Obligor fails to perform any of the terms, covenants, conditions or provisions contained in this Agreement or any of the other Financing Agreements other than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;

(b) any representation, warranty or statement of material fact made by any Borrower or Guarantor to Agent in this Agreement, the other Financing Agreements or any other written agreement, schedule, confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any material respect;

(c) any Obligor revokes or terminates or purports to revoke or terminate or fails to perform any of the terms, covenants, conditions or provisions of any guarantee, endorsement or other agreement of such party in favor of Agent or any Lender;

(d) any judgment for the payment of money is rendered against any Borrower or Obligor in excess of $5,000,000 in any one case or in excess of $25,000,000 in the aggregate (to the extent not covered by insurance where the insurer has assumed responsibility in writing for such judgment) and shall remain undischarged or unvacated for a period in excess of forty-five (45) days or execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or injunction, attachment, garnishment or execution is rendered against any Borrower or Obligor or any of the Collateral having a value in excess of $5,000,000;

(e) any Obligor (being a natural person or a general partner of an Obligor which is a partnership) dies or any Borrower or Obligor, which is a partnership, limited liability company, limited liability partnership or a corporation, dissolves or suspends or discontinues doing business, except as otherwise permitted under this Agreement;

(f) any Borrower or Obligor makes an assignment for the benefit of creditors, makes or sends notice of a bulk transfer or calls a meeting of its creditors or principal creditors in connection with a moratorium or adjustment of the Indebtedness due to them;

(g) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity) is filed against any Borrower or Obligor or all or any part of its properties and such petition or application is not dismissed within sixty (60) days after the date of its filing or any Borrower or Obligor shall file any answer admitting or not contesting such petition or application or indicates its consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner;

(h) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity) is filed by any Borrower or Obligor or for all or any part of its property;

(i) any default in respect of any Indebtedness of any Borrower or Obligor (other than Indebtedness owing to Agent and Lenders hereunder), in any case in an amount in excess of $5,000,000, which default continues unremedied for more than forty-five (45) days after the applicable cure period, if any, with respect thereto; PROVIDED, HOWEVER, that such default shall immediately constitute an Event of Default at any time during such period of up to forty-five (45) days that the obligee or payee in respect of such Indebtedness (or such other person entitled

to take action) takes any action against such Borrower or Obligor or the assets or properties of such Borrower or Obligor;

(j) any default by any Borrower or Obligor under any Material Contract, which default continues unremedied for more than forty-five (45) days after the applicable cure period, if any, with respect thereto; PROVIDED, HOWEVER, that such default shall immediately constitute an Event of Default at any time during such period of up to forty-five (45) days that the person entitled to take action against such Borrower or Guarantor under such Material Contract takes any action against such Borrower or Obligor or the assets or properties of such Borrower or Obligor;

(k) any material provision hereof or of any of the other Financing Agreements shall for any reason cease to be valid, binding and enforceable with respect to any party hereto or thereto (other than Agent or any Lender) in accordance with its terms, or any such party shall challenge the enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Financing Agreements has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided for herein or in any of the other Financing Agreements shall cease to be a valid and perfected first priority security interest in any of the Collateral purported to be subject thereto (except as otherwise permitted herein or therein);

(l) any default by a Borrower or Guarantor under any of the Clearinghouse Agreements;

(m) any cessation of payments or suspension of settlements or payments in favor of Polar (whether affecting Polar or CNS alone or other IATA members or clients), or any failure by Polar for any reason to receive on the scheduled monthly settlement date for Polar (or within three (3) Business Days thereafter) a net credit settlement from the CNS or IATA, as applicable, or any failure of CNS or IATA to transfer such net credit settlement, in an amount of at least eighty (80%) percent of the amount of the gross Accounts reported to Agent as submitted to the CNS or IATA, as applicable, in respect of the period covered by such monthly settlement date;

(n) an ERISA Event shall occur which results in or could reasonably be expected to result in liability of any Borrower in an aggregate amount in excess of $5,000,000;

(o) any Change of Control;

(p) there shall be a material adverse change in the business, assets or prospects of Borrowers and Guarantors (taken as a whole) after the date hereof; or

(q) there shall be an event of default under any of the other Financing Agreements.

10.2 REMEDIES.

(a) At any time an Event of Default exists or has occurred and is continuing, Agent and Lenders shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the UCC and other applicable law, all of which rights and remedies may be exercised without notice to or consent by any Borrower or Obligor, except as such notice or

consent is expressly provided for hereunder or required by applicable law. All rights, remedies and powers granted to Agent and Lenders hereunder, under any of the other Financing Agreements, the UCC or other applicable law, are cumulative, not exclusive and enforceable, in Agent's discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by any Borrower or Obligor of this Agreement or any of the other Financing Agreements. Subject to Section 12 hereof, Agent may, and at the direction of the Required Lenders shall, at any time or times, proceed directly against any Borrower or Obligor to collect the Obligations without prior recourse to the Collateral.

(b) Without limiting the generality of the foregoing, at any time an Event of Default exists or has occurred and is continuing, Agent may, at its option and shall upon the direction of the Required Lenders, (i) upon notice to Administrative Borrower, accelerate the payment of all Obligations and demand immediate payment thereof to Agent for itself and the benefit of Lenders; (PROVIDED, THAT, upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations shall automatically become immediately due and payable), and (ii) terminate the Commitments and this Agreement; (PROVIDED, THAT, upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h), the Commitments and any other obligation of the Agent or a Lender hereunder shall automatically terminate).

(c) Without limiting the foregoing, at any time an Event of Default exists or has occurred and is continuing, Agent may, in its discretion (i) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair of all or any portion of the Collateral, (ii) require any Borrower or Obligor, at Borrowers' expense, to assemble and make available to Agent any part or all of the Collateral at any place and time designated by Agent, (iii) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, including collection of amounts to be settled and paid by or through CNS, CASS, IATA and/or the Clearing Bank, (iv) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, (v) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including entering into contracts with respect thereto, public or private sales at any exchange, broker's board, at any office of Agent or elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon credit or for future delivery, with the Agent having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any right or equity of redemption of any Borrower or Obligor, which right or equity of redemption is hereby expressly waived and released by Borrowers and Obligors and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased by Agent upon credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally collected by Agent. If notice of disposition of Collateral is required by law, ten (10) days prior notice by Agent to Administrative Borrower designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and Borrowers and Obligors waive any other notice. In the event Agent institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, each Borrower and Obligor waives the posting of any bond which might otherwise be required. At any time an Event of Default exists or has occurred and is continuing, upon Agent's request,

Borrowers will either, as Agent shall specify, furnish cash collateral to the issuer to be used to secure and fund Agent's reimbursement obligations to the issuer in connection with any Letter of Credit Accommodations or furnish cash collateral to Agent for the Letter of Credit Accommodations. Such cash collateral shall be in the amount equal to one hundred ten (110%) percent of the amount of the Letter of Credit Accommodations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of such Letter of Credit Accommodations.

(d) At any time or times that an Event of Default exists or has occurred and is continuing, Agent may, in its discretion, enforce the rights of any Borrower or Obligor against any account debtor, secondary obligor or other obligor in respect of any of the Accounts or other Receivables constituting Collateral. Without limiting the generality of the foregoing, Agent may, in its discretion, at such time or times (i) notify any or all account debtors, secondary obligors or other obligors in respect thereof that the Receivables have been assigned to Agent and that Agent has a security interest therein and Agent may direct any or all account debtors, secondary obligors and other obligors to make payment of such Receivables directly to Agent, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all such Receivables or other obligations included in the Collateral and thereby discharge or release the account debtor or any secondary obligors or other obligors in respect thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any such Receivables or such other obligations, but without any duty to do so, and Agent and Lenders shall not be liable for any failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other action Agent may deem necessary or desirable for the protection of its interests and the interests of Lenders. At any time that an Event of Default exists or has occurred and is continuing, at Agent's request, all invoices and statements sent to any account debtor shall state that the Accounts and such other obligations have been assigned to Agent and are payable directly and only to Agent and Borrowers and Obligors shall deliver to Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Agent may require. In the event any account debtor returns Inventory constituting Collateral when an Event of Default exists or has occurred and is continuing, Borrowers shall, upon Agent's request, hold such returned Inventory in trust for Agent, segregate all such returned Inventory from all of its other property, dispose of such returned Inventory solely according to Agent's instructions, and not issue any credits, discounts or allowances with respect thereto without Agent's prior written consent.

(e) To the extent that applicable law imposes duties on Agent or any Lender to exercise remedies in a commercially reasonable manner (which duties cannot be waived under such law), each Borrower and Guarantor acknowledges and agrees that it is not commercially unreasonable for Agent or any Lender (i) to fail to incur expenses reasonably deemed significant by Agent or any Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain consents of any Governmental Authority or other third party for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against account debtors, secondary obligors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against

Collateral, (iv) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other persons, whether or not in the same business as any Borrower or Guarantor, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure Agent or Lenders against risks of loss, collection or disposition of Collateral or to provide to Agent or Lenders a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral. Each Borrower and Guarantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Agent or any Lender would not be commercially unreasonable in the exercise by Agent or any Lender of remedies against the Collateral and that other actions or omissions by Agent or any Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section. Without limitation of the foregoing, nothing contained in this Section shall be construed to grant any rights to any Borrower or Guarantor or to impose any duties on Agent or Lenders that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

(f) For the purpose of enabling Agent to exercise the rights and remedies hereunder, each Borrower and Obligor hereby grants to Agent, to the extent assignable, an irrevocable, nonexclusive license (exercisable at any time an Event of Default shall exist or have occurred and for so long as the same is continuing) without payment of royalty or other compensation to any Borrower or Obligor, to use, assign, license or sublicense any of the trademarks, service-marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other Intellectual Property and general intangibles now owned or hereafter acquired by any Borrower or Obligor, wherever the same maybe located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.

(g) At any time an Event of Default exists or has occurred and is continuing, Agent may apply the cash proceeds of Collateral actually received by Agent from any sale, lease, foreclosure or other disposition of the Collateral to payment of the Obligations, in whole or in part and in accordance with the terms hereof, whether or not then due or may hold such proceeds as cash collateral for the Obligations. Borrowers and Guarantors shall remain liable to Agent and Lenders for the payment of any deficiency with interest at the highest rate provided for herein and all costs and expenses of collection or enforcement, including attorneys' fees and expenses.

(h) Without limiting the foregoing, upon the occurrence of a Default or an Event of Default, (i) Agent and Lenders may, at Agent's option, and upon the occurrence of an Event of

Default at the direction of the Required Lenders, Agent and Lenders shall, without notice, (A) cease making Loans or arranging for Letter of Credit Accommodations or reduce the lending formulas or amounts of Loans and Letter of Credit Accommodations available to Borrowers and/or (B) terminate any provision of this Agreement providing for any future Loans or Letter of Credit Accommodations to be made by Agent and Lenders to Borrowers and (ii) Agent may, at its option, establish such Reserves as Agent determines, without limitation or restriction, notwithstanding anything to the contrary contained herein.

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER.

(a) The validity, interpretation and enforcement of this Agreement and the other Financing Agreements (except as otherwise provided therein) and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

(b) Borrowers, Guarantors, Agent and Lenders irrevocably consent and submit to the non-exclusive jurisdiction of the Supreme Court of the State of New York for New York County and the United States District Court for the Southern District of New York, whichever Agent may elect, and waive any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Agreement or any of the other Financing Agreements or in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Financing Agreements or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Agent and Lenders shall have the right to bring any action or proceeding against any Borrower or Guarantor or its or their property in the courts of any other jurisdiction which Agent deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against any Borrower or Guarantor or its or their property).

(c) Each Borrower and Guarantor hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified mail (return receipt requested) directed to its address set forth herein and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Agent's option, by service upon any Borrower or Guarantor (or Administrative Borrower on behalf of such Borrower or Guarantor) in any other manner provided under the rules of any such courts. Within thirty (30) days after such service, such Borrower or Guarantor shall appear in answer to such process, failing which such Borrower or Guarantor shall be deemed in default and judgment may be entered by Agent against such Borrower or Guarantor for the amount of the claim and other relief requested.

(d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(e) Agent and Lenders shall not have any liability to any Borrower or Guarantor (whether in tort, contract, equity or otherwise) for losses suffered by such Borrower or Guarantor in connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on Agent and such Lender, that the losses were the result of acts or omissions constituting gross negligence or willful misconduct. In any such litigation, Agent and Lenders shall be entitled to the benefit of the rebuttable presumption that it acted in good faith and with the exercise of ordinary care in the performance by it of the terms of this Agreement. Each Borrower and Guarantor: (i) certifies that neither Agent, any Lender nor any representative, agent or attorney acting for or on behalf of Agent or any Lender has represented, expressly or otherwise, that Agent and Lenders would not, in the event of litigation, seek to enforce any of the waivers provided for in this Agreement or any of the other Financing Agreements and (ii) acknowledges that in entering into this Agreement and the other Financing Agreements, Agent and Lenders are relying upon, among other things, the waivers and certifications set forth in this Section 11.1 and elsewhere herein and therein.

11.2 WAIVER OF NOTICES. Each Borrower and Guarantor hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and chattel paper, included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as are expressly provided for herein. No notice to or demand on any Borrower or Guarantor which Agent or any Lender may elect to give shall entitle such Borrower or Guarantor to any other or further notice or demand in the same, similar or other circumstances.

11.3 AMENDMENTS AND WAIVERS.

(a) Neither this Agreement nor any other Financing Agreement nor any terms hereof or thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination is in writing signed by Agent and the Required Lenders or at

Agent's option, by Agent with the authorization of the Required Lenders, and as to amendments to any of the Financing Agreements (other than with respect to any provision of Section 12 hereof), by any Borrower; except, that, no such amendment, waiver, discharge or termination shall:

(i) reduce the interest rate or any fees or extend the time of payment of principal, interest or any fees or reduce the principal amount of any Loan or Letter of Credit Accommodations, in each case without the consent of each Lender directly affected thereby,

(ii) increase the Commitment of any Lender over the amount thereof then in effect or provided hereunder, in each case without the consent of the Lender directly affected thereby,

(iii) release any Collateral consisting of Receivables (except as expressly required hereunder or under any of the other Financing Agreements or applicable law and except as permitted under Section 12.1l(b) hereof), without the consent of Agent and all of Lenders,

(iv) reduce any percentage specified in the definition of Required Lenders, without the consent of Agent and all of Lenders,

(v) consent to the assignment or transfer by any Borrower or Guarantor of any of their rights and obligations under this Agreement, without the consent of Agent and all of Lenders,

(vi) amend, modify or waive any terms of this Section 11.3 hereof, without the consent of Agent and all of Lenders, or

(vii) increase the advance rates constituting part of the Borrowing Base or increase the sublimits with respect to Loans based on Foreign Accounts or for Letter of Credit Accommodations, without the consent of Agent and all of Lenders.

(b) Agent and Lenders shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its or their rights, powers and/or remedies unless such waiver shall be in writing and signed as provided herein. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by Agent or any Lender of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Agent or any Lender would otherwise have on any future occasion, whether similar in kind or otherwise.

(c) Notwithstanding anything to the contrary contained in Section 11.3(a) above, in connection with any amendment, waiver, discharge or termination, in the event that any Lender whose consent thereto is required shall fail to consent or fail to consent in a timely manner (such Lender being referred to herein as a "Non-Consenting Lender"), but the consent of any other Lenders to such amendment, waiver, discharge or termination that is required are obtained, if any, then Congress shall have the right, but not the obligation, at any time thereafter, and upon the exercise by Congress of such right, such Non-Consenting Lender shall have the obligation, to sell, assign and transfer to Congress or such Eligible Transferee as Congress may specify, the Commitment of such Non-Consenting Lender and all rights and interests of such Non-

Consenting Lender pursuant thereto. Congress shall provide the Non-Consenting Lender with prior written notice of its intent to exercise its right under this Section, which notice shall specify on date on which such purchase and sale shall occur. Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance

(d) (whether or not executed by the Non-Consenting Lender), except that on the date of such purchase and sale, Congress, or such Eligible Transferee specified by Congress, shall pay to the Non-Consenting Lender (except as Congress and such Non-Consenting Lender may otherwise agree) the amount equal to: (i) the principal balance of the Loans held by the Non-Consenting Lender outstanding as of the close of business on the business day immediately preceding the effective date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees payable to the Non-Consenting Lender to the effective date of the purchase (but in no event shall the Non-Consenting Lender be deemed entitled to any early termination fee), minus
(iii) the amount of the closing fee received by the Non-Consenting Lender pursuant to the terms hereof or of any of the other Financing Agreements multiplied by the fraction, the numerator of which is the number of months remaining in the then current term of the Credit Facility and the denominator of which is the number of months in the then current term thereof. Such purchase and sale shall be effective on the date of the payment of such amount to the Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall terminate on such date.

(e) The consent of Agent shall be required for any amendment, waiver or consent affecting the rights or duties of Agent hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section and the exercise by Agent of any of its rights hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory shall not be deemed an amendment to the advance rates provided for in this
Section 11.3.

11.4 WAIVER OF COUNTERCLAIMS. Each Borrower and Guarantor waives all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other then compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or thereto.

11.5 INDEMNIFICATION. Each Borrower and Guarantor shall, jointly and severally, indemnify and hold Agent and each Lender, and its officers, directors, agents, employees, advisors and counsel and their respective Affiliates (each such person being an "Indemnitee"), harmless from and against any and all losses, claims, damages, liabilities, costs or expenses (including attorneys' fees and expenses) imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto, including amounts paid in settlement, court costs, and the fees and expenses of counsel except that Borrowers and Guarantors shall not have any obligation under this Section 11.5 to indemnify an Indemnitee with respect to a matter covered hereby resulting from the gross negligence or wilful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without

limiting the obligations of Borrowers or Guarantors as to any other Indemnitee). To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Borrowers and Guarantors shall pay the maximum portion which it is permitted to pay under applicable law to Agent and Lenders in satisfaction of indemnified matters under this Section. To the extent permitted by applicable law, no Borrower or Guarantor shall assert, and each Borrower and Guarantor hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Financing Agreements or any undertaking or transaction contemplated hereby. All amounts due under this Section shall be payable upon demand. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

SECTION 12. THE AGENT

12.1 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender irrevocably designates, appoints and authorizes Congress to act as Agent hereunder and under the other Financing Agreements with such powers as are specifically delegated to Agent by the terms of this Agreement and of the other Financing Agreements, together with such other powers as are reasonably incidental thereto. Agent (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Financing Agreements, and shall not by reason of this Agreement or any other Financing Agreement be a trustee or fiduciary for any Lender; (b) shall not be responsible to Lenders for any recitals, statements, representations or warranties contained in this Agreement or in any of the other Financing Agreements, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Financing Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing Agreement or any other document referred to or provided for herein or therein or for any failure by any Borrower or any Obligor or any other Person to perform any of its obligations hereunder or thereunder; and (c) shall not be responsible to Lenders for any action taken or omitted to be taken by it hereunder or under any other Financing Agreement or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. Agent may deem and treat the payee of any note as the holder thereof for all purposes hereof unless and until the assignment thereof pursuant to an agreement (if and to the extent permitted herein) in form and substance satisfactory to Agent shall have been delivered to and acknowledged by Agent.

12.2 RELIANCE BY AGENT. Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by Agent. As to any matters not expressly provided for by this Agreement or any other Financing Agreement, Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions

given by the Required Lenders or all of Lenders as is required in such circumstance, and such instructions of such Agents and any action taken or failure to act pursuant thereto shall be binding on all Lenders.

12.3 EVENTS OF DEFAULT.

(a) Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or an Event of Default or other failure of a condition precedent to the Loans and Letter of Credit Accommodations hereunder, unless and until Agent has received written notice from a Lender, or a Borrower specifying such Event of Default or any unfulfilled condition precedent, and stating that such notice is a "Notice of Default or Failure of Condition". In the event that Agent receives such a Notice of Default or Failure of Condition, Agent shall give prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7) take such action with respect to any such Event of Default or failure of condition precedent as shall be directed by the Required Lenders to the extent provided for herein; PROVIDED, THAT, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to or by reason of such Event of Default or failure of condition precedent, as it shall deem advisable in the best interest of Lenders. Without limiting the foregoing, and notwithstanding the existence or occurrence and continuance of an Event of Default or any other failure to satisfy any of the conditions precedent set forth in Section 4 of this Agreement to the contrary, unless and until otherwise directed by the Required Lenders, Agent may, but shall have no obligation to, continue to make Loans and issue or cause to be issued Letter of Credit Accommodations for the ratable account and risk of Lenders from time to time if Agent believes making such Loans or issuing or causing to be issued such Letter of Credit Accommodations is in the best interests of Lenders.

(b) Except with the prior written consent of Agent, no Lender may assert or exercise any enforcement right or remedy in respect of the Loans, Letter of Credit Accommodations or other Obligations, as against any Borrower or Obligor or any of the Collateral or other property of any Borrower or Obligor.

12.4 CONGRESS IN ITS INDIVIDUAL CAPACITY. With respect to its Commitment and the Loans made and Letter of Credit Accommodations issued or caused to be issued by it (and any successor acting as Agent), so long as Congress shall be a Lender hereunder, it shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include Congress in its individual capacity as Lender hereunder. Congress (and any successor acting as Agent) and its Affiliates may (without having to account therefor to any Lender) lend money to, make investments in and generally engage in any kind of business with Borrowers (and any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and Congress and its Affiliates may accept fees and other consideration from any Borrower or Guarantor and any of its Subsidiaries and Affiliates for services in connection with this Agreement or otherwise without having to account for the same to Lenders.

12.5 INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent not reimbursed by Borrowers hereunder and without limiting any obligations of Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any and all claims of any kind and nature whatsoever

that may be imposed on, incurred by or asserted against Agent (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Financing Agreement or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that Agent is obligated to pay hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents; PROVIDED, THAT, no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the party to be indemnified as determined by a final non-appealable judgment of a court of competent jurisdiction. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

12.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that it has, independently and without reliance on Agent or other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of Borrowers and Obligors and has made its own decision to enter into this Agreement and that it will, independently and without reliance upon Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the other Financing Agreements. Agent shall not be required to keep itself informed as to the performance or observance by any Borrower or Obligor of any term or provision of this Agreement or any of the other Financing Agreements or any other document referred to or provided for herein or therein or to inspect the properties or books of any Borrower or Obligor. Agent will use reasonable efforts to provide Lenders with any information received by Agent from any Borrower or Obligor which is required to be provided to Lenders or deemed to be requested by Lenders hereunder and with a copy of any Notice of Default or Failure of Condition received by Agent from any Borrower or any Lender; PROVIDED, THAT, Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent's own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Except for notices, reports and other documents expressly required to be furnished to Lenders by Agent or deemed requested by Lenders hereunder, Agent shall not have any duty or responsibility to provide any Lender with any other credit or other information concerning the affairs, financial condition or business of any Borrower or Obligor that may come into the possession of Agent.

12.7 FAILURE TO ACT. Except for action expressly required of Agent hereunder and under the other Financing Agreements, Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from Lenders of their indemnification obligations under Section 12.5 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

12.8 ADDITIONAL LOANS. Agent shall not make any Loans or provide any Letter of Credit Accommodations to any Borrower on behalf of Lenders intentionally and with actual knowledge that such Loans or Letter of Credit Accommodations would cause the aggregate amount of the total outstanding Loans and Letter of Credit Accommodations to exceed the Borrowing Base, without the prior consent of all Lenders, EXCEPT, THAT, Agent may make such additional Loans or provide such additional Letter of Credit Accommodations on behalf of Lenders, intentionally and

with actual knowledge that such Loans or Letter of Credit Accommodations will cause the total outstanding Loans and Letter of Credit Accommodations to Borrowers to exceed the Borrowing Base, as Agent may deem necessary or advisable in its discretion; PROVIDED, THAT: (a) the total principal amount of the additional Loans or additional Letter of Credit Accommodations which Agent may make or provide after obtaining such actual knowledge that the aggregate principal amount of the Loans equal or exceed the Borrowing Base, plus the amount of Special Agent Advances made pursuant to Section 12.1l(a)(ii) hereof then outstanding, shall not exceed the aggregate amount equal to $6,000,000 and shall not cause the total principal amount of the Loans and Letter of Credit Accommodations to exceed the Maximum Credit and (b) no such additional Loan or Letter of Credit Accommodation shall be outstanding more than ninety (90) days after the date such additional Loan or Letter of Credit Accommodation is made or issued (as the case may be), except as the Required Lenders may otherwise agree. Each Lender shall be obligated to pay Agent the amount of its Pro Rata Share of any such additional Loans or Letter of Credit Accommodations.

12.9 CONCERNING THE COLLATERAL AND THE RELATED FINANCING AGREEMENTS. Each Lender authorizes and directs Agent to enter into this Agreement and the other Financing Agreements. Each Lender agrees that any action taken by Agent or Required Lenders in accordance with the terms of this Agreement or the other Financing Agreements and the exercise by Agent or Required Lenders of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

12.10 FIELD AUDIT, EXAMINATION REPORTS AND OTHER INFORMATION; DISCLAIMER BY LENDERS. By signing this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report and report with respect to the Borrowing Base prepared or received by Agent (each field audit or examination report and report with respect to the Borrowing Base being referred to herein as a "Report" and collectively, "Reports"), appraisals with respect to the Collateral and financial statements with respect to Atlas Holdings and its Subsidiaries received by Agent;

(b) expressly agrees and acknowledges that Agent (i) does not make any representation or warranty as to the accuracy of any Report, appraisal or financial statement or (ii) shall not be liable for any information contained in any Report, appraisal or financial statement;

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or any other party performing any audit or examination will inspect only specific information regarding Borrowers and Guarantors and will rely significantly upon Borrowers' and Guarantors' books and records, as well as on representations of Borrowers' and Guarantors' personnel; and

(d) agrees to keep all Reports confidential and strictly for its internal use in accordance with the terms of Section 13.5 hereof, and not to distribute or use any Report in any other manner.

12.11 COLLATERAL MATTERS.

(a) Agent may, at its option, from time to time, at any time on or after an Event of Default and for so long as the same is continuing or upon any other failure of a condition precedent to the Loans and Letter of Credit Accommodations hereunder, make such disbursements and advances ("Special Agent Advances") which Agent, in its sole discretion, (i) deems necessary or desirable either to preserve or protect the Collateral or any portion thereof or (ii) to enhance the likelihood or maximize the amount of repayment by Borrowers and Guarantors of the Loans and other Obligations; PROVIDED, THAT, the aggregate principal amount of the Special Agent Advances pursuant to this clause (ii), plus the then outstanding principal amount of the additional Loans and Letter of Credit Accommodations which Agent may make or provide as set forth in Section 12.8 hereof, shall not exceed the aggregate amount of $6,000,000 or (iii) to pay any other amount chargeable to any Borrower or Guarantor pursuant to the terms of this Agreement or any of the other Financing Agreements consisting of (A) costs, fees and expenses and (B) payments to any issuer of Letter of Credit Accommodations. Special Agent Advances shall be repayable on demand and together with all interest thereon shall constitute Obligations secured by the Collateral. Special Agent Advances shall not constitute Loans but shall otherwise constitute Obligations hereunder. Interest on Special Agent Advances shall be payable at the Interest Rate then applicable to Prime Rate Loans and shall be payable on demand. Without limitation of its obligations pursuant to
Section 6.10, each Lender agrees that it shall make available to Agent, upon Agent's demand, in immediately available funds, the amount equal to such Lender's Pro Rata Share of each such Special Agent Advance. If such funds are not made available to Agent by such Lender, such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to recover such funds, on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agent's option based on the arithmetic mean determined by Agent of the rates for the last transaction in overnight federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of the three leading brokers of federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate Loans.

(b) Lenders hereby irrevocably authorize Agent, at its option and in its discretion to release any security interest in, mortgage or lien upon, any of the Collateral (i) upon termination of the Commitments and payment and satisfaction of all of the Obligations and delivery of cash collateral to the extent required under Section 13.1 below, or (ii) constituting property being sold or disposed of if Administrative Borrower or any Borrower or Guarantor certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such certificate, without further inquiry), or (iii) constituting property in which any Borrower or Guarantor did not own an interest at the time the security interest, mortgage or lien was granted or at any time thereafter, or (iv) having a value in the aggregate in any twelve (12) month period of less than $5,000,000, and to the extent Agent may release its security interest in and lien upon any such Collateral pursuant to the sale or other disposition thereof, such sale or other disposition shall be deemed consented to by Lenders, or (v) if required or permitted under the terms of any of the other Financing Agreements, including any intercreditor agreement, or (vi) approved, authorized or ratified in writing by the Required

Lenders or all of Lenders, as applicable. Except as provided above, Agent will not release any security interest in, mortgage or lien upon, any of the Collateral without the prior written authorization of all of Lenders. Upon request by Agent at any time, Lenders will promptly confirm in writing Agent's authority to release particular types or items of Collateral pursuant to this Section.

(c) Without any manner limiting Agent's authority to act without any specific or further authorization or consent by the Required Lenders, each Lender agrees to confirm in writing, upon request by Agent, the authority to release Collateral conferred upon Agent under this Section. Agent shall (and is hereby irrevocably authorized by Lenders to) execute such documents as may be necessary to evidence the release of the security interest, mortgage or liens granted to Agent upon any Collateral to the extent set forth above; PROVIDED, THAT, (i) Agent shall not be required to execute any such document on terms which, in Agent's opinion, would expose Agent to liability or create any obligations or entail any consequence other than the release of such security interest, mortgage or liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any security interest, mortgage or lien upon (or obligations of any Borrower or Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.

(d) Agent shall have no obligation whatsoever to any Lender or any other Person to investigate, confirm or assure that the Collateral exists or is owned by any Borrower or Guarantor or is cared for, protected or insured or has been encumbered, or that any particular items of Collateral meet the eligibility criteria applicable in respect of the Loans or Letter of Credit Accommodations hereunder, or whether any particular reserves are appropriate, or that the liens and security interests granted to Agent pursuant hereto or any of the Financing Agreements or otherwise have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Agreement or in any of the other Financing Agreements, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, subject to the other terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its discretion, given Agent's own interest in the Collateral as a Lender and that Agent shall have no duty or liability whatsoever to any other Lender.

12.12 AGENCY FOR PERFECTION. Each Lender hereby appoints Agent and each other Lender as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral of Agent in assets which, in accordance with Article 9 of the UCC can be perfected only by possession (or where the security interest of a secured party with possession has priority over the security interest of another secured party) and Agent and each Lender hereby acknowledges that it holds possession of any such Collateral for the benefit of Agent as secured party. Should any Lender obtain possession of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's instructions.

12.13 SUCCESSOR AGENT. Agent may resign as Agent upon thirty (30) days' notice to Lenders and Atlas Holdings. If Agent resigns under this Agreement, the Required Lenders shall

appoint from among the Lenders a successor agent for Lenders. If no successor agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with Lenders and Atlas Holdings, a successor agent from among Lenders. Upon the acceptance by the Lender so selected of its appointment as successor agent hereunder, such successor agent shall succeed to all of the rights, powers and duties of the retiring Agent and the term "Agent" as used herein and in the other Financing Agreements shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 12 shall inure to its benefit as to any actions taken or omitted by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is thirty (30) days after the date of a retiring Agent's notice of resignation, the retiring Agent's resignation shall nonetheless thereupon become effective and Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

12.14 LEAD ARRANGER. The party identified on the facing page or signature pages of this Agreement as a "lead arranger" shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any of the other Financing Agreements. Without limiting the foregoing, the party so identified as a Co-Agent shall not have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on the party identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS

13.1 TERM.

(a) This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on the date that is four (4) years from the date hereof (the "Renewal Date"), and from year to year thereafter, unless sooner terminated pursuant to the terms hereof. Agent may, at its option (or shall at the direction of any Lender in writing received by Agent at least ninety (90) days prior to the Renewal Date or the anniversary of any Renewal Date, as the case may be), terminate this Agreement and the other Financing Agreements, or Administrative Borrower or any Borrower may terminate this Agreement and the other Financing Agreements, each case, effective on the Renewal Date or on the anniversary of the Renewal Date in any year by giving to the other party at least sixty (60) days prior written notice; PROVIDED, THAT, this Agreement and all other Financing Agreements must be terminated simultaneously. In addition, Borrowers may terminate this Agreement at any time without premium or penalty upon ten (10) days prior written notice to Agent (which notice shall be irrevocable) and Agent may, at its option, and shall at the direction of Required Lenders, terminate this Agreement at any time on or after an Event of Default. Upon the Renewal Date or any other effective date of termination of the Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations and shall furnish cash collateral to Agent (or at Agent's option, a letter of credit issued for the account of Borrowers and at Borrowers' expense, in form and substance satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in such amounts as Agent determines are reasonably necessary to secure Agent and Lenders from loss, cost, damage or

expense, including attorneys' fees and expenses, in connection with any contingent Obligations, including issued and outstanding Letter of Credit Accommodations and checks or other payments provisionally credited to the Obligations and/or as to which Agent or any Lender has not yet received final and indefeasible payment and any continuing obligations of Agent or any Lender pursuant to any Deposit Account Control Agreement (contingent or otherwise) and for any of the Obligations arising under or in connection with any Interest Rate Protection Agreements in such amounts as the other party thereto may require (unless such obligations arising under or in connection with any Interest Rate Protection Agreements are paid in full in cash and terminated in a manner satisfactory to such other party). The amount of such cash collateral (or letter of credit, as Agent may determine) as to any Letter of Credit Accommodations shall be in the amount equal to one hundred ten (110%) percent of the amount of the Letter of Credit Accommodations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of such Letter of Credit Accommodations. Such payments in respect of the Obligations and cash collateral shall be remitted by wire transfer in federal funds to the Agent Payment Account or such other bank account of Agent, as Agent may, in its discretion, designate in writing to Administrative Borrower for such purpose. Interest shall be due until and including the next Business Day, if the amounts so paid by Borrowers to the Agent Payment Account or other bank account designated by Agent are received in such bank account later than 12:00 noon, New York time.

(b) No termination of this Agreement or the other Financing Agreements shall relieve or discharge any Borrower or Guarantor of its respective duties, obligations and covenants under this Agreement or the other Financing Agreements until all outstanding, non-contingent Obligations have been fully and finally discharged and paid, and Agent and Lenders shall have no further commitment to make Loans or Letter of Credit Accommodations under this Agreement, as determined by Agent, and Agent's continuing security interest in the Collateral and the rights and remedies of Agent and Lenders hereunder, under the other Financing Agreements and applicable law, shall remain in effect until all such Obligations have been fully and finally discharged and paid. Accordingly, each Borrower and Guarantor waives any rights it may have under the UCC to demand the filing of termination statements with respect to the Collateral and Agent shall not be required to send such termination statements to Borrowers or Guarantors, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all outstanding, non-contingent Obligations paid and satisfied in full in immediately available funds, and Agent and Lenders shall have no further commitment to make Loans or Letter of Credit Accommodations under this Agreement, as determined by Agent.

13.2 INTERPRETATIVE PROVISIONS.

(a) All terms used herein which are defined in Article 1, Article 8 or Article 9 of the UCC shall have the meanings given therein unless otherwise defined in this Agreement.

(b) All references to the plural herein shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires.

(c) All references to any Borrower, Guarantor, Agent and Lenders pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns.

(d) The words "hereof, "herein", "hereunder", "this Agreement" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(e) The word "including" when used in this Agreement shall mean "including, without limitation" and the word "will" when used in this Agreement shall be construed to have the same meaning and effect as the word "shall".

(f) An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 11.3 or is cured in a manner satisfactory to Agent, if such Event of Default is capable of being cured as determined by Agent.

(g) All references to the term "good faith" used herein when applicable to Agent or any Lender shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty in fact in the conduct or transaction concerned. Borrowers and Guarantors shall have the burden of proving any lack of good faith on the part of Agent or any Lender alleged by any Borrower or Guarantor at any time.

(h) Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations hereunder shall be computed unless otherwise specifically provided herein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the financial statements of Atlas Holdings most recently received by Agent prior to the date hereof. Notwithstanding anything to the contrary contained in GAAP or any interpretations or other pronouncements by the Financial Accounting Standards Board or otherwise, the term "unqualified opinion" as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is unqualified and also does not include any explanation, supplemental comment or other comment concerning the ability of the applicable person to continue as a going concern or the scope of the audit.

(i) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including", the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including".

(j) Unless otherwise expressly provided herein, (i) references herein to any agreement, document or instrument shall be deemed to include all subsequent amendments, modifications, supplements, extensions, renewals, restatements or replacements with respect thereto, but only to the extent the same are not prohibited by the terms hereof or of any other Financing Agreement, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, recodifying, supplementing or interpreting the statute or regulation.

(k) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

(1) This Agreement and other Financing Agreements may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.

(m) This Agreement and the other Financing Agreements are the result of negotiations among and have been reviewed by counsel to Agent and the other parties, and are the products of all parties. Accordingly, this Agreement and the other Financing Agreements shall not be construed against Agent or Lenders merely because of Agent's or any Lender's involvement in their preparation.

13.3 NOTICES. All notices, requests and demands hereunder shall be in writing and deemed to have been given or made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. All notices, requests and demands upon the parties are to be given to the following addresses (or to such other address as any party may designate by notice in accordance with this Section):

If to any Borrower or Guarantor:           Atlas Air Worldwide Holdings, Inc.
                                           2000 Westchester Avenue
                                           Purchase, New York 10577-2543
                                           Attention: Mr. William C. Bradley
                                           Telephone No.: 914-701-8395
                                           Telecopy No.: 914-701-8750

with a copy to:                            Haynes and Boone, L.L.P.
                                           One Houston Center
                                           1221 McKinney Street, Suite 2100
                                           Houston, Texas 77010
                                           Attention: Lenard Parkins, Esq.
                                           Telephone No.: 713-547-2008
                                           Telecopy No.: 713-236-5405

If to Agent:                               Congress Financial Corporation
                                           1133 Avenue of the Americas
                                           New York, New York l0036
                                           Attention: Portfolio Manager
                                           Telephone No.: 212-840-2000
                                           Telecopy No.: 212-840-6259

13.4 PARTIAL INVALIDITY. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole,

but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

13.5 CONFIDENTIALITY.

(a) Agent and each Lender shall use all reasonable efforts to keep confidential, in accordance with its customary procedures for handling confidential information and safe and sound lending practices, any non-public information supplied to it by any Borrower pursuant to this Agreement which is clearly and conspicuously marked as confidential at the time such information is furnished by such Borrower to Agent or such Lender; PROVIDED, THAT, nothing contained herein shall limit the disclosure of any such information: (i) to the extent required by statute, rule, regulation, subpoena or court order, (ii) to bank examiners and other regulators, auditors and/or accountants, in connection with any litigation to which Agent or such Lender is a party, (iii) to any Lender or Participant (or prospective Lender or Participant) or to any Affiliate of any Lender so long as such Lender or Participant (or prospective Lender or Participant) or Affiliate shall have been instructed to treat such information as confidential in accordance with this Section 13.5, or (iv) to counsel for Agent or any Lender or Participant (or prospective Lender or Participant).

(b) In the event that Agent or any Lender receives a request or demand to disclose any confidential information pursuant to any subpoena or court order, Agent or such Lender, as the case may be, agrees (i) to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent or such Lender determines in good faith that it will not create any risk of liability to Agent or such Lender, Agent or such Lender will promptly notify Administrative Borrower of such request so that Administrative Borrower may seek a protective order or other appropriate relief or remedy and (ii) if disclosure of such information is required, disclose such information and, subject to reimbursement by Borrowers of Agent's or such Lender's expenses, cooperate with Administrative Borrower in the reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the disclosed information which Administrative Borrower so designates, to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent or such Lender determines in good faith that it will not create any risk of liability to Agent or such Lender.

(c) In no event shall this Section 13.5 or any other provision of this Agreement, any of the other Financing Agreements or applicable law be deemed: (i) to apply to or restrict disclosure of information that has been or is made public by any Borrower, Guarantor or any third party or otherwise becomes generally available to the public other than as a result of a disclosure in violation hereof, (ii) to apply to or restrict disclosure of information that was or becomes available to Agent or any Lender (or any Affiliate of any Lender) on a non-confidential basis from a person other than a Borrower or Guarantor,
(iii) to require Agent or any Lender to return any materials furnished by a Borrower or Guarantor to Agent or a Lender or prevent Agent or a Lender from responding to routine informational requests in accordance with the CODE OF ETHICS FOR THE EXCHANGE OF CREDIT INFORMATION promulgated by The Robert Morris Associates or other applicable industry standards relating to the exchange of credit information. The obligations of Agent and Lenders under this Section 13.5 shall supersede and replace the obligations of Agent and Lenders under any confidentiality letter signed prior to the date hereof

or any other arrangements concerning the confidentiality of information provided by any Borrower or Guarantor to Agent or any Lender.

13.6 SUCCESSORS. This Agreement, the other Financing Agreements and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by Agent, Lenders, Borrowers, Guarantors and their respective successors and assigns, except that Borrower may not assign its rights under this Agreement, the other Financing Agreements and any other document referred to herein or therein without the prior written consent of Agent and Lenders. Any such purported assignment without such express prior written consent shall be void. No Lender may assign its rights and obligations under this Agreement without the prior written consent of Agent, except as provided in Section 13.7 below. The terms and provisions of this Agreement and the other Financing Agreements are for the purpose of defining the relative rights and obligations of Borrowers, Guarantors, Agent and Lenders with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Agreement or any of the other Financing Agreements.

13.7 ASSIGNMENTS; PARTICIPATIONS.

(a) Each Lender may, with the prior written consent of Agent, assign all or, if less than all, a portion equal to at least $5,000,000 in the aggregate for the assigning Lender, of such rights and obligations under this Agreement to one or more Eligible Transferees (but not including for this purpose any assignments in the form of a participation), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Acceptance; PROVIDED, THAT, (i) such transfer or assignment will not be effective until recorded by Agent on the Register and (ii) Agent shall have received for its sole account payment of a processing fee from the assigning Lender or the assignee in the amount of $5,000. Prior to any such assignment by Congress of all or any portion of its rights and obligations under this Agreement, Congress shall notify Administrative Borrower of its intention to so assign and of the identify of the Eligible Transferee.

(b) Agent shall maintain a register of the names and addresses of Lenders, their Commitments and the principal amount of their Loans (the "Register"). Agent shall also maintain a copy of each Assignment and Acceptance delivered to and accepted by it and shall modify the Register to give effect to each Assignment and Acceptance. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and any Borrowers, Obligors, Agent and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Administrative Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.

(c) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and to the other Financing Agreements and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations (including, without limitation, the obligation to participate in Letter of Credit Accommodations) of a Lender hereunder and thereunder and the assigning Lender shall, to the

extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement.

(d) By execution and delivery of an Assignment and Acceptance, the assignor and assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any of the other Financing Agreements or the execution, legality, enforceability, genuineness, sufficiency or value of this Agreement or any of the other Financing Agreements furnished pursuant hereto, (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower, Obligor or any of their Subsidiaries or the performance or observance by any Borrower or Obligor of any of the Obligations; (iii) such assignee confirms that it has received a copy of this Agreement and the other Financing Agreements, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon the assigning Lender, Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Financing Agreements, (v) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Financing Agreements as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Financing Agreements are required to be performed by it as a Lender. Agent and Lenders may furnish any information concerning any Borrower or Obligor in the possession of Agent or any Lender from time to time to assignees and Participants.

(e) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Financing Agreements (including, without limitation, all or a portion of its Commitments and the Loans owing to it and its participation in the Letter of Credit Accommodations, without the consent of Agent or the other Lenders); PROVIDED, THAT, (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment hereunder) and the other Financing Agreements shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and Borrowers, Guarantors, the other Lenders and Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Financing Agreements, and (iii) the Participant shall not have any rights under this Agreement or any of the other Financing Agreements (the Participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by any Borrower or Obligor hereunder shall be determined as if such Lender had not sold such participation.

(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lenders

from such Federal Reserve Bank; PROVIDED, THAT, no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee for such Lender as a party hereto.

(g) Borrowers and Guarantors shall assist Agent or any Lender permitted to sell assignments or participations under this Section 13.7 in whatever manner reasonably necessary in order to enable or effect any such assignment or participation, including (but not limited to) the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and the delivery of informational materials, appraisals or other documents for, and the participation of relevant management in meetings and conference calls with, potential Lenders or Participants. Borrowers shall certify the correctness, completeness and accuracy, in all material respects, of all descriptions of Borrowers and Guarantors and their affairs provided, prepared or reviewed by any Borrower or Guarantor that are contained in any selling materials and all other information provided by it and included in such materials.

13.8 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In the event of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.

13.9 USA PATRIOT ACT. Each Lender hereby notifies each Borrower and Guarantor that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies such Borrower and Guarantor, which information includes the name and address of such Borrower and Guarantor and other information that will allow such Lender to identify such Borrower and Guarantor in accordance with the requirements of such Act and any other applicable law.

13.10 COUNTERPARTS, ETC. This Agreement or any of the other Financing Agreements may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the other Financing Agreements by telefacsimile shall have the same force and effect as the delivery of an original executed counterpart of this Agreement or any of such other Financing Agreements. Any party delivering an executed counterpart of any such agreement by telefacsimile shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused these presents to be duly executed as of the day and year first above written.

AGENT                                   BORROWERS

CONGRESS FINANCIAL CORPORATION,         ATLAS AIR, INC.
  as Agent

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

                                        POLAR AIR CARGO, INC.

                                        By: /s/ Dorinda Pannozzo
                                            ---------------------------------
                                                    Dorinda Pannozzo
                                     Title: ---------------------------------
                                                  Assistant Treasurer

                                        GUARANTORS

                                        ATLAS AIR WORLDWIDE
                                         HOLDINGS, INC.

                                        By: /s/ T. Wakelee Smith
                                            ---------------------------------
                                                   T. Wakelee Smith
                                     Title: ---------------------------------
                                                Senior Vice President &
                                                Chief Operating Officer

                                        AIRLINE ACQUISITION CORP I

                                        By: /s/ John Dietrich
                                            ---------------------------------

                                        Title: Sr. VP, General Counsel - CHRO

IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused these presents to be duly executed as of the day and year first above written.

AGENT                                    BORROWERS

CONGRESS FINANCIAL CORPORATION,          ATLAS AIR, INC.
  as Agent

By: /s/ Peter Provenzale                 By: _________________________________
   ------------------------------
Title: SVP                               Title: ______________________________

                                         POLAR AIR CARGO, INC.

                                         By: _________________________________

                                         Title: ______________________________

                                         GUARANTORS

                                         ATLAS AIR WORLDWIDE
                                           HOLDINGS, INC.

                                         By: _________________________________

                                         Title: ______________________________

                                         AIRLINE ACQUISITION CORP I

                                         By: _________________________________

                                         Title: ______________________________

LENDERS

CONGRESS FINANCIAL CORPORATION

By: /s/ Peter Provenzale
    ----------------------------------
Title: SUP

Commitment: $60,000,000

EXHIBIT 10.4.1

LEASE AGREEMENT

Dated as of July 29, 1998

Between

FIRST SECURITY BANK, NATIONAL ASSOCIATION
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Lessor

and

ATLAS AIR, INC.,

Lessee

The right, title and interest of Lessor in and to, among other things, this Lease Agreement has been assigned to and is subject to a security interest in favor of Wilmington Trust Company, a Delaware banking corporation, as Mortgagee, under the Trust Indenture and Mortgage, dated as of July 29, 1998, for the benefit of the holders of the Equipment Notes referred to in such Trust Indenture, all to the extent provided in such Trust Indenture. This Lease Agreement has been executed in multiple counterparts; to the extent, if any, that this Lease Agreement constitutes chattel paper (as defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in Lessor's right, title and interest in and to this Lease Agreement may be perfected through the delivery or possession of any counterpart of this Lease Agreement other than the counterpart of this Lease Agreement that contains the original receipt executed by Wilmington Trust Company, as Mortgagee.

                                TABLE OF CONTENTS

SECTION 1.  DEFINITIONS AND CONSTRUCTION ...............................      1

SECTION 2.  DELIVERY AND ACCEPTANCE ....................................      1
  2.1    Delivery and Lease of Aircraft ................................      1
  2.2    Acceptance by Lessee ..........................................      2

SECTION 3.  TERM AND RENT ..............................................      2
  3.1    Term ..........................................................      2
  3.2    Rent ..........................................................      2
  3.3    Payments ......................................................      6

SECTION 4.  DISCLAIMER; CERTAIN AGREEMENTS OF
               LESSOR; SECTION 1110 MATTERS ............................      7
  4.1    Disclaimer ....................................................      7
  4.2    Certain Agreements of Lessor ..................................      8
  4.3    Quiet Enjoyment ...............................................      8
  4.4    Investment of Funds Held as Security ..........................      9
  4.5    Title Transfers by Lessor .....................................     10
  4.6    Lessor's Interest in Certain Engines ..........................     10
  4.7    Lease for U.S. Federal Income Tax Law
            Purposes; Section 1110 of Bankruptcy Code ..................     11

SECTION 5.  RETURN OF AIRCRAFT .........................................     11
  5.1    Compliance with Annex B .......................................     11
  5.2    Storage and Related Matters ...................................     11
  5.3    Return of Other Engines .......................................     12
  5.4    Fuel ..........................................................     12

SECTION 6.  LIENS ......................................................     12

SECTION 7.  REGISTRATION, OPERATION, POSSESSION,
               SUBLEASING AND RECORDS ..................................     13
  7.1    Registration and Operation ....................................     13
  7.2    Possession ....................................................     15
  7.3    Certain Limitations on Subleasing or
            Other Relinquishment of Possession .........................     20

SECTION 8.  MAINTENANCE; REPLACEMENT AND POOLING
               OF PARTS; ALTERATIONS, MODIFICATIONS
               AND ADDITIONS; OTHER LESSEE COVENANTS ...................     21
  8.1    Maintenance; Replacement and Pooling of
            Parts; Alterations, Modifications and Additions ............     21

                                       -i-

  15.1   Remedies ......................................................     44
  15.2   Limitations Under CRAF ........................................     48
  15.3   Right to Perform for Lessee ...................................     48
  15.4   Determination of Fair Market Rental Value
            and Fair Market Sales Value ................................     48
  15.5   Remedies Cumulative ...........................................     49

SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF,
               COUNTERCLAIM, ETC. ......................................     49

SECTION 17. RENEWAL AND PURCHASE OPTIONS ...............................     50
  17.1   Preliminary Notices ...........................................     50
  17.2   Renewal Options ...............................................     51
  17.3   Purchase Option ...............................................     53
  17.4   Appraisals ....................................................     54

SECTION 18. MISCELLANEOUS ..............................................     55
  18.1   Amendments ....................................................     55
  18.2   Severability ..................................................     56
  18.3   Third-Party Beneficiary .......................................     56
  18.4   Reproduction of Documents .....................................     56
  18.5   Counterparts ..................................................     57
  18.6   Notices .......................................................     57
  18.7   Governing Law; Submission To
            Jurisdiction; Venue ........................................     57
  18.8   No Waiver .....................................................     58
  18.9   Entire Agreement ..............................................     59

LEASE AGREEMENT

LEASE AGREEMENT dated as of July 29, 1998 (this "Agreement" or "Lease"), between (a) First Security Bank, National Association, a national banking association, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee (this and all other capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in Section 1 below) ("Lessor" or "Owner Trustee"), and (b) ATLAS AIR, INC., a Delaware corporation ("Lessee").

RECITALS

A. Lessor and Lessee are parties to the Participation Agreement, pursuant to which, among other things, Lessor and Lessee have agreed to enter into this Agreement.

B. Pursuant to the Trust Agreement, Owner Participant has authorized Lessor to enter into this Agreement.

NOW, THEREFORE, for and in consideration of the premises and the mutual agreements contained herein and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS AND CONSTRUCTION

Capitalized terms used but not defined herein shall have the respective meanings set forth or incorporated by reference, and shall be construed and interpreted in the manner described, in Annex A.

SECTION 2. DELIVERY AND ACCEPTANCE

2.1 Delivery and Lease of Aircraft

Lessor hereby agrees (subject to the satisfaction or waiver of the conditions set forth in Section 5 of the Participation Agreement) to lease to Lessee for the Term and Lessee hereby agrees (subject to the satisfaction or waiver of the conditions set forth in Section 5 of the Participation Agreement) to lease from Lessor for the Term, the Aircraft, commenc-

ing immediately upon acquisition of the Aircraft by Lessor pursuant to the Purchase Agreement Assignment.

2.2 Acceptance by Lessee

(a) By executing and delivering Lease Supplement No. 1, Lessee confirms to Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft for all purposes of this Agreement.

(b) Lessor has authorized one or more employees of Lessee, designated by Lessee in writing, as the authorized representative or representatives of Lessor to accept delivery of the Aircraft on behalf of Lessor pursuant to the Purchase Agreement Assignment and the Participation Agreement. Lessee hereby agrees that if delivery of the Aircraft shall be accepted by an employee or employees of Lessee pursuant to such authorization by Lessor, such acceptance of delivery by such employee or employees on behalf of Lessor shall, without further act, irrevocably constitute acceptance by Lessee of the Aircraft for all purposes of this Agreement.

SECTION 3. TERM AND RENT

3.1 Term

The Aircraft shall be leased hereunder for the Term, unless this Agreement or the leasing of the Aircraft is earlier terminated in accordance with any provision of this Agreement. Lessee shall have the option to renew the leasing of the Aircraft hereunder pursuant to, and subject to the terms and conditions of, Section 17, for the Renewal Lease Term.

3.2 Rent

3.2.1  Basic Rent; Adjustments to Basic Rent and Certain Other
       Amounts

(a)   During the Base Lease Term, Lessee shall pay to Lessor, on

each Payment Date, Basic Rent in the amount equal to the percentage of Lessor's Cost specified in Schedule 2 for such Payment Date, which shall be allocated to the Payment Period ending on such Payment Date, if designated as a payment in arrears, or allocated to the Payment Period commencing on such Payment Date, if designated as a payment in advance, in each case as specified in Schedule 2, as such amount may be adjusted pursuant to Section 3.2.1(b).

(b) Basic Rent, Stipulated Loss Values, EBO Price, the EBO Date, and Termination Values shall be subject to adjustment as follows:

(i) In the event that Transaction Expenses paid by Lessor pursuant to Section 9.2 of the Participation Agreement are determined to be other than 2.086% of Lessor's Cost, then in each case the Basic Rent percentages set forth in Schedule 2, Stipulated Loss Value percentages set forth in Schedule 3, the Termination Value percentages set forth in Schedule 4, and the EBO Price and the EBO Date shall be recalculated (upwards or downwards) by the Owner Participant, on or prior to the 120th day after the Delivery Date using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and the EBO Price and the EBO Date, in order to (1) maintain the Owner Participant's Net Economic Return and (2) to the extent possible consistent with clause (1) hereof, maintain a targeted monthly Rent and then minimize the Net Present Value of Rents and EBO Price to Lessee.

(ii) In the event of a refinancing as contemplated by Section 11 of the Participation Agreement, then the Basic Rent percentages set forth in Schedule 2, Stipulated Loss Value percentages set forth in Schedule 3, the Termination Value percentages set forth in Schedule 4, and the EBO Price and the EBO Date shall be recalculated (upwards or downwards) by the Owner Participant, using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value Percentages, and the EBO Price and the EBO Date, in order to (1) maintain the Owner Participant's Net Economic Return, and (2) to the extent possible consistent with clause (1) hereof, maintain a targeted monthly Rent and then minimize the Net Present Value of Rents and EBO Price to Lessee.

(iii) In the event that Lessee is required to indemnify the Owner Participant under the Tax Indemnity Agreement, then (A) in the event that Lessee agrees to satisfy such indemnity obligation through an adjustment to Basic Rent pursuant to Section 2.1(a) of the Tax Indemnity Agreement, the Basic Rent percentages set forth in Schedule 2 and (B) in any event, the Stipulated Loss Value percentages set forth in Schedule 3 and the Termination Value percentages set forth in Schedule 4 shall be recalculated (upwards or downwards) by Owner Participant, using the same methods and assumptions (except to the extent such

assumptions shall be varied to take into account the Tax Loss (as such term is defined in the Tax Indemnity Agreement) that is the subject of such indemnification and any prior or contemporaneous Tax Loss) used to calculate the Basic Rent percentages, the Stipulated Loss Value percentages and the Termination Value percentages on the Delivery Date, in order to (1) maintain Owner Participant's Net Economic Return and (2) to the extent possible consistent with clause (1) hereof, maintain, a targeted monthly Rent and then minimize the Net Present Value of Rents and EBO Price to Lessee.

(iv) Notwithstanding anything to the contrary in this paragraph
(b), all adjustments, upwards or downwards, to Basic Rent shall be made in a manner that causes the Lease to comply with Sections 4.02(5) and 4.07 of Revenue Procedure 75-28 (or any applicable successor thereto) and Proposed Treasury Regulation Section 1.467-3(c)(2)(i) (or any applicable successor thereto), provided, however, that if no such Proposed Treasury Regulation (or corresponding final Treasury Regulation) is in effect providing an applicable "safe harbor" from characterization of the Lease as a "disqualified leaseback or long-term agreement" within the meaning of
Section 467(b)(4) of the Code, taking into account the adjusted Basic Rent structure and the event or events giving rise to the adjustment to Basic Rent, then the adjustments, upwards or downwards, to Basic Rent shall be made in a manner such that independent tax counsel, selected by Owner Participant and reasonably acceptable to and compensated by Lessee, is able to opine and does opine that there is no non-de minimis increased risk that the Lease will be characterized as a "disqualified leaseback or long-term agreement" within the meaning of Section 467(b)(4) of the Code or will be subject to "constant rental accrual" under Section 467(b)(2) of the Code.

(c) All adjustments pursuant to Section 3.2.1(b) shall be made as promptly as practicable after either Owner Participant or Lessee gives notice to the other that an event has occurred that requires an adjustment. Owner Participant and Lessee shall give prompt notice to the other of any event requiring an adjustment. Any recalculation of the percentages of Basic Rent, the EBO Price, the EBO Date (which may change only at the election of Lessee), Stipulated Loss Value and Termination Value shall be prepared by Owner Participant, subject to verification by Lessee in accordance with Section
3.2.1(d). Promptly after an adjustment is made hereunder, Owner Participant shall deliver to Lessee a description of such adjustment,

setting forth in reasonable detail the calculation thereof. All adjustments required pursuant to Section 3.2.1(b) shall be set forth in a Lease Supplement or in an amendment to this Lease, and, promptly after execution thereof by Lessor and Lessee, Lessee shall give a copy thereof to Mortgagee. Furthermore, notwithstanding anything contained in these subparagraphs (b) and (c) to the contrary, the EBO Price shall not under any circumstances be adjusted to an amount that is less than the anticipated fair market value of the Aircraft on the EBO Date (as determined by GRA Aviation Specialists, Inc. on the Closing Date as set forth in the appraisal required as a closing condition in Section 5.1.2(xv) of the Participation Agreement) nor to an amount that is less than the amount required to preserve Owner Participant's Net Economic Return. Any such post-Closing adjustment to the EBO Date shall be conditioned on the Owner Participant receiving an appraisal (at Lessee's expense) from GRA Aviation Specialists, Inc. (or such other appraisor selected by the Owner Participant and reasonably acceptable to the Lessee) at such time to the effect that (A) the EBO Price on such adjusted EBO Date is not below the greater of (i) the estimated Fair Market Sales Value on such adjusted EBO Date and (ii) the amount required to preserve Owner Participant's Net Economic Return, and (B) based on the remaining scheduled Basic Rent payments and Lessee's fair market value purchase option at the end of the originally scheduled Base Lease Term, Lessee will not be economically compelled to exercise its option to purchase the Aircraft at the EBO Price on such adjusted EBO Date.

(d) If Lessee believes that any calculations by Owner Participant pursuant to Section 3.2.1(c) are in error, and if, after consultation, Lessee and Owner Participant are unable to agree on an adjustment, then a nationally recognized independent certified public accounting firm selected by Lessee and reasonably satisfactory to Owner Participant shall verify such calculations. Owner Participant will make available to such firm, but not, in any circumstances, to Lessee or any representative of Lessee, the methodology and assumptions referred to in Section 3.2.1(b) and any modifications thereto made to reflect the events giving rise to adjustments hereunder (subject to the execution by such firm of a confidentiality agreement, reasonably acceptable to Owner Participant, prohibiting disclosure of such methodology and assumptions to Lessee or any third party). The determination by such firm of accountants shall be final. Lessee shall pay all costs and expenses of such verification by such accountants, provided that if it results in a decrease in Basic Rent which decreases the remaining Net Present Value of Rents by $10,000 from the re-

maining Net Present Value of Rents as recalculated by the Owner Participant, then the Owner Participant will pay such costs and expenses.

(e) Notwithstanding anything to the contrary in any Operative Agreement, the amount of the payment of Basic Rent due and payable on each Payment Date shall be at least sufficient to pay in full, as of such Payment Date (assuming timely payment of the Equipment Notes prior to such Date), the aggregate principal amount of scheduled installments due on the Equipment Notes outstanding on such Payment Date, together with the accrued and unpaid interest thereon, due on such Payment Date in respect of the Equipment Notes; provided, however, that no installment of Basic Rent shall be increased to the extent such increase would be based upon (i) any attachment or diversion of Basic Rent on account of Lessor Liens, (ii) any modification of the payment terms of the Equipment Notes, other than as required or permitted by any Operative Agreement (including, without limitation, as permitted upon the occurrence of a Lease Event of Default) or (iii) the acceleration of any Equipment Note or Equipment Notes due solely to the occurrence of an Indenture Event of Default that does not constitute a Lease Event of Default.

3.2.2 Supplemental Rent

Lessee shall pay to Lessor, or to whosoever shall be entitled thereto, any and all Supplemental Rent when and as the same shall become due and owing. Lessee will also pay to Lessor, or to whosoever shall be entitled thereto as Supplemental Rent, to the extent permitted by applicable Law, interest at the Payment Due Rate on any part of any amount of Rent (including, without limitation, Supplemental Rent) not paid by 12:30 p.m., New York time, on the date when due (so long as, in the case of any person not a party to the Participation Agreement, Lessee had received timely notice of the account to which such payment was required to be made), for the period from and including the date on which the same was due to, but excluding, the date of payment in full.

3.3 Payments

(a) Payments of Rent by Lessee shall be paid by wire transfer of immediately available Dollars, not later than 12:30 p.m., New York time, on the date when due, to the account of Lessor specified in Schedule 1 to the Participation Agreement or to such other account in the United States as directed by Lessor to Lessee in writing at least 10 Business Days prior

to the date such payment of Rent is due or, in the case of any payment of Supplemental Rent expressly payable to a person other than Lessor, to the person that shall be entitled thereto to such account in the United States as such person may specify from time to time to Lessee at least 10 Business Days prior to the date such payment of Rent is due.

(b) Except as otherwise expressly provided herein, whenever any payment of Rent shall be due on a day that is not a Business Day, such payment shall be made on the next day that is a Business Day, and, if such payment is made on such next Business Day, no interest shall accrue on the amount of such payment during such extension.

(c) So long as Lessee has not received written notice from the Mortgagee that the Lien of the Trust Indenture has been discharged, and notwithstanding Section 3.3(a), Lessor hereby directs, and Lessee agrees, that all payments of Rent and all other amounts payable by Lessee hereunder, other than Excluded Payments, shall be paid directly to Mortgagee on behalf of Lessor by wire transfer of immediately available Dollars to the account of Mortgagee specified in Schedule 1 to the Participation Agreement, or to such other account in the United States as Mortgagee may specify by written notice to Lessor and Lessee at least 10 Business Days prior to the date such payment of Rent is due.

(d) Excluded Payments shall be paid by wire transfer of immediately available Dollars to the account of the person specified in the Participation Agreement or, if not so specified, to such account in the United States as may be specified by such person by written notice to Lessor and Lessee from time to time at least 10 Business Days prior to the date such payment is required to be made.

(e) All computations of interest under this Agreement shall be made on the basis of a year of 360 days comprised of twelve 30-day months.

SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS

4.1 Disclaimer

LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE AND ANY PARTICIPANT

(i) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER THEREOF AND (ii) NONE OF LESSOR, MORTGAGEE AND ANY PARTICIPANT 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:

(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;

(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;

(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;

(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE; OR

(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER (OTHER THAN REPRESENTATIONS AND WARRANTIES OF THE OWNER TRUSTEE AND ANY OWNER PARTICIPANT WITH RESPECT TO LESSOR LIENS IN EXISTENCE ON THE DELIVERY DATE), EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY

PART THEREOF.

4.2 Certain Agreements of Lessor

Unless a Lease Event of Default shall have occurred and be continuing, Lessor agrees to make available to Lessee such rights as Lessor may have under any warranty with respect to the Aircraft made, or made available, by Airframe Manufacturer or Engine Manufacturer or any of their respective subcontractors or suppliers, as the case may be, pursuant to and in accordance with the terms of the Purchase Agreement Assignment.

4.3 Quiet Enjoyment

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

4.4 Investment of Funds Held as Security

4.4.1 Investment

Any moneys required to be paid to or retained by Lessor that are required to be paid to Lessee or applied as provided herein shall, until paid to Lessee as provided herein or applied as provided herein, be invested by Lessor from time to time as directed in writing by Lessee (or, if Lessee fails to so direct, as directed by Lessor in its sole discretion) and at the expense and risk of Lessee in Cash Equivalents so long as such Cash Equivalents specified by Lessee or Lessor, as the case may be, can be acquired by Lessor using its best efforts; provided, that so long as the Lien of the Trust Indenture shall not have been discharged, such moneys shall be invested and held by Mortgagee, as assignee of Lessor, in accordance with this Lease and upon discharge of such Lien, Mortgagee shall pay any such money held by it to Lessor to be held and invested in accordance with this Section.

4.4.2 Payment of Gain or Loss

Any net gain (including interest received) realized as the result of investments pursuant to Section 4.4.1 (net of any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment) shall be held and applied in the same manner as the principal amount is to be held and applied hereunder. Lessee will promptly pay to Lessor, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions and other reasonable expenses, if any, incurred in connection with such investment), such amount so paid to be held and applied by Lessor as contemplated in Section 4.4.1 above.

4.4.3 Limitation of Liability

All investments under this Section 4.4 shall be at the expense and risk of Lessee, and Lessor and Mortgagee shall not be liable for any loss resulting from any investment made under this Section 4.4 other than by reason of its willful misconduct or gross negligence. Any such investment may be sold (without regard to its maturity) by Lessor, or by Mortgagee as assignee of Lessor, without instructions whenever such sale is necessary to make a distribution required by this Lease.

4.5 Title Transfers by Lessor

If Lessor shall be required to transfer title to the Aircraft, Airframe or any Engine to Lessee or any other person pursuant to this Lease, then (a) Lessor shall (1) transfer to Lessee or such other person, as the case may be, all of Lessor's right, title and interest in and to the Aircraft, Airframe or such Engine, as the case may be, free and clear of all Lessor Liens,
(2) so long as the Lien of the Trust Indenture has not been discharged, comply with the Trust Indenture relating to the release of the Aircraft, Airframe or such Engine, (3) assign to Lessee or such other person, as the case may be, if and to the extent permitted under the Purchase Agreement, all warranties of Airframe Manufacturer and Engine Manufacturer with respect to the Aircraft, Airframe or such Engine, and (4) assign to Lessee or such other person, as the case may be, if and to the extent permitted, all claims, if any, for damage to the Aircraft, Airframe or such Engine, in each case free of Lessor Liens, and without recourse or warranty of any kind whatsoever (except as to the transfer described in clause (1) above and as to the absence of such Lessor Liens, as aforesaid), and (b) Lessor shall promptly deliver to Lessee or such other person, as the case may be, a bill of sale and agreements of assignment, evidencing such transfer and assignment, and such other instruments of transfer, all in form and substance reasonably satisfactory to Lessee (or such other person, as the case may be), as Lessee (or such other person, as the case may be) may reasonably request.

4.6 Lessor's Interest in Certain Engines

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

4.7 Lease for U.S. Federal Income Tax Law Purposes; Section 1110 of Bankruptcy Code

(a) Lessee and Lessor agree that this Lease is, and shall be treated as, a lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines and Parts.

(b) It is the intention of each of Lessee and Lessor that Lessor (and Mortgagee as assignee of Lessor under the Trust Indenture) shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in this Lease.

SECTION 5. RETURN OF AIRCRAFT

5.1 Compliance with Annex B

Lessee shall comply with each of the provisions of Annex B hereto, which provisions are hereby incorporated by this reference as if set forth in full herein.

5.2 Storage and Related Matters

If Lessor gives written notice to Lessee not less than 60 days nor more than 120 days prior to the end of the Term requesting outdoor parking of the Aircraft upon its return hereunder, Lessee will assist Lessor in arranging outdoor parking facilities for the Aircraft for a period up to 30 days, commencing on the date of such return, and upon request of Lessor to Lessee made at least 10 days prior to the end of such initial 30 day period, for an additional 30 day period commencing upon expiration of such initial period, at such outdoor parking facility in the 48 contiguous states of the United States as Lessee may select. Lessee shall, at Lessor's written request, maintain insurance (if available) for the Aircraft during such outdoor parking period, provided that Lessor shall reimburse Lessee for Lessee's out-of-pocket cost of providing such insurance. Such outdoor parking shall be at Lessor's risk, and Lessor shall pay all applicable outdoor parking fees; PROVIDED that Lessee's obligation to assist Lessor in arranging parking shall be subject to Lessor entering into an agreement prior to the commencement of the outdoor parking period with the outdoor parking facility providing, among other things, that Lessor shall bear all maintenance charges (other than maintenance required as a direct result of Lessee's failure to comply with the provisions of Annex B) and other costs incurred.

5.3 Return of Other Engines

In the event that any Engine owned by Lessor shall not be installed on the Airframe at the time of return hereunder, Lessee shall be required to return the Airframe hereunder with a Replacement Engine meeting the requirements of, and in accordance with, Section 10 hereof and Annex B hereto. Thereupon, Lessor will transfer to Lessee the Engine constituting part of such Aircraft but not installed on such Airframe at the time of the return of the Airframe.

5.4 Fuel

Upon the return of the Airframe upon any termination of this Lease, Lessor shall pay Lessee, as compensation for any fuel or oil contained in the fuel or oil tanks of such Airframe, the value of such fuel or oil at the price paid by Lessee for such fuel or oil, provided that if the Aircraft is being returned in connection with the exercise of remedies pursuant to Section 15, Lessor shall have no obligation to make such payment to Lessee until Lessor shall have been paid all amounts due to it pursuant to Section 15.

SECTION 6. LIENS

Lessee shall not, directly or indirectly, create, incur, assume or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine or any Part, title to any of the foregoing or any interest of Lessee therein, or the Lessee's rights in and to this Lease or any Permitted Sublease, except (a) the respective rights of Lessor, Mortgagee, the Participants or Lessee under the Operative Agreements, or of any Permitted Sublessee under any Permitted Sublease; (b) Lessor Liens; (c) the rights of others under agreements or arrangements to the extent permitted by the terms of Sections 7.2 and 7.3;
(d) Liens for Taxes of Lessee or any Permitted Sublessee (and their respective U.S. federal tax law consolidated groups), or Liens for Taxes of any Tax Indemnitee (and its U.S. federal tax law consolidated group) for which Lessee is obligated to indemnify such Tax Indemnitee under any of the Lessee Operative Agreements, in any such case either not yet due or being contested in good faith by appropriate proceedings so long as such Liens and such proceedings do not involve any material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the interest of any Participant therein or impair the lien of the Trust Indenture; (e) materialmen's, mechanics', workers', repairers', employees'

or other like Liens arising in the ordinary course of business for amounts the payment of which is either not yet delinquent for more than 60 days or is being contested in good faith by appropriate proceedings, so long as such Liens and such proceedings do not involve any material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the interest of any Participant therein or impair the lien of the Trust Indenture; (f) Liens arising out of any judgment or award against Lessee (or against any Permitted Sublessee), so long as such judgment shall, within 60 days after the entry thereof, have been discharged or vacated, or execution thereof stayed pending appeal or shall have been discharged, vacated or reversed within 60 days after the expiration of such stay, and so long as during any such 60-day period there is not, or any such judgment or award does not involve, any material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the interest of any Participant therein or impair the lien of the Trust Indenture, and (g) any other Lien with respect to which Lessee (or any Permitted Sublessee) shall have provided a bond, cash collateral or other security adequate in the reasonable opinion of Lessor. Lessee shall promptly take (or cause to be taken) such action as may be necessary duly to discharge (by bonding or otherwise) any Lien not excepted above if the same shall at any time arise in respect of the Aircraft, the Airframe, any Engine or any Part during the Term.

SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS

7.1 Registration and Operation

7.1.1 Registration and Recordation

Subject to the compliance by Lessor and Owner Participant with their respective obligations under Section 13 of the Participation Agreement, Lessee shall cause the Aircraft to be, and at all times during the Term to remain, duly registered with the FAA under the Act or with such other country of registry as shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and lessor (except to the extent that such registration under the Act cannot be effected with the FAA because of Lessor's or Owner Participant's failure to comply with the citizenship requirements for registration of the Aircraft under the Act). Lessor shall execute and deliver all such documents as Lessee (or any Permitted Sublessee) may reasonably request for the purpose of effecting and continuing such registration. Unless Mortgagee has given Lessee notice

that the Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture to be duly recorded and at all times maintained of record as a first-priority perfected mortgage (subject to Permitted Liens) on the Aircraft, the Airframe and each of the Engines (except to the extent such perfection or priority cannot be maintained solely as a result of the failure by Lessor or Mortgagee to execute and deliver any necessary documents).

7.1.2 Reregistration

So long as no Specified Default or Lease Event of Default shall have occurred and be continuing, Lessee may, by written notice to Lessor, request to change the country of registration of the Aircraft. Any such change in registration shall be effected only in compliance with, and subject to all of the conditions set forth in, Section 7.6.11 of the Participation Agreement; PROVIDED, HOWEVER, that any such reregistration to a Permitted Foreign Air Carrier shall not be permitted to occur prior to the end of the Tax Attribute Period unless Lessee prepays to the Owner Participant on a lump-sum basis any indemnity required under the Tax Indemnity Agreement as a result of such reregistration.

7.1.3 Markings

If permitted by applicable Law, on or reasonably promptly after the Delivery Date, Lessee will cause to be affixed to, and maintained in, the cockpit of the Airframe and on each Engine, in each case, in a clearly visible location (it being understood that the location of such placards, as identified to the Owner Participant prior to the Delivery Date, shall be deemed to be in compliance with this requirement), a placard of a reasonable size and shape bearing the legend, in English, set forth in Schedule 6. Such placards may be removed temporarily, if. necessary, in the course of maintenance of the Airframe or Engines. If any such placard is destroyed or becomes illegible, Lessee shall promptly replace it with a placard complying with the requirements of this
Section 7.1.3. Except as provided above, Lessee will not allow the name of any Person to be placed on the Airframe or on an Engine as an explicit designation of ownership.

7.1.4 Compliance With Laws

Lessee shall not, and shall not allow any other person to, operate, use, maintain, service, repair or overhaul the Aircraft (a) in violation of any Law binding on or applicable

to the Aircraft, the Airframe or any Engine, or (b) in violation of any airworthiness certificate, license or registration of any Government Entity relating to the Aircraft, the Airframe or any Engine, except (1) immaterial or non-recurring violations with respect to which corrective measures are taken promptly by Lessee or a Permitted Sublessee, as the case may be, upon discovery thereof, and (2) to the extent Lessee or any Permitted Sublessee is contesting the validity or application of any such Law or requirement relating to any such certificate, license or registration in good faith in any reasonable manner which does not involve any material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the interest of any Participant therein, any material risk of criminal liability or of material civil penalty against Lessor, Mortgagee or any Participant or impair the lien of the Trust Indentures.

7.1.5 Operation

Lessee agrees not to operate, use or locate the Aircraft, the Airframe or any Engine, or allow the Aircraft, the Airframe or any Engine to be operated, used or located (a) in any area excluded from coverage by any insurance required by the terms of Section 11, except in the case of a requisition by or transfer to the U.S. Government where Lessee obtains an indemnity in lieu of such insurance from the U.S. Government, or insurance from the U.S. Government, covering such area, in accordance with Section 11.3 or (b) in any recognized area of hostilities unless fully covered in accordance with Annex D by war-risk insurance as required by the terms of Section 11 (including, without limitation, Section 11.3), unless in any. case referred to in this
Section 7.1.5 the Aircraft is only temporarily operated, used or located in such area as a result of an emergency, equipment malfunction, navigational error, hijacking, weather condition or other similar unforeseen circumstances, so long as Lessee diligently and in good faith proceeds to remove the Aircraft from such area.

7.2 Possession

Lessee will not, without the prior written consent of Lessor, sublease or otherwise in any manner deliver, transfer or relinquish possession of the Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine to be installed, on any airframe other than the Airframe; provided, however, subject to the provisions of Section 7.3, Lessee may, without such prior written consent:

7.2.1 Interchange and Pooling

Subject or permit any Permitted Sublessee to subject any Engine to normal interchange agreements or pooling agreements or arrangements, in each case customary in the commercial air cargo industry and entered into by Lessee or such Permitted Sublessee, as the case may be, in the ordinary course of business; provided, however, that if Lessor's title to any such Engine is divested under any such agreement or arrangement, then such Engine shall be deemed to have suffered an Event of Loss as of the date of such divestiture, with the effect that Lessee shall be required to replace such Engine with a Replacement Engine meeting the requirements of, and in accordance with, Section 10.

7.2.2 Testing and Service

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

7.2.3 Transfer to U.S. Government

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

7.2.4 Installation of Engines on Owned Aircraft

Install or permit any Permitted Sublessee to install an Engine on an airframe owned by Lessee or such Permitted Sub-

lessee, as the case may be, free and clear of all Liens, except (a) Permitted Liens and those that do not apply to the Engines and (b) the rights of third parties under normal interchange or pooling agreements and arrangements of the type that would be permitted under Section 7.2.1.

7.2.5 Installation of Engines on Other Airframes

Install or permit any Permitted Sublessee to install an Engine on an airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or such Permitted Sublessee subject to a mortgage, security agreement, conditional sale or other secured financing arrangement, but only if (a) such airframe is free and clear of all Liens, except (i) the rights of the parties to such lease, or any such secured financing arrangement, covering such airframe and (ii) Liens of the type permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee or Permitted Sublessee, as the case may be, shall have received from the lessor, mortgagee, secured party or conditional seller, in respect of such airframe, a written agreement (which may be a copy of the lease, mortgage, security agreement, conditional sale or other agreement covering such airframe), whereby such Person agrees that it will not acquire or claim any right, title or interest in, or Lien on, such Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor.

7.2.6 Installations of Engines on Financed Aircraft

Install or permit any Permitted Sublessee to install an Engine on an airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such Permitted Sublessee, or purchased by Lessee or such Permitted Sublessee subject to a conditional sale or other security agreement under circumstances where neither Section 7.2.4 or 7.2.5 is applicable; provided, however, that any such installation shall be deemed an Event of Loss with respect to such Engine, and Lessee shall comply with Section 10.2 hereof in respect thereof. Until Section 10.2 shall have been complied with, Lessor's interest in such Engine shall remain in full force and effect.

7.2.7 Subleasing

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

(a) Lessee shall provide written notice to Lessor and Mortgagee (such notice in the event of a sublease to a U.S. Air Carrier to be given promptly after entering into any such sublease or, in the case of a sublease to any other Permitted Air Carrier, 30 days in advance of entering into such sublease if during the Tax Attribute Period, otherwise 10 days in advance of entering into such sub lease);

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

(c) Any such sublease (i) shall not extend beyond the expiration of the Base Lease Term or any Renewal Lease Term then in effect unless Lessee shall have irrevocably committed to purchase the Aircraft, (ii) shall include provisions for the maintenance, operation, possession, inspection and insurance of the Aircraft that are the same in all material respects as the applicable provisions of this Lease and (iii) shall be expressly subject and subordinate to all the terms of this Agreement and to the rights, powers and remedies of Lessor hereunder, including, without limitation, Lessor's rights under Section 15 to repossess the Aircraft, Airframe and Engines and to terminate such sublease upon the occurrence of a Lease Event of Default;

(d) In connection with a sublease to a Permitted Foreign Air Carrier, (1) the United States maintains diplomatic relations with the country of domicile of such Permitted Foreign Air Carrier (or, in the case of Taiwan, diplomatic relations at least as good as those in effect on the Delivery Date) and (2) Lessee shall have furnished Lessor and Mortgagee a favorable opinion of counsel, reasonably satisfactory to Lessor, in the country of domicile of such Permitted Foreign Air Carrier, that (i) the terms of such sublease are the legal, valid and binding obligations of the parties thereto enforceable under the laws of such jurisdiction, (ii) it is not necessary for Owner Participant, Lessor or Mortgagee to register or qualify to do business in such jurisdiction, if not already so registered or qualified, as a result, in whole or in part, of the proposed sublease,
(iii) Lessor's title to, and Mortgagee's Lien in respect of, the Aircraft, Airframe and En-

gines will be recognized in such jurisdiction, (iv) the Laws of such jurisdiction of domicile require fair compensation by the government of such jurisdiction, payable in a currency freely convertible into Dollars, for the loss of title to the Aircraft, Airframe or Engines in the event of the requisition by such government of such title (unless Lessee shall provide insurance in the amounts required with respect to hull insurance under Section 11 covering the requisition of title to the Aircraft, Airframe or Engines by the government of such jurisdiction so long as the Aircraft, Airframe or Engines are subject to such sublease) and (v) the agreement of such Permitted Foreign Air Carrier that its rights under the sublease are subject and subordinate to all the terms of this Lease is enforceable against such Permitted Foreign Air Carrier under applicable law;

(e) Lessee shall furnish to Lessor, Mortgagee and Owner Participant evidence reasonably satisfactory to Lessor that the insurance required by Section 11 remains in effect;

(f) All necessary documents shall have been duly filed, registered or recorded in such public offices as may be required fully to preserve the title of Lessor, and the first priority security interest (subject to Permitted Liens) of Mortgagee, in the Aircraft, Airframe and Engines;

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

(h) For all purposes of this Section 7.2.7, the term "sublease" shall be deemed to include interchange agreements with respect to the Aircraft or Airframe; and

(i) Notwithstanding anything to the contrary in this Section 7.2, no such sublease shall be made to a Permitted Foreign Air Carrier prior to the close of the Tax Attribute Period, unless Lessee prepays to Owner Participant on a lump-sum basis any indemnity required under the Tax Indemnity Agreement as a result of such sublease based upon the assumption that such sublease were to continue for the remainder of the term of the Lease.

7.3 Certain Limitations on Subleasing or Other Relinquishment of Possession

Notwithstanding anything to the contrary in Section 7.2:

(a) The rights of any person that receives possession of the Aircraft in accordance with Section 7.2 shall be subject and subordinate to all the terms of this Lease, and to Lessor's rights, powers and remedies hereunder, including, without limitation (i) Lessor's right to repossess the Aircraft pursuant to Section 15, (ii) Lessor's right to terminate and avoid such sublease, delivery, transfer or relinquishment of possession upon the occurrence of a Lease Event of Default and (iii) the right to require such person to forthwith deliver the Aircraft, the Airframe and Engines subject to such transfer upon the occurrence of a Lease Event of Default;

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

(c) Lessee shall ensure that no sublease, delivery, transfer or relinquishment permitted under Section 7.2 shall affect the United States registration of the Aircraft, unless also made in accordance with the provisions of Section 7.1.2;

(d) Any event that constitutes or would, with the passage of time, constitute an Event of Loss under paragraph (c), (d), or (e) of the definition of such term (as set forth in Annex A) shall not be deemed to violate the provisions of Section 7.2;

(e) Any Wet Lease or ACMI Contract shall not constitute a delivery, transfer or relinquishment of possession for purposes of Section 7.2 and shall not be prohibited by the terms hereof nor shall a Wet Lease or ACMI Contract be deemed to be a "sublease," nor shall the lessee of a Wet Lease or ACMI Contract be deemed to be a "sublessee" under the Lease;

and

(f) Any sublease with a term of two years or longer shall be assigned to or for benefit of Lessor and/or Mortgagee, PROVIDED that it is understood that such sublease be for security purposes only and the rents under such sublease shall not be so assigned and shall be payable directly to Lessee.

SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER LESSEE COVENANTS

8.1 Maintenance; Replacement and Pooling of Parts; Alterations, Modifications and Additions

At all times during the Term, Lessee shall comply with, or cause to be complied with, each of the provisions of Annex C, which provisions are hereby incorporated by this reference as if set forth in full herein.

8.2 Information, Certificates, Notices and Reports

8.2.1 Financial Information

Lessee will furnish to Lessor:

(a) Within 90 days after the end of each of the first three fiscal quarters in each fiscal year of Lessee, a consolidated balance sheet of Lessee as of the end of such quarter and related statements of income and cash flows for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, prepared in accordance with GAAP; provided that so long as Lessee is subject to the reporting requirements of the Securities Exchange Act of 1934, a copy of Lessee's report on Form 10-Q for such fiscal quarter (excluding exhibits) will satisfy this paragraph (a).

(b) Within 120 days after the end of each fiscal year of Lessee, a consolidated balance sheet of Lessee as of the end of such fiscal year and related statements of income and cash flows of Lessee for such fiscal year, in comparative form with the preceding fiscal year, prepared in accordance with GAAP, together with a report of Lessee's independent certified public accountants with respect to their audit of such financial statements; pro-

vided that so long as Lessee is subject to the reporting requirements of the Securities Exchange Act of 1934, a copy of Lessee's report on Form 10-K for such fiscal year (excluding exhibits) will satisfy this paragraph (b).

8.2.2 Annual Certificate

Within 120 days after the close of each fiscal year of Lessee, Lessee shall deliver to Lessor and Mortgagee an Officer's Certificate of Lessee to the effect that such officer is familiar with or has reviewed or caused to be reviewed the relevant terms of this Lease and the other Lessee Operative Agreements and that such officer does not have knowledge of the existence as at the date of such certificate of any Lease Event of Default.

8.2.3 Information for Filings

Lessee shall promptly furnish to Owner Participant or Lessor such information (other than with respect to the citizenship of Owner Participant and Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably available to or obtainable by Lessee or such Permitted Sublessee, as may be required to enable Lessor timely to file any reports required to be filed by it as lessor under the Lease or to enable Owner Participant to timely file any reports required to be filed by it, as the beneficiary of the Trust Estate, in either case, with any Government Entity because of, or in connection with, the interest of Owner Participant or Lessor in the Aircraft, Airframe or Engines, this Lease or any other part of the Trust Estate; provided, however, that with respect to any such information which Lessee or such Permitted Sublessee reasonably deems commercially sensitive or confidential, Owner Participant or Lessor, as the case may be, shall afford Lessee or such Permitted Sublessee a reasonable opportunity to seek from any such Government Entity a waiver of the obligation of Owner Participant or Lessor to file any such information, or shall consent to the filing of such information directly by Lessee or such Permitted Sublessee in lieu of filing by Owner Participant or Lessor, and if any such waiver or consent is evidenced to the reasonable satisfaction of Owner Participant or Lessor, as the case may be, then Lessee shall not be required to furnish such information to Owner Participant or Lessor.

8.2.4 Other

Lessee shall furnish annually any such opinions as may be required pursuant to Section 7.1.3(d) of the Participation Agreement.

SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE

9.1 Right of Termination

(a) So long as no Specified Default or Lease Event Default set forth in Section 14.1 or 14.5 below, shall have occurred and be continuing, Lessee shall have the right upon not less than 90 days' prior written notice at its option to terminate this Lease during the Base Lease Term, effective only on a Termination Date occurring after the seventh anniversary of the close of the calendar year in which occurs the applicable Closing Date, if:

(i) Lessee makes a good faith determination that the Aircraft either has become economically obsolete or is surplus to Lessee's requirements and the Chief Financial Officer or Treasurer of Lessee so certifies in writing to Lessor; or

(ii) the Aircraft is to be disposed of pursuant to a program of fleet renewal.

(b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to sell or retain the Aircraft, as provided in this Section 9, no less than 30 days after Lessee gives Lessor written notice pursuant to Section 9.1(a). Any failure by Lessor to give such notice of its election shall be deemed to be an election to sell the Aircraft, as provided in this Section 9.

(c) Any termination pursuant to this Section 9 shall become effective on the date of the sale, if any, pursuant to Section 9.2 or upon the date of termination and payment by Lessee and Lessor in accordance with Section 9.3 if Lessor elects to retain the Aircraft.

9.2 Election by Lessor to Sell

9.2.1 Bids; Closing of Sale

Unless Lessor has given Lessee notice of Lessor's election to retain the Aircraft, Lessee (or a person authorized by the Lessee, acting as agent for the Lessor, for a commercially reasonable commission payable by Lessee) as agent for Lessor at no expense to Lessor shall, until the date ten Business Days prior to the proposed Termination Date, use commercially reasonable efforts to obtain third-party bids for a cash purchase of the Aircraft and Lessor may, if it desires to do so, also seek to obtain such third-party bids at its own expense. In the event Lessee receives any bid, or more than one bid, Lessee shall promptly, and in any event at least ten Business Days prior to the proposed date of sale, certify to Lessor in writing the amount and terms of such bid or, in the event that there shall be more than one bid, the terms of the highest BONA FIDE all cash bid, the proposed date of such sale and the name and address of the person (who shall not be Lessee or any Affiliate of Lessee or any person with whom Lessee or any such Affiliate has an arrangement for the future use of the Aircraft by Lessee or any such Affiliate) submitting such bid.
Notwithstanding anything in this Section 9.2 to the contrary, Lessee shall have no liability to the Lessor or any other party for failure to obtain a higher price for the Aircraft than the price actually obtained, if any, or for the manner in which Lessee solicited bids for the Aircraft, such manner of soliciting bids to be in the sole discretion of Lessee, including, without limitation, the decision whether or not to solicit bids publicly or in any particular market or venue. In addition. Lessee shall have no obligation to Lessor or any other party to accept any bid solicited pursuant to this Section 9.2.1 that Lessee, in good faith, believes is unlikely to result in the consummation of the sale of the Aircraft in accordance with the terms hereof.

9.2.2 Closing of Sale

(a) On the proposed Termination Date (i) Lessee shall deliver the Airframe and Engines or engines constituting part of the Aircraft to the bidder, if any, which shall have submitted the highest cash bid on or before the date ten Business Days prior to such Termination Date, in the same manner as if delivery were made to Lessor pursuant to Section 5 and Annex B and in full compliance with the terms thereof, and shall duly transfer to Lessor title to any such engines not owned by Lessor, all in accordance with the terms of
Section 5 and An-

nex B, and (ii) Lessor shall simultaneously therewith transfer the Airframe and Engines or engines to such bidder, in the manner described in Section 4.5, against cash paid by such bidder to Lessor in the amount of such highest bid and in the manner and in funds of the type specified in Section 3.3.

(b) The proceeds of any sale described in Section 9.2.2(a) shall be paid to and retained by Lessor and, on such Termination Date, and as a condition precedent to such sale and the delivery of the Aircraft and Engines or engines to such bidder, Lessee shall pay to Lessor, in the manner and in funds of the type specified in Section 3.3:

(i) all unpaid Basic Rent due at any time prior to such Termination Date and all Basic Rent due on such Termination Date to the extent payable in arrears with respect to the Payment Period then ended; plus

(ii) an amount equal to the excess, if any, of the Termination Value for the Aircraft, computed as of such Termination Date, over the sales price of the Aircraft less any sales commissions or marketing expenses for brokers and agents engaged by Lessee or Permitted Sublessee; PROVIDED that such commission and expenses shall have been deducted from the sales proceeds of the Aircraft; plus

(iii) as provided in Section 3.2.2, interest on the amounts specified in the foregoing clause (i) at the Payment Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full.

As a further condition precedent to such sale and delivery, Lessee shall pay all Supplemental Rent (other than Termination Value) due by Lessee to Lessor, Mortgagee or the Participants under this Lease, including, without limitation, (A) Supplemental Rent in respect of Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the Trust Indenture in connection with a prepayment of the Equipment Notes upon such sale and (B) all interest charges provided for hereunder or under any other Lessee Operative Agreement with respect to the late payment of any amounts so payable. In addition, Lessee shall pay all reasonable out-of-pocket fees and expenses incurred by Lessor, Mortgagee and Owner Participant in connection with such sale and related termination of this Lease (but excluding any sales commissions or marketing expenses for brokers and agents engaged by Lessor or Owner Participant in connection with such sale unless engaged by Lessee on behalf of Lessor).

(c) Upon and subject to any such sale and receipt of proceeds by Lessor, and full and final payment of all amounts described in Section 9.2.2(b), and compliance by Lessee with all the other provisions of this Section 9.2,

(i) Lessor will transfer to Lessee, in accordance with Section 4.5, any Engines constituting part of the Aircraft but which were not then installed on the Airframe and sold therewith; and

(ii) the obligation of Lessee to pay Basic Rent, on or after the Payment Date with reference to which Termination Value is computed, shall cease, and the Term for the Aircraft shall end effective as of the date of such sale.

(d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take place only on a Termination Date or any such other date within 10 Business Days after a Termination Date as Lessor may consent to, which consent shall not be withheld unreasonably, PROVIDED, that during any such 10-day extension or any part thereof, interest shall accrue on the amount due at a rate of interest equal to the Debt Rate. Subject to Section 9.3, if no sale shall have occurred on or as of the proposed Termination Date, this Agreement shall continue in full force and effect, and all of Lessee's obligations shall continue, including, without limitation, its obligation to pay Rent, in each case, as if the notice under Section 9.1 shall not have been given and, subject to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.

9.2.3 Withdrawal of Notice of Termination

(a) Lessee may withdraw any notice given pursuant to Section 9.1 at any time on or before the date ten Business Days prior to the proposed Termination Date, whereupon this Agreement shall continue in full force and effect and all of Lessee's obligations shall continue, including, without limitation, its obligation to pay Rent, in each case, as if the notice under
Section 9.1 shall not have been given and Lessee may give another notice pursuant to Section 9.1; provided that Lessee shall not be entitled to give more than four notices pursuant to Section 9.1.

(b) Lessee shall pay all reasonable out-of-pocket fees and expenses of Lessor, Mortgagee and Owner Participant in connection with any notice of termination withdrawn by Lessee or in connection with any notice of termination pursuant to which a sale of the Aircraft fails to occur.

9.3 Retention of Aircraft by Lessor

(a) If Lessor shall elect to retain the Aircraft in accordance with Section 9.1, on the proposed Termination Date:

(i) Lessor shall pay, or cause to be paid, in the manner and in funds of the type specified in Section 3.3, to the Mortgagee an amount sufficient to prepay all outstanding Equipment Notes pursuant to Section 2.10(b) of the Trust Indenture;

(ii) subject to receipt by Mortgagee of the funds described in paragraph (i) above, Lessee shall deliver the Airframe and Engines or engines constituting part of the Aircraft to Lessor pursuant to Section 5 and Annex B and in full compliance with the terms thereof, and shall duly transfer to Lessor title to any such engines not owned by Lessor, all in accordance with the terms of Section 5 and Annex B;

(iii) Lessee shall pay to Lessor, in the manner and in funds of the type specified in Section 3.3:

(1) all unpaid Basic Rent due at any time prior to such Termination Date (or any later date agreed by the parties pursuant to Section 9.2.2(d)) and all Basic Rent due on such Termination Date (or any later date agreed by the parties pursuant to Section 9.2.2(d))to the extent payable in arrears with respect to the Payment Period then ended; plus

(2) as provided in Section 3.2.2, interest on the amounts specified in the foregoing clause (1) at the Payment Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full; and

(iv) Lessee shall also pay all Supplemental Rent due and payable by Lessee to Lessor, Mortgagee or the other Participants under this Lease (other than any Supplemental Rent in respect of Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the Trust Indenture in connection with a prepayment of the Equipment Notes upon such sale), including without limitation all interest charges provided for hereunder or under any other Lessee Operative Agreement with respect to the late payment of any amounts, so payable, and the reasonable out-of-pocket fees and ex-

penses incurred by Lessor, Mortgagee and Owner Participant in connection with such termination and sale;

(b) Upon full and final payment to Lessor, Mortgagee and the Participants of the amounts described in Section 9.3(a), and compliance by Lessee with all the other applicable provisions of this Section 9.3,

(i) Lessor will transfer to Lessee, in accordance with Section 4.5, any Engines constituting part of the Aircraft but which were not then installed on the Airframe and sold therewith; and

(ii) The obligation of Lessee to pay Basic Rent otherwise due on or after the Termination Date shall cease, and the Term for the Aircraft shall end effective as of such Termination Date.

SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.

10.1 Event of Loss With Respect to Aircraft

10.1.1 Notice and Election

(a) Upon the occurrence of an Event of Loss with respect to the Airframe, and any Engine or Engines installed thereon at the time of such Event of Loss, Lessee shall promptly (and in any event within 15 days after such occurrence) give Lessor and Mortgagee written notice of such Event of Loss. Within 45 days after such occurrence, Lessee shall give Lessor and Mortgagee written notice of Lessee's election to make payment in respect of such Event of Loss, as provided in Section 10.1.2, or to replace the Airframe, and any such Engines, as provided in Section 10.1.3.

(b) Any failure by Lessee to give such notice of its election shall be deemed to be an election of the option set forth in Section 10.1.2. In addition, Lessee shall not be entitled to elect the option set forth in Section 10.1.3 if, at the time Lessor receives such notice from Lessee, there shall have occurred and be continuing a Specified Default or Lease Event of Default.

(c) For purposes of Section 10.1.2, an Event of Loss with respect to the Airframe shall be deemed to constitute an Event of Loss with respect to the Aircraft. For purposes of

Section 10.1.3, any Engine not actually suffering an Event of Loss shall not be required to be replaced.

10.1.2 Payment of Loss and Termination of Lease

(a) If Lessee elects, in accordance with Section 10.1.1, to make payment in respect of any such Event of Loss, then Lessee shall pay, in the manner and in funds of the type specified in Section 3.3, the following amounts:

(i) on or before the Business Day next following the earlier of
(x) the 180th day following the date of the occurrence of such Event of Loss, and (y) no later than the third Business Day following the receipt of all insurance proceeds with respect to such occurrence (but in any event not earlier than the date of Lessee's election under Section 10.1.1 to make payment under this Section 10.1.2), Lessee shall pay to Lessor an amount equal to the Stipulated Loss Value of the Aircraft as of the Loss Payment Date plus (a) all unpaid Basic Rent or Renewal Rent, as the case may be, payable in advance and due prior to the Loss Payment Date, plus
(b) any unpaid Basic Rent or Renewal Rent, as the case may be, payable in arrears and due on or before such Loss Payment Date, plus (c) all other amounts of Supplemental Rent due on or before the Loss Payment Date and any reasonable expenses and costs incurred in connection with such Event of Loss by Lessor, the Owner Participant or the Mortgagee (including with respect to Make-Whole Amount, if any).

(ii) on or before the date required for payment of the amounts specified in paragraph (i) above, Lessee shall also pay to Lessor, Mortgagee and the other Participants all other amounts due and payable by Lessee to Lessor, Mortgagee and the other Participants under this Lease, the Participation Agreement or any other Lessee Operative Agreement.

(b) Upon payment in full of all amounts described in the foregoing paragraph (a),(i) the obligation of Lessee to pay Basic Rent or Renewal Rent hereunder with respect to the Aircraft shall terminate, (ii) the Term for the Aircraft shall end and (iii) Lessor will transfer the Aircraft to Lessee, as-is and where-is, and subject to any insurer's salvage rights, but otherwise in the manner described in Section 4.5.

10.1.3 Replacement of Airframe and Engines

(a) If Lessee elects, in accordance with Section 10.1.1, to replace the Airframe, and any Engines actually suffering the Event of Loss, then Lessee shall, as promptly as possible and in any event within 180 days after the occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with Section 10.3 and as replacement for the Airframe, and any such Engine, title to a Replacement Airframe (which shall comply with paragraph (b) below), and for each such Engine a Replacement Engine, in each case free and clear of all Liens other than Permitted Liens. If Lessee makes such election, but for any reason fails or is unable to effect such replacement within such time period and in compliance with the requirements set forth in Section 10.3, then Lessee shall be deemed to have initially made the election set forth in
Section 10.1.2 with the effect that Lessee shall immediately pay, in the manner and in funds of the type specified in Section 3.3, the amounts required under, and in accordance with, Section 10.1.2.

(b) Any such Replacement Airframe shall be an airframe that is the same model as the Airframe to be replaced thereby, or an improved model, and that has a value, utility and remaining useful life (without regard to hours or cycles remaining until the next regular maintenance check), at least equal to the Airframe to be replaced thereby (assuming that such Airframe had been maintained in accordance with the Lease). Any such Replacement Engine shall meet the requirements of, and be conveyed by Lessee to Lessor in accordance with,
Section 10.2 (other than the notice requirement set forth in Section 10.2.1).

10.2 Event of Loss With Respect to an Engine

10.2.1 Notice

Upon the occurrence of an Event of Loss with respect to an Engine under circumstances in which an Event of Loss with respect to the Airframe has not occurred, Lessee shall promptly (and in any event within 15 days after such occurrence) give Lessor written notice of such Event of Loss.

10.2.2 Replacement of Engine

Lessee shall, promptly and in any event within 90 days after the occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with Section 10.3

and as replacement for the Engine with respect to which any Event of Loss occurred, title to a Replacement Engine free and clear of all Liens other than Permitted Liens. Such Replacement Engine shall be an engine that is the same or improved make and model as the Engine to be replaced, and that is suitable for installation and use on the Airframe, and that has a value, utility and remaining useful life (without regard to hours and cycles remaining until overhaul) at least equal to the Engine to be replaced thereby (assuming that such Engine had been maintained in accordance with the Lease).

10.2.3 Engine Exchange

Upon not less than five (5) Business Days' prior written notice to Lessor, Lessee may replace any Engine leased hereunder with another engine (the "Exchanged Engine") meeting the requirements of Section 10.2.2. Such Exchanged Engine shall be deemed to be a "Replacement Engine" and Lessor and Lessee shall comply with the provisions of Section 10.3 with regard to the Exchanged Engine and the Engine so replaced.

10.3 Conditions to Any Replacement

10.3.1 Documents

Prior to or at the time of conveyance of title to any Replacement Airframe or Replacement Engine to Lessor, Lessee shall take each of the following actions:

(a) furnish Lessor with a full warranty bill of sale duly conveying to Lessor such Replacement Airframe or Replacement Engine, in form and substance reasonably satisfactory to Lessor and cause such Replacement Airframe to be duly registered in the name of Lessor pursuant to the Act;

(b) cause (i) a Lease Supplement subjecting such Replacement Airframe or Replacement Engine to this Lease, duly executed by Lessee, to be delivered to Lessor for execution and, upon such execution, to be filed for recordation with the FAA pursuant to the Act, (ii) a Trust Indenture Supplement, subjecting such Replacement Airframe or Replacement Engine to the Trust Indenture, to be delivered to Lessor for execution and, upon execution, to be filed for recordation with the FAA pursuant to the Act and (iii) such Financing Statements and other filings, as Lessor or Mortgagee may reasonably request, duly executed by Lessee and, to the extent applicable, Lessor and Mortgagee

(and Lessor and Mortgagee shall execute and deliver the same), to be filed in such locations as any such party may reasonably request;

(c) furnish such evidence of compliance with the insurance provisions of Section 11 with respect to such Replacement Airframe or Replacement Engine as Lessor may reasonably request;

(d) furnish an opinion or opinions of Lessee's counsel (which may be Lessee's legal department) reasonably satisfactory to Lessor and addressed to Lessor and Mortgagee to the effect that (i) such full warranty bill of sale referred to in Section 10.3.1(a) constitutes an effective instrument for the conveyance of title to the Replacement Airframe or Replacement Engine and (ii) in the case of a Replacement Airframe, Lessor and Mortgagee, as assignee of Lessor, will be entitled to the benefits of Section 1110 with respect to the Replacement Airframe, provided that such opinion referred to in this clause (ii) need not be delivered to the extent that immediately prior to such replacement the benefits of Section 1110 were not, solely by reason of a change in law or court interpretation thereof, available to Lessor or Mortgagee, as assignee of Lessor;

(e) furnish an opinion of Lessee's aviation law counsel reasonably satisfactory to Lessor and addressed to Lessor and Mortgagee as to the due registration of any such Replacement Airframe and the due filing for recordation of each Lease Supplement and Trust Indenture Supplement with respect to such Replacement Airframe or Replacement Engine under the Act;

(f) with respect to any Replacement Airframe, furnish an opinion of tax counsel, selected by Owner Participant and reasonably satisfactory to Lessee, as to the federal income tax consequences (without any requirement as to the nature of such Federal income tax consequences) to Lessor and Owner Participant of any such replacement;

(g) with respect to the replacement of the Airframe, and any Engine installed thereon at the time of the subject Event of Loss, if requested by Lessor and at Lessor's expense, furnish a certified report of a qualified independent aircraft appraiser, reasonably satisfactory to Lessor, certifying that such Replacement Airframe and any such Replacement Engine complies with the value, utility

and remaining useful life requirements set forth in Section 10.1.3(b).

Lessor and Lessee understand and agree that if at the time of any replacement of the Airframe or any Engine, as contemplated in this Section 10, the Airframe was registered in a jurisdiction other than the United States, then the requirements set forth above in this Section 10.3.1 relating to compliance with the requirements of the Act or the FAA, shall be deemed to refer to the comparable applicable Law of, and the Aviation Authority of, such other jurisdiction.

10.3.2 Other Obligations

(a) Lessor and Lessee agree that, upon any Replacement Airframe becoming the Airframe hereunder, and upon any Replacement Engine becoming an Engine hereunder, this Lease shall continue to be, and shall be treated as, a lease for U.S. federal income tax purposes of, among other things, such Replacement Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and Lessor intend that Lessor shall, in all events, be entitled to the benefits of Section 1110 with respect to any Replacement Airframe or Replacement Engine and Lessee and Lessor shall cooperate and take such action as the other may reasonably request so as to ensure that Lessor shall be entitled to such benefits; provided that Lessor shall not be entitled to such benefits to the extent that immediately prior to any Replacement Engine becoming an Engine hereunder, the benefits of Section 1110 were not, solely by reason of a change in law or court interpretation thereof, available to Lessor or Mortgagee, as assignee of Lessor.

(b) No Event of Loss with respect to an Engine, or with respect to an Airframe, shall result in, or otherwise allow or permit (other than as provided in Section 10.1.2(b)), any reduction, deferral, discharge or other change in the timing or amount of any Rent payable by Lessee hereunder, and (subject to such Section 10.1.2(b)) Lessee shall pay all such Rent and other amounts as though such Event of Loss had not occurred.

10.4 Conveyance to Lessee

Upon compliance by Lessee with the applicable terms of Sections 10.1.3, 10.2 and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine, as the case may be, with respect to which such Event of Loss occurred, in accordance with Section 4.5.

10.5 Application of Payments

Any amounts, other than insurance proceeds in respect of damage or loss not constituting an Event of Loss (the application of which is provided for in Section 11), received at any time by Lessor, Lessee or any Permitted Sublessee from any Government Entity or any other Person in respect of any Event of Loss will be applied as follows:

10.5.1 Replacement of Airframe and Engines

If such amounts are received with respect to the Airframe, and any Engine installed thereon at the time of such Event of Loss, then depending upon whether such amounts are above or below the Threshold Amount, such amounts will be paid over to either Lessor or Lessee, as applicable, in accordance with paragraph B.1(ii)(A) and (B) of Annex D, as applicable, and upon compliance by Lessee with the applicable terms of Section 10.1.3 with respect to the Event of Loss for which such amounts are received, any such amounts not previously paid to Lessee shall be paid over to, Lessee.

10.5.2 Loss of Engine

If such amounts are received with respect to an Engine (other than an Engine installed on the Airframe at the time such Airframe suffers an Event of Loss), then depending upon whether such amounts are above or below the Threshold Amount, such amounts will be paid over to either Lessor or Lessee, as applicable, in accordance with clauses (ii)(A) and (B) of the second paragraph of Section B.1. of Annex D, as applicable, and upon compliance by Lessee with the applicable terms of Section 10.2.2 with respect to the Event of Loss for which such amounts are received, any such amounts not previously paid to Lessee shall be paid over to, Lessee.

10.5.3 Payment of Loss

If such amounts are received, in whole or in part, with respect to the Airframe, and Lessee makes, has made or is deemed to have made the election set forth in Section 10.1.2, such amounts shall be applied as follows:

(a) first, if the sum described in Section 10.1.2 has not then been paid in full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee so long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been duly discharged, except with re-

spect to Excluded Payments) to the extent necessary to pay in full such sum;

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

10.6 Requisition of Aircraft for Use

If any Government Entity shall requisition for use the Airframe and the Engines or engines installed thereon, and if the same does not constitute an Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such requisition and all of Lessee's obligations under this Agreement shall continue to the same extent as if such requisition had not occurred; provided, however, that if the Airframe and Engines or engines installed thereon are not returned to Lessor by Lessee at the end of the Term or within 180 days thereafter, and Lessor, upon notice given not less than 30 days nor more than 120 days before the end of the Term, shall have elected to treat such event as constituting an Event of Loss with respect to the Aircraft, Lessee shall then be deemed to have made the election set forth in Section 10.1.2 with the effect that Lessee shall be obligated to pay the Stipulated Loss Value and all other amounts payable pursuant to Section 10.1.2 with respect to the Aircraft as if an Event of Loss had occurred as of the end of the Term. If Lessor shall not have elected to treat such event as an Event of Loss, Lessee shall be obligated to return the Airframe and Engines or engines to Lessor pursuant to, and in all other respects to comply with the provisions of, Section 5 promptly upon their return by such Government Entity, and Lessee shall pay to Lessor upon such return an amount equal to the average daily Basic Rent or Renewal Rent, as the case may be, payable by Lessee during the Term for each day after the end of the Term to but excluding the day of such return, up to a maximum of 30 days.

10.7 Requisition of an Engine for Use

If any Government Entity shall requisition for use any Engine but not the Airframe, Lessee will, if such requisition continues to the end of the Term, replace such Engine by complying with the applicable terms of Sections 10.2 and 10.3 to the same extent as if an Event of Loss had occurred with respect to such Engine, and any payments received by Lessor or Lessee from such Government Entity with respect to such requisition shall be paid or retained in accordance with Section 10.5.2.

10.8 Application of Payments

All payments received by Lessor or Lessee, or any Permitted Sublessee, from any Government Entity for the use of the Airframe and Engines or engines installed thereon during the Term shall be paid over to, or retained by, Lessee and all payments received by Lessor or Lessee from any Government Entity for the use of the Airframe and Engines or engines installed thereon after the Term shall be paid over to, or retained by, Lessor; provided that, if such requisition constitutes an Event of Loss, or Lessor has elected under Section 10.6 to treat such requisition as an Event of Loss, then all such payments shall be paid over to Lessor (or to Mortgagee so long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been duly discharged), and held as provided in Section 10.5.

10.9 Application of Payments During Existence of a Specified Default or Lease Event of Default

Any amount described in this Section 10 that is payable or creditable to, or retainable by, Lessee shall not be paid or credited to, or retained by, Lessee if at the time such payment, credit or retention would otherwise occur a Specified Default or Lease Event of Default shall have occurred and be continuing, but shall instead be held by or paid over to Lessor (or to Mortgagee so long as Mortgagee has not given notice to Lessee that, the Trust Indenture has been duly discharged) as security for the obligations of Lessee under this Lease and the other Lessee Operative Agreements and shall be invested pursuant to Section 4.4 hereof unless and until such amount is applied, at the option of Lessor, or upon the written request of Lessee to Lessor, from time to time during the continuance of a Lease Event of Default, to Lessee's obligations under this Lease as and when due, it being understood that any such application shall be made to such obligations of Lessee as Lessor may determine in its sole discretion. At such time as there shall not be continuing any Specified Default or Lease Event of Default, such amount shall be paid to Lessee to the extent not previously applied in accordance with this Section 10.9.

SECTION 11. INSURANCE

11.1 Lessee's Obligation to Insure

Lessee shall comply with, or cause to be complied with, each of the provisions of Annex D, which provisions are

hereby incorporated by this reference as if set forth in full herein.

11.2 Insurance for Own Account

Nothing in Section 11 shall limit or prohibit (a) Lessee from maintaining the policies of insurance required under Annex D with higher limits than those specified in Annex D, or (b) Lessor, Mortgagee or Owner Participant from obtaining insurance for its own account (and any proceeds payable under such separate insurance shall be payable as provided in the policy relating thereto); provided, however, that no insurance may be obtained or maintained that would limit or otherwise adversely affect the coverage of any insurance required to be obtained or maintained by Lessee pursuant to this Section 11 and Annex D.

11.3 Indemnification by Government in Lieu of Insurance

Lessor agrees to accept, in lieu of insurance against any risk with respect to the Aircraft described in Annex D, indemnification from, or insurance provided by, the U.S. Government, or upon the written consent of Lessor, other Government Entity, against such risk in an amount that, when added to the amount of insurance (including permitted self-insurance), if any, against such risk that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance with this Section 11, during the period of such requisition or transfer, shall be at least equal to the amount of insurance against such risk otherwise required by this Section 11.

11.4 Application of Insurance Proceeds

As between Lessor and Lessee, all insurance proceeds received as a result of the occurrence of an Event of Loss with respect to the Aircraft or any Engine under policies required to be maintained by Lessee pursuant to this
Section 11 will be applied in accordance with Section 10.5. All proceeds of insurance required to be maintained by Lessee, in accordance with Section 11 and
Section B of Annex D, in respect of any property damage or loss not constituting an Event of Loss with respect to the Aircraft, Airframe or any Engine will be applied in payment (or to reimburse Lessee) for repairs or for replacement property, and any balance remaining after such repairs or replacement with respect to such damage or loss shall be paid over to, or retained by, Lessee.

ll.5 Application of Payments During Existence of Specified Default or Event of Default

If a Specified Default or Event of Default shall have occurred and be continuing at any time that an amount described in this Section 11 is payable or creditable to, or retainable by, Lessee, Lessee shall cause such amount to be paid over to Lessor (or to Mortgagee so long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been duly discharged) as security for the obligations of Lessee under this Lease and shall be invested pursuant to Section 4.4 hereof unless and until such amount is applied, at the option of Lessor, or upon the written request of Lessee to Lessor, from time to time during the continuance of a Specified Default or Event of Default, to Lessee's obligations under this Lease and the other Lessee Operative Agreements as and when due, it being understood that any such application shall be made to such obligations of Lessee as Lessor may determine in its sole discretion. At such time as there shall not be continuing any Specified Default or Event of Default, such amount shall be paid to Lessee to the extent not previously applied in accordance with this Section 11.5.

SECTION 12. INSPECTION

(a) At all reasonable times Lessor, Mortgagee or the Owner Participant, and their respective authorized representatives (the "Inspecting Parties") may (not more than once every 12 months unless a Lease Event of Default has occurred and is continuing then such inspection right shall not be so limited) inspect the Aircraft, Airframe and Engines (including, without limitation, the Aircraft Documents) and any such Inspecting Party may make copies of such Aircraft Documents not reasonably deemed confidential by Lessee or such Permitted Sublessee.

(b) Any inspection of the Aircraft hereunder shall be limited to a visual, walk-around inspection and shall not include the opening of any panels, bays or other components of the Aircraft, PROVIDED, HOWEVER, that in the event any such panels, bays or other components shall have already been opened and continue to remain open at the sole discretion of Lessee or the Permitted Sublessee, then such inspection may include such opened areas, and no such inspection shall interfere with Lessee's or any Permitted Sublessee's maintenance and operation of the Aircraft, Airframe and Engines.

(c) With respect to such rights of inspection, Lessor, Owner Participant and Mortgagee shall not have any duty or liability to make, or any duty or liability by reason of not making, any such visit, inspection or survey.

(d) Each Inspecting Party shall bear its own expenses in connection with any such inspection (including the cost of any copies made in accordance with Section 12(a)).

(e) Upon prior written request by Owner Participant, Lessee shall disclose to Owner Participant as soon as practicable any heavy maintenance inspection of the Aircraft scheduled to take place within the 12-month period following such request.

(f) Upon the request of the Lessor, the Lessee shall provide to the Lessor, not more frequently than once per calendar year, or, if an Event of Default has occurred and is continuing, not more frequently than once per calendar quarter, a written report with respect to the flight hours and cycles of operation of the Airframe and each Engine during the period since the end of the period to which the most recent such report related (or, if there has been no such previous report, since the commencement of the Term) through the last day of the calendar year, or quarter, as the case may be, most recently ended prior to the date of the current report.

SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE

13.1 In General

This Lease and the other Lessee Operative Agreements shall be binding upon and inure to the benefit of Lessor and Lessee and their respective successors and permitted assigns. Except as otherwise expressly permitted by the terms of the Lease or any other Lessee Operative Agreement, Lessee will not, without the prior written consent of Lessor and Mortgagee, assign any of its rights under this Lease, such consent not to be unreasonably withheld. Except as otherwise provided herein (including, without limitation, under the provisions of Section 15 hereof), Lessor and Mortgagee may not assign or convey any of their right, title and interest in and to this Lease or the Aircraft without the prior written consent of Lessee, such consent not to be unreasonably withheld.

13.2 Merger of Lessee

13.2.1 In General

Lessee shall not consolidate with or merge into any other person under circumstances in which Lessee is not the surviving corporation, or convey, transfer or lease in one or more transactions all or substantially all of its assets to any other person, unless:

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

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

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

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

(e) Lessee shall have promptly notified Owner Participant of such merger or consolidation and provided Owner Participant with copies of all filings and recordings with the SEC in connection therewith.

13.2.2 Effect of Merger

Upon any such consolidation or merger of Lessee with or into, or the conveyance, transfer or lease by Lessee of all or substantially all of its assets to, any Person in accordance with this Section 13.2, such Person will succeed to, and be substituted for, and may exercise every right and power of, Lessee under the Lessee Operative Agreements with the same effect as if such person had been named as "Lessee" therein. No such consolidation or merger, or conveyance, transfer or lease, shall have the effect of releasing Lessee or such Person from

any of the obligations, liabilities, covenants or undertakings of Lessee under the Lessee Operative Agreements.

13.3 Assignment Security for Lessor's Obligations

In order to secure the indebtedness evidenced by the Equipment Notes, Lessor has agreed in the Trust Indenture, among other things, to assign to Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in favor of Mortgagee, subject to the reservations and conditions therein set forth. Lessee hereby accepts and consents to the assignment of all Lessor's right, title and interest in and to this Lease pursuant to the terms of the Trust Indenture. In accordance with Section 3.3 (c), Lessee agrees to pay directly to Mortgagee (or, after receipt by Lessee of notice from Mortgagee of the discharge of the Lien of the Trust Indenture, to Lessor), all amounts of Rent (other than Excluded Payments) due or to become due hereunder and assigned to Mortgagee and Lessee agrees that Mortgagee's right to such payments hereunder shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, the circumstances set forth in
Section 16 hereof. Notwithstanding the foregoing assignment of this Lease, the obligations of Lessee to Lessor to perform the terms and conditions of this Lease shall remain in full force and effect.

13.4 Successor Owner Trustee

Lessee agrees that in the case of the appointment of any successor Owner Trustee pursuant to the terms of the Participation Agreement and the Trust Agreement, such successor Owner Trustee shall, upon written notice by such successor Owner Trustee to Lessee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft and the other assets of the Trust Estate for all purposes hereof without the necessity of any consent or approval by Lessee and without in any way altering the terms of this Lease or Lessee's obligations hereunder. An appointment and designation of a successor Owner Trustee shall not exhaust the right to appoint and designate further successor or additional Owner Trustees pursuant to the Participation Agreement and the Trust Agreement, and such right may be exercised repeatedly as long as this Lease shall be in effect.

SECTION 14. LEASE EVENTS OF DEFAULT

The occurrence of any one or more of the following circumstances, conditions, acts or events, for any reason whatsoever and whether any such circumstance, condition, act or 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, order, rule or regulation of any Government Entity, shall constitute a Lease Event of Default so long as it shall not have been remedied:

14.1 Payments

Lessee shall fail to pay any amount of Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due and such failure shall continue for or period in excess of ten (10) Business Days after the same shall become due; or Lessee shall fail to pay any Supplemental Rent (other than Stipulated Loss Value or Termination Value) when due and such failure shall continue for a period in excess of ten (10) Business Days from and after the date of any written notice to Lessee from Lessor of the failure to make such payment when due; provided that any such failure to pay any Excluded Payment shall not constitute a Lease Event of Default until written notice is given by the Owner Participant to Lessee and Mortgagee that such failure constitutes a Lease Event of Default and such failure shall have continued for a period in excess of ten (10) Business Days after such notice.

14.2 Insurance

Lessee shall fail to carry and maintain, or cause to be carried and maintained, insurance on and in respect of the Aircraft, Airframe and Engines in accordance with the provisions of Section 11.

14.3 Other Covenants

Lessee shall fail to observe or perform (or caused to be observed and performed) in any material respect any other covenant, agreement or obligation to be observed or performed by it as set forth herein or in any other Lessee Operative Agreement (other than the covenants, agreements and obligations set forth in the Tax Indemnity Agreement), and such failure shall continue unremedied for a period of 30 days from and after the date of written notice thereof to Lessee from Lessor or Mortgagee, unless such failure is capable of being corrected and Lessee shall be diligently proceeding to correct such fail-

ure, in which case there shall be no Lease Event of Default unless and until such failure shall continue unremedied for a period of 180 days after receipt of such notice.

14.4 Representations and Warranties

Any material representation or warranty made by Lessee herein, in the Participation Agreement or in any other Lessee Operative Agreement (other than the representations and warranties of Lessee in the Tax Indemnity Agreement) (a) shall prove to have been untrue or inaccurate in any material respect as of the date made, (b) such untrue or inaccurate representation or warranty is material at the time in question and (c) the same shall remain uncured (to the extent of the adverse impact of such incorrectness on the interest of the Participants or Lessor) for a period in excess of 30 days from and after the date of written notice thereof from Lessor or Mortgagee to Lessee.

14.5 Bankruptcy and Insolvency

(a) Lessee shall consent to the appointment of or the taking of possession by a receiver, trustee or liquidator of itself or of substantially all of its property, or Lessee shall admit in writing its inability to pay its debts generally as they come due, or does not pay its debts generally as they become due or shall make a general assignment for the benefit of creditors, or Lessee shall file a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or other relief in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time), or Lessee shall seek relief by voluntary petition, answer or consent, under the provisions of any other bankruptcy or other similar Law providing for the reorganization or winding-up of corporations (as in effect at such time) or Lessee's board of directors shall adopt a resolution authorizing any of the foregoing; or

(b) an order, judgment or decree shall be entered by any court of competent jurisdiction appointing, without the consent of Lessee, a receiver, trustee or liquidator of Lessee or of substantially all of its property, or substantially all of the property of Lessee shall be sequestered, and any such order, judgment or decree of appointment or sequestration shall remain in force undismissed, unstayed and unvacated for a period of 90 days after the date of entry thereof; or

(c) a petition against Lessee in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) is filed and not withdrawn or dismissed within 90 days thereafter, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Lessee, any court of competent jurisdiction assumes jurisdiction, custody or control of Lessee or of substantially all of its property and such jurisdiction, custody or control remains in force unrelinquished, unstayed and unterminated for a period of 90 days.

SECTION 15. REMEDIES AND WAIVERS

15.1 Remedies

If any Lease Event of Default shall occur and be continuing, Lessor may, at its option and at any time and from time to time, exercise any one or more of the following remedies as Lessor in its sole discretion shall elect:

15.1.1 Return and Repossession

Lessor may cause Lessee, upon giving written notice to Lessee, to return promptly, and Lessee shall return promptly, the Airframe and Engines as Lessor may so demand, to Lessor or its order in the manner and condition required by, and otherwise in accordance with, all the provisions of Section 5 as if the Airframe or Engine were being returned at the end of the Base Lease Term or any Renewal Lease Term or Lessor, at its option, may enter upon the premises where the Airframe or any Engine, or any Part thereof, are located and take immediate possession of and remove the same by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise.

15.1.2 Sale and Use

Lessor may sell the Airframe and/or any Engine at public or private sale, at such times and places, and to such Persons (including Lessor, Mortgagee or any Participant), as Lessor may determine; or Lessor may otherwise dispose of, hold, use, operate, lease to others or keep idle the Airframe and/or any Engine, as Lessor, in its sole discretion, may determine, all free and clear of any rights of Lessee and without any duty to account to Lessee with respect to such action or inaction or

for any proceeds with respect thereto, except as hereinafter set forth in this
Section 15, and except to the extent that such proceeds would constitute, under applicable Law, a mitigation of Lessor's damages suffered or incurred as a result of the subject Lease Event of Default. Lessor shall give Lessee at least 15 days prior written notice of the date fixed for any public sale of the Airframe and/or any Engine or of the date on or after which will occur the execution of any contract providing for any private sale.

15.1.3 Certain Liquidated Damages

Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under Section 15.1.1 or 15.1.2 with respect to the Airframe and/or any Engine, or any Part thereof, Lessor, by written notice to Lessee specifying a payment date (which shall be the Stipulated Loss Value Date next occurring not less than 10 days after the date of such notice), may demand Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment date so specified and in the manner and in funds of the type specified in Section 3.3, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for the Aircraft in respect of all periods commencing on or after the date specified for payment in such notice), the following amounts:

(a) all unpaid Basic Rent or Renewal Rent, as the case may be, due at any time prior to the Stipulated Loss Value Date specified in such notice; plus

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

(i) an amount equal to the excess, if any, of the present value, computed as of the Stipulated Loss Value Date specified in such notice, discounted to such date at a rate per annum equal to the Debt Rate, compounded semi-annually, of all unpaid Basic Rent during the then remaining portion of the Base Lease Term or, if a Renewal Lease Term has commenced, of all unpaid Renewal Rent during the remaining portion of such Renewal Lease Term, over the Fair Market Rental Value of the Aircraft for the remainder of the Term, after discounting such Fair Market Rental Value to its then present value (at a rate per annum equal to the Debt Rate, compounded semiannually) as of the Stipulated Loss Value Date specified in such notice, or

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

(c) interest on the amounts specified in the foregoing clause (a) at the Payment Due Rate from and including the date on which any such amount was due to the date of payment of such amount; plus

(d) interest on the amount specified in the foregoing clause (b)
(i) or (b) (ii), according to Lessor's election, at the Payment Due Rate from and including the Stipulated Loss Value Date specified in such notice to the date of payment of such amount.

15.1.4 Liquidated Damages Upon Sale

If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have sold the Airframe and/or any Engine, Lessor, in lieu of exercising its rights under Section 15.1.3 with respect to the Aircraft, Airframe or any Engine, as the case may be, may, if Lessor shall so elect, upon giving written notice to Lessee, demand Lessee to pay Lessor, and Lessee shall pay to Lessor, on the date of such sale and in the manner and in funds of the type specified in Section 3.3, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, for the Aircraft in respect of all periods commencing on or after the date of such sale), the following amounts:

(a) all unpaid Basic Rent or Renewal Rent, as the case may be, due at any time prior to the Stipulated Loss Value Date on or immediately preceding the date of such sale; plus

(b) an amount equal to the excess, if any, of (i) the Stipulated Loss Value of the Aircraft, computed as of the Stipulated Loss Value Date used in the foregoing clause (a) for the computation of unpaid Rent, over
(ii) the proceeds of such sale, minus all reasonable costs of Lessor and Mortgagee in connection with the sale; plus

(c) if the date of such sale is not a Stipulated Loss Value Date, an amount equal to interest on the outstanding principal amount of the Equipment Notes at the rate per annum borne thereby from and including the Stipu-

lated Loss Value Date used in the foregoing clause (a) for the computation of unpaid Rent to the date of such sale; plus

(d) interest on the amounts specified in the foregoing clause (a) at the Payment Due Rate from and including the date on which any such amount was due to the date of payment of such amount; plus

(e) interest on the sum of the amounts specified in the foregoing clause (b) at the Payment Due Rate from and including the date of such sale to the date of payment of such amounts.

15.1.5 Rescission

Lessor may (i) at its option, rescind or terminate this Lease as to the Aircraft, Airframe or any Engine, or any Part thereof, or (ii) exercise any other right or remedy that may be available to it under applicable Law or proceed by appropriate court action to enforce the terms hereof.

15.1.6 Other Remedies

(a) In addition to the foregoing remedies (but without duplication of amounts otherwise paid under this Section 15), Lessee shall be liable for any and all unpaid Rent due hereunder before, during or after (except as otherwise provided herein) the exercise of any of the foregoing remedies and for all reasonable attorneys' fees and other costs and expenses of Lessor, Mortgagee the Owner Participant and the Note Holders, including, without limitation, interest on overdue Rent at the rate as herein provided, incurred by reason of the occurrence of any Lease Event of Default or the exercise of Lessor's remedies with respect thereto, including all reasonable costs and expenses incurred in connection with the return of the Airframe or any Engine, in accordance with the terms of Section 5 or in placing the Airframe or any Engine, in the condition and airworthiness required by Section 5.

(b) The prevailing party in any dispute between Lessee and Lessor under this Lease shall be entitled to reimbursement from the other party for all reasonable attorneys' fees and other costs and expenses of such prevailing party, incurred by reason of such dispute.

15.2 Limitations Under CRAF

Notwithstanding the provisions of Section 15.1, during any period that the Aircraft, Airframe or any Engine is subject to CRAF in accordance with the provisions of Section 7.2.3 and in the possession of the U.S. Government, Lessor shall not, as a result of any Lease Event of Default, exercise its remedies hereunder in such manner as to limit Lessee's control under this Lease (or any Permitted Sublessee's control under any Permitted Sublease) of the Aircraft, Airframe or such Engine, unless at least 30 days' (or such other period as may then be applicable under CRAF) written notice of default hereunder shall have been given by Lessor or Mortgagee by registered or certified mail to Lessee (and any Permitted Sublessee) with a copy to the Contracting Officer Representative or Representatives for the Military Airlift Command of the United States Air Force to whom notices must be given under the contract governing Lessee's (or any Permitted Sublessee's) participation in CRAF with respect to the Aircraft, Airframe or any Engine.

15.3 Right to Perform for Lessee

If Lessee (i) fails to make any payment of Rent required to be made by it hereunder or (ii) fails to perform or comply with any of its agreements contained herein and such failure continues for a period of thirty days after written notice thereof is given by Lessor or Mortgagee to Lessee, Lessor or Mortgagee may (but shall not be obligated to) make such payment or perform or comply with such agreement, and the amount of such payment and the amount of the expenses of Lessor or Mortgagee 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 Payment Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand by Lessor or Mortgagee, whichever is entitled thereto. No such payment, performance or compliance shall be deemed to cure any Lease Default or Lease Event of Default or otherwise relieve Lessee of its obligations with respect thereto.

15.4 Determination of Fair Market Rental Value and Fair Market Sales Value

For the purpose of this Section 15 only, the "Fair Market Rental Value" or the "Fair Market Sales Value" of the Aircraft, Airframe or any Engine, shall be determined on an "as is, where is" basis and shall take into account customary brokerage and other out-of-pocket fees and expenses which typi-

cally would be incurred in connection with a re-lease or sale of the Aircraft, Airframe or any Engine. Any such determination shall be made by an Appraiser selected by Lessor and the costs and expenses associated therewith shall be borne by Lessee, unless Lessor does not obtain possession of the Aircraft, Airframe and Engines pursuant to this Section 15, in which case an Appraiser shall not be appointed and Fair Market Rental Value and Fair Market Sales Value for purposes of this Section 15 shall be zero.

15.5 Remedies Cumulative

Nothing contained in this Lease shall be construed to limit in any way any right, power, remedy or privilege of Lessor hereunder or under any other Operative Agreement or now or hereafter existing at law or in equity. Each and every right, power, remedy and privilege hereby given to, or retained by, Lessor in this Lease shall be in addition to and not in limitation of every other right, power, remedy and privilege given under the Operative Agreements or now or hereafter existing at law or in equity. Each and every right, power, remedy and privilege of Lessor under this Lease and any other Operative Agreement may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by Lessor. All such rights, powers, remedies and privileges shall be cumulative and not mutually exclusive, and the exercise of one shall not be deemed a waiver of the right to exercise any other. Lessee hereby waives to the extent permitted by applicable Law any right which it may have to require Lessor to choose or elect remedies.

SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.

(a) Lessee's obligation to pay Rent hereunder shall be absolute and unconditional, and shall not be affected by any event or circumstance, including, without limitation: (i) any setoff, counterclaim, recoupment, defense or other right that Lessee may have against Lessor, Mortgagee, any Participant, any Note Holder, or any other Person for any reason whatsoever; (ii) any defect in the title, airworthiness, condition, design, operation or fitness for use of, or any damage to or loss or destruction of, the Aircraft, Airframe or any Engine, or any interruption or cessation in the use or possession thereof by Lessee for any reason whatsoever; (iii) any insolvency, bankruptcy, reorganization or similar proceedings by or against Lessee or any other Person; or (iv) any other circumstance,

happening or event whatsoever, whether or not similar to any of the foregoing.

(b) If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent payment at the time such payment would have become due and payable in accordance with the terms hereof had this Agreement not been terminated in whole or in part. Lessee hereby waives, to the extent 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 Agreement, except in accordance with the express terms hereof.

(c) Nothing set forth in this Section 16 shall be construed to prohibit Lessee from separately pursuing any claim that it may have from time to time against Lessor or any other Person with respect to any matter (other than the absolute and unconditional nature of Lessee's obligations hereunder to pay Basic Rent, Renewal Rent, the Stipulated Loss Value with respect to any Aircraft, and the Termination Value with respect to any Aircraft and other than the matters specified in paragraphs (a) and (b) above).

SECTION 17. RENEWAL AND PURCHASE OPTIONS

17.1 Preliminary Notices

(a) At least (i) 180 days prior to the Scheduled Expiration Date, Lessee may provide written notice to Lessor that Lessee may exercise either the option to extend the leasing of the Aircraft for the first Renewal Lease Term pursuant to Section 17.2 or the option to purchase the Aircraft on the Scheduled Expiration Date and (ii) 180 days prior to the first Renewal Term Expiration Date, Lessee may, if it has leased the Aircraft during the first Renewal Lease Term, provide notice to Lessor that Lessee may exercise either the option to extend the leasing of the Aircraft for the Subsequent Renewal Lease Term pursuant to Section 17.2, or the option to purchase the Aircraft on the first Renewal Term Expiration Date pursuant to Section 17.3. Any such notice (a "Preliminary Notice") shall be revocable.

(b) If any such Preliminary Notice is given by Lessee, then Lessee may provide a further notice specifying which

option it intends to elect, with respect to the relevant period, pursuant to
Section 17.2.1 or 17.3.1, as the case may be. If Lessee fails to provide such further notice, such Preliminary Notice shall be deemed revoked.

17.2 Renewal Options

17.2.1 Renewal Notice

(a) If Lessee has given a Preliminary Notice and has not revoked such Preliminary Notice, as specified in Section 17.1, and subject to the terms and conditions of this Section 17.2, Lessee may exercise its option to extend the leasing of the Aircraft hereunder until the applicable Renewal Term Expiration Date, on the same terms, provisions and conditions (except as contemplated by this Section 17) set forth herein and in the other Lessee Operative Agreements with respect to the Base Lease Term, by delivery of an irrevocable notice (a "Renewal Notice") to Lessor not less than (i) 90 days prior to the Scheduled Expiration Date or a Renewal Term Expiration Date, as applicable, or (ii) if a Renewal Lease Term of six months or less is then in effect, 20 days prior to the Renewal Term Expiration Date.

(b) Notwithstanding anything to the contrary in this Agreement or any other Operative Agreement:

(i) No Renewal Notice shall be binding on Lessor or oblige Lessor to extend the leasing of the Aircraft hereunder for a Renewal Lease Term if any Lease Event of Default or Specified Default shall have occurred and be continuing on and as of the date that such Renewal Lease Term would otherwise commence.

(ii) Any Renewal Notice shall be irrevocable and shall constitute an unconditional obligation of Lessee to extend the leasing of the Aircraft hereunder for the Renewal Lease Term to which such Renewal Notice relates.

(iii) Lessee shall not be entitled to give any Renewal Notice if it has (x) not delivered a Preliminary Notice or (y) delivered a Purchase Notice to Lessor.

17.2.2 Renewal Rent

(a) During the Renewal Lease Term, Lessee shall pay to Lessor on each Payment Date, in the manner and in the funds of the type specified in
Section 3.3, Renewal Rent in arrears;

PROVIDED, however if the Renewal Lease Term does not end on a Payment Date, the last Payment Date of such Renewal Lease Term shall include a payment of Renewal Rent in advance for the remaining period of such Renewal Lease Term following such Payment Date.

(b) The Renewal Rent payable by Lessee on each Payment Date during the first Renewal Lease Term (such Term to extend for one period only of not less than 3 months and not more than two (2) years) shall be the lower of (i) an amount equal to the Renewal Rent Cap and (ii) the Fair Market Rental Value of the Aircraft for such Renewal Lease Term. The Renewal Rent payable by Lessee on each Payment Date during the Subsequent Renewal Lease Term (such Term to extend for one period only of not less than 3 months and not more than two (2) years) shall be the Fair Market Rental Value of the Aircraft for such Renewal Lease Term. Any such Fair Market Rental Value shall be determined not more than 35 days after delivery of a Preliminary Notice by mutual agreement of Lessor and Lessee or, if they shall be unable to agree, by an appraisal in accordance with
Section 17.4.

17.2.3 Stipulated Loss and Termination Values

(a) For any Renewal Lease Term, Stipulated Loss Value Dates and Termination Value Dates shall be extended throughout such Renewal Lease Term on the same days and for the same months as during the Base Lease Term.

(b) Stipulated Loss Value and Termination Value amounts that are payable during any such Renewal Lease Term shall be determined at the same time that the Renewal Rent for such Renewal Lease Term is determined under Section
17.2.2. Stipulated Loss Values and Termination Values for any such Renewal Lease Term shall, commencing on the first day of such Renewal Lease Term, be equal to the Fair Market Sales Value of the Aircraft, computed as of the first day of such Renewal Lease Term, and shall decline ratably on a monthly basis to the Fair Market Sales Value of the Aircraft as of the last day of such Renewal Lease Term.

(c) Any Fair Market Sales Value of the Aircraft, for purposes of calculating Stipulated Loss Value and Termination Value amounts applicable during any such Renewal Lease Term, shall be determined 35 days after delivery of a Preliminary Notice by mutual agreement of Lessor and Lessee or, if they shall be unable to agree, by an appraisal in accordance with Section 17.4.

17.3 Purchase Option

17.3.1 Purchase Notice

(a) Subject to the terms and conditions of this Section 17.3, Lessee or its designee may elect to purchase the Aircraft, (A) on any Purchase Date, at a purchase price equal to the Fair Market Sales Value of the Aircraft, (B) on the EBO Date at a purchase price equal to the EBO Price or (C) provided there shall not have occurred and be continuing at the time of purchase a Specified Default or a Lease Event of Default, at any time following the occurrence of a Materially Adverse Tax Event at a purchase price equal to the Fair Market Sales Value of the Aircraft (or, if greater, the Termination Value thereof), determined as of the date of purchase.

(b) Lessee may exercise its option to purchase the Aircraft pursuant to clause (A), clause (B) or clause (C) of Section 17.3.1(a), by delivery of an irrevocable notice (a "Purchase Notice") to Lessor not less than
(i) in the case of Clause A, 90 days prior to the Purchase Date specified in such Purchase Notice, or (ii) in the case of Clause A, if a Renewal Lease Term of six months or less is then in effect, 20 days prior to the Purchase Date specified in such Purchase Notice, or (iii) in the case of Clause (B) of Sections 17.3.1(a) not less than 60 days prior to the EBO Date or (iv) in the case of Clause (C) of Section 17.3.1(a) at any time following a Materially Adverse Tax Event.

(c) Notwithstanding anything to the contrary in this Agreement or any other Operative Agreement:

(i) Lessee shall not be entitled to give any Purchase Notice in respect of any Purchase Date if it (x) has not delivered a Preliminary Notice or (y) has delivered a Renewal Notice for a Renewal Lease Term that would commence immediately following such Purchase Date.

(ii) If any purchase option is exercised, upon payment of the applicable purchase price any Rent otherwise due and payable on the date of purchase or thereafter with respect to such Aircraft shall not be due and payable.

(iii) At the election of the Lessee, any purchase option described in this Section 17.3 may be exercised by a designee of the Lessee.

(iv) The purchase option herein specified may be effected by the acquisition by Lessee of the Owner Participant's beneficial interest in the Aircraft.

17.3.2 Determination of Fair Market Sales Value

The Fair Market Sales Value of the Aircraft shall be determined not more than 35 days after delivery of a Preliminary Notice by mutual agreement of Lessor and Lessee or, if they shall be unable to agree, by an appraisal in accordance with Section 17.4.

17.3.3 Title

Upon full and final payment by Lessee of (a) the applicable purchase price of the Aircraft, (b) all unpaid Rent due and payable through and including the Purchase Date, EBO Date, or the date of Purchase under Clause (C) of Section 17.3.1(a), as the case may be and (c) all other amounts due and payable by Lessee under this Agreement, Lessor will transfer to Lessee title to the Aircraft in accordance with Section 4.5.

17.4 Appraisals

Whenever Fair Market Rental Value or Fair Market Sales Value of the Aircraft is required to be determined by an appraisal under this Section 17, Lessee and Lessor shall within 7 days after the expiration of the 35-day period referred to in Sections 17.2.2(b), 17.2.3.(c) and 17.3.2 appoint a mutually satisfactory Appraiser to conduct such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser then each shall promptly appoint a separate Appraiser and such Appraisers shall jointly determine such amount. If either Lessee or Lessor fails to so appoint an Appraiser, the determination of the single Appraiser appointed shall be final. If two Appraisers are appointed and within 7 days after the appointment of the latter of such two Appraisers, they cannot agree upon such amount, such two Appraisers shall, within 8 days after such latter appointment, appoint a third Appraiser and such amount shall be determined by such three Appraisers, who shall make their separate appraisals within 7 days following the appointment of the third Appraiser, and any determination so made shall be conclusive and binding upon Lessor and Lessee. If no such third Appraiser is appointed within such 8-day period, either Lessor or Lessee may apply to the American Arbitration Association to make such appointment, and both parties shall be bound by such appointment. If three Appraisers are appointed and the difference between the determination which is farther

from the middle determination and the middle determination is more than 125% of the difference between the middle determination and the third determination, then such farther determination shall be excluded, the remaining two determinations shall be averaged and such average shall be final and binding upon Lessor and Lessee. Otherwise, the average of all three determinations shall be final and binding upon Lessor and Lessee. The fees and expenses of all such Appraisers and such appraisal procedure shall be borne equally by Lessee and Lessor, provided that if Lessee elects not to renew this Lease or purchase the Aircraft following the conclusion of such appraisal, Lessee shall pay all expenses of such appraisal. The foregoing appraisal procedure shall in any event be completed no less than 97 days prior to the Scheduled Expiration Date or Renewal Term Expiration Date, or, if a Renewal Lease Term of six months or less is then in effect, no less than 35 days before the end of such Renewal Lease Term. It is understood that if such appraisal process shall not have been completed by such time due to any delays or lateness caused by Lessor with respect to the time constraints set forth in this Section 17, then the notice requirements for the delivery by Lessee of any Renewal Notice under Section 17.2.1(a) or any Purchase Notice under Section 17.3.1(b) shall each be reduced from their present number by the same number of days as the completion of the appraisal procedure shall have been delayed in each case past such 97-day time limit.

SECTION 18. MISCELLANEOUS

18.1 Amendments

No provision of this Agreement may be amended, supplemented, waived, modified, discharged, terminated or otherwise varied orally, but only by an instrument in writing that specifically identifies the provision of this Agreement that it purports to amend, supplement, waive, modify, discharge, terminate or otherwise vary and is signed by Lessor and Lessee. Each such amendment, supplement, waiver, modification, discharge, termination or variance shall be effective only in the specific instance and for the specific purpose for which it is given. No provision of this Agreement shall be varied or contradicted by oral communication, course of dealing or perform-

ance or other manner not set forth in an agreement, document or instrument in writing and signed by Lessor and Lessee.

18.2 Severability

If any provision hereof shall be held invalid, illegal or unenforceable in any respect in any jurisdiction, then, to the extent permitted by Law (a) all other provisions hereof shall remain in full force and effect in such jurisdiction and (b) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. If, however, any Law pursuant to which such provisions are held invalid, illegal or unenforceable may be waived, such Law is hereby waived by the parties hereto to the full extent permitted, to the end that this Agreement shall be deemed to be a valid and binding agreement in all respects, enforceable in accordance with its terms.

18.3 Third-Party Beneficiary

This Agreement is not intended to, and shall not, provide any person not a party hereto (other than Mortgagee, the Participants, the Indenture Indemnitees and the Persons referred to in Section 4.6) with any rights of any nature whatsoever against either of the parties hereto, and no person not a party hereto (other than Mortgagee, the Participants, the Indenture Indemnitees and the Persons referred to in Section 4.6) shall have any right, power or privilege in respect of, or have any benefit or interest arising out of, this Agreement.

18.4 Reproduction of Documents

This Agreement, all annexes, schedules and exhibits hereto and all agreements, instruments and documents relating hereto, including, without limitation (a) consents, waivers and modifications that may hereafter be executed and (b) financial statements, certificates and other information previously or hereafter furnished to any party hereto, may be reproduced by such party by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process, and such party may destroy any original documents so reproduced. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such party in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction likewise is admissible in evidence.

18.5 Counterparts

This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

18.6 Notices

Unless otherwise expressly permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers and other communications required or permitted to be made, given, furnished or filed hereunder shall be in writing (it being understood that the specification of a writing in certain instances and not in others does not imply an intention that a writing is not required as to the latter), shall refer specifically to this Agreement and shall be personally delivered, sent by facsimile or telecommunication transmission (which in either case provides written confirmation to the sender of its delivery), sent by registered mail or certified mail, return receipt requested, postage prepaid, or sent by overnight courier service, in each case to the respective address or facsimile number set forth for such party in Schedule 1 to the Participation Agreement, or to such other address or number as either party hereto may hereafter specify by notice to the other party hereto. Each such notice, request, demand, authorization, direction, consent, waiver or other communication shall be effective when received or, if made, given, furnished or filed (a) by facsimile or telecommunication transmission, when confirmed, or (b) by registered or certified mail, three Business Days after being deposited, properly addressed, with the U.S. Postal Service.

18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.

(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION,

SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE ADDRESS SET FORTH PURSUANT TO SECTION 18.6. EACH PARTY HERETO HEREBY AGREES THAT SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 18.7(c), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON.

(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS.

(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.

18.8 No Waiver

No failure on the part of Lessor to exercise, and no delay by Lessor in exercising, any of its rights, powers, remedies or privileges under this Agreement or provided at Law, in equity or otherwise shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach hereof or default hereunder or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof by Lessor or the exercise of any other right, power, remedy or privilege by Lessor. No notice to or demand on Lessee in any case shall, unless otherwise required under this Agreement, entitle Lessee to any other or further notice or demand in similar or other circumstances

or constitute a waiver of the rights of Lessor to any other or further action in any circumstances without notice or demand.

18.9 Entire Agreement

This Agreement, together with the other Operative Agreements, on and as of the date hereof constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and all prior or contemporaneous understandings or agreements, whether written or oral, between the parties hereto with respect to such subject matter are hereby superseded in their entireties.

[This space intentionally left blank.]

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

FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual
capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement

By: /s/ Greg A. Hawley
    -------------------------------------
    Name:  Greg A. Hawley
    Title: Vice President

ATLAS AIR, INC.,
as Lessee

By: _____________________________________
Name:
Title:

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

FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual
capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement

By: _____________________________________
Name:
Title:

ATLAS AIR, INC.,
as Lessee

By: /s/ Stephen C. Nevin
    -------------------------------------
    Name:  Stephen C. Nevin
    Title: Vice President - Finance &
           Chief Financial Officer

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

FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual
capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement

By: /s/ Greg A. Hawley
    -------------------------------------
    Name:  Greg A. Hawley
    Title: Vice President

ATLAS AIR, INC.,
as Lessee

By: _____________________________________
Name:
Title:

Receipt of this original counterpart of the foregoing Lease Agreement is hereby acknowledged on this 29th day of July, 1998.

WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Mortgagee

By: _____________________________________
Name:
Title:

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

FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual
capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement

By: _____________________________________
Name:
Title:

ATLAS AIR, INC.,
as Lessee

By: /s/ Stephen C. Nevin
    -------------------------------------
    Name:  Stephen C. Nevin
    Title: Vice President - Finance &
           Chief Financial Officer

Receipt of this original counterpart of the foregoing Lease Agreement is hereby acknowledged on this 29th day of July, 1998.

WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Mortgagee

By: _____________________________________
Name:
Title:

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

FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual
capacity, except as expressly
provided herein, but solely as Owner
Trustee under the Trust Agreement

By: _____________________________________
Name:
Title:

ATLAS AIR, INC.,
as Lessee

By: _____________________________________
Name:
Title:

Receipt of this original counterpart of the foregoing Lease Agreement is hereby acknowledged on this 29th day of July, 1998.

WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Mortgagee

By: /s/ Patricia A. Evans
    -------------------------------------
    Name:  Patricia A. Evans
    Title: Financial Services Officer

Exhibit A - Lease Supplement Lease Agreement

LEASE SUPPLEMENT NO.___

LEASE SUPPLEMENT No. __, dated ________, 199_, between First Security Bank, National Association, a national banking association, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement _____, dated as of ___________, 1998, with the Owner Participant named therein (such Owner Trustee, in its capacity as such Owner Trustee being herein called "Lessor"), and ATLAS AIR, INC., a Delaware corporation, as Lessee ("Lessee").

Lessor and Lessee have heretofore entered into that certain Lease Agreement______, dated as of ______________, relating to one Boeing Model __________ aircraft (herein called the "Lease" and the defined terms therein being hereinafter used with the same meanings). The Lease provides for the execution and delivery of this Lease Supplement for the purpose of leasing the Airframe and Engines under the Lease as and when delivered by Lessor to Lessee in accordance with the terms thereof.

The Lease relates to the Airframe and Engines described below, and a counterpart of the Lease to which this Lease Supplement is attached and of which this Lease Supplement is a part, is being filed for recordation on the date hereof with the Federal Aviation Administration as one document.

NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, Lessor and Lessee hereby agree as follows:

1. Lessee has been duly authorized by Lessor to accept, and does hereby irrevocably accept on behalf of Lessor delivery of the Aircraft from Airframe Manufacturer under, and for all purposes of, the Aircraft Bill of Sale, the Participation Agreement and the Purchase Agreement Assignment.

2. Lessor hereby delivers and leases to Lessee under the Lease and Lessee hereby accepts and leases from Lessor under the Lease the following described Boeing 747-47UF aircraft (the "Aircraft"), which Aircraft as of the date hereof consists of the following components:

(i) Airframe: U.S. Registration No. N491MC; manufacturer's serial no. 29252; and

(ii) Engines: four (4) GE CF 6-80C2B1F engines bearing, respectively, manufacturer's serial nos. 704-692, 704-693, 704-694 and 704-695 (each of which engines has 750 or more rated takeoff horsepower or the equivalent of such horsepower).

3. The Delivery Date of the Aircraft is the date of this Lease Supplement set forth in the opening paragraph hereof.

4. Lessee hereby confirms to Lessor that Lessee has duly and irrevocably accepted the Aircraft under and for all purposes hereof, of the Lease and of the other Lessee Operative Agreements.

5. All of the terms and provisions of this Lease Supplement are hereby incorporated by reference in the Lease to the same extent as if fully set forth therein.

6. This Lease Supplement 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.

7. To the extent, if any, that this Lease Supplement 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 Supplement may be created through the transfer or possession of any counterpart other than the original executed counterpart, which shall be identified as the counterpart containing the receipt therefor executed by the Mortgagee on the signature page thereof.

[This space intentionally left blank.]

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

FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its
individual capacity, except
as expressly provided herein,
but solely as Owner Trustee
under the Trust Agreement

By: ____________________________
Name:
Title:

ATLAS AIR, INC.,
as Lessee

By: ____________________________
Name:
Title:

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

FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its
individual capacity, except
as expressly provided herein,
but solely as Owner Trustee
under the Trust Agreement

By: ____________________________
Name:
Title:

ATLAS AIR, INC.,
as Lessee

By: ____________________________
Name:
Title:

Receipt of this original counterpart of the foregoing Lease Supplement is hereby acknowledged on this ___ day of ___________, ____________.

WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Mortgagee

By: ____________________________
Name:
Title:

(FINOVA)

ANNEX A
TO LEASE FINANCING AGREEMENTS

DEFINITIONS

GENERAL PROVISIONS

(a) In each Operative Agreement, unless otherwise expressly provided, a reference to:

(i) each of "Lessee," "Lessor," "Loan Participant," "Owner Trustee," "Owner Participant," "Mortgagee," "Note Holder" or any other person includes, without prejudice to the provisions of any Operative Agreement, any successor in interest to it and any permitted transferee, permitted purchaser or permitted assignee of it;

(ii) words importing the plural include the singular and words importing the singular include the plural;

(iii) any agreement, instrument or document, or any annex, schedule or exhibit thereto, or any other part thereof, includes, without prejudice to the provisions of any Operative Agreement, that agreement, instrument or document, or annex, schedule or exhibit, or part, respectively, as amended, modified or supplemented from time to time in accordance with its terms and in accordance with the Operative Agreements, and any agreement, instrument or document entered into in substitution or replacement therefor (including, without limitation, in the case of each Pass Through Trust Agreement, the "Related Pass Through Trust Agreement" as defined therein);

(iv) any provision of any Law includes any such provision as amended, modified, supplemented, substituted, reissued or reenacted prior to the Delivery Date, and thereafter from time to time;

(v) the words "Agreement," "this Agreement," "hereby," "herein," "hereto," "hereof" and "hereunder" and words of similar import when used in any Operative Agreement refer to such Operative Agreement as a whole and not to any particular provision of such Operative Agreement;

(vi) the words "including," "including, without limitation," "including, but not limited to," and terms or phrases of similar import when used in any Operative Agreement, with respect to any matter or thing, mean including, without limitation, such matter or thing; and

(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any Operative Agreement, or in any annex thereto, is a reference to a section of, or an exhibit, an annex or a schedule to, such Operative Agreement or such annex, respectively.

(b) Each exhibit, annex and schedule to each Operative Agreement is incorporated in, and shall be deemed to be a part of, such Operative Agreement.

(c) Unless otherwise defined or specified in any Operative Agreement, all accounting terms therein shall be construed and all accounting determinations thereunder shall be made in accordance with GAAP.

(d) Headings used in any Operative Agreement are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, such Operative Agreement.

DEFINED TERMS

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

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

"ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or Mortgagee, as the case may be, actual knowledge of a responsible officer in the Corporate Trust Department or the Corporate Trust Office, respectively, and (b) as it applies to Owner Participant or Lessee, actual knowledge of a Vice President or more senior officer of Owner Participant or Lessee, respectively, or any other officer of Owner Participant or Lessee, respectively, having responsibility for the transactions

contemplated by the Operative Agreements; PROVIDED that each of Lessee, Owner Participant, Owner Trustee and Mortgagee shall be deemed to have "Actual Knowledge" of any matter as to which it has received notice from Lessee, Owner Participant, any Note Holder, Owner Trustee or Mortgagee, such notice having been given pursuant to Section 15.7 of the Participation Agreement.

"ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.

"ADVERSE CHANGE IN TAX LAW" means (a) for Lessee, a Change in Tax Law that Lessee regards as one that could adversely affect the economic consequences of the transactions contemplated by the Participation Agreement and the other Operative Agreements that are anticipated by Lessee or (b) for Owner Participant, a Change in Tax Law that, in the reasonable judgment of Owner Participant, would adversely affect its Net Economic Return or that would adversely affect any of the following tax assumptions:

(i) For federal income tax purposes, the Lease will be a "true" lease for purposes of the Code and Owner Participant will be treated as the owner of the Aircraft and Lessee will be treated as the lessee thereof;

(ii) For federal income tax purposes, Owner Participant will be entitled to depreciation or cost recovery deductions with respect to Lessor' s Cost of the Aircraft including amortization of Transaction Expenses; and

(iii) For federal income tax purposes, Owner Participant will be entitled to deductions for interest payments on the Equipment Notes.

"AFFILIATE" means, with respect to any person, any other person directly or indirectly controlling, controlled by or under common control with such person. For purposes of this definition, "control" means the power, directly or indirectly, to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities or by contract or otherwise and "controlling," "controlled by" and "under common control with" have correlative meanings.

"AIRCRAFT" means, collectively, the Airframe and Engines.

"AIRCRAFT BILL OF SALE" means the full warranty bill of sale covering the Aircraft delivered by Airframe Manufacturer to Owner Trustee on the Delivery Date.

"AIRCRAFT DOCUMENTS" means all technical data, manuals and log books, and all inspection, modification and overhaul records and other service, repair, maintenance and technical records that are required by the FAA (or the relevant Aviation Authority), to be maintained with respect to the Aircraft, Airframe, Engines or Parts; and such term shall include all additions, renewals, revisions and replacements of any such materials from time to time made, or required to be made, by the FAA (or other Aviation Authority) regulations, and in each case in whatever form and by whatever means, or medium (including, without limitation, microfiche, microfilm, paper or computer disk) such materials may be maintained or retained by or on behalf of Lessee (PROVIDED, that all such materials shall be maintained in, or are contemporaneously translated into, the English language).

"AIRFRAME" means (a) the aircraft (excluding Engines or engines from time to time installed thereon) manufactured by Airframe Manufacturer and identified by Airframe Manufacturer's model number, United States registration number and Airframe Manufacturer's serial number set forth in Lease Supplement No. 1 and any Replacement Airframe and (b) any and all Parts incorporated or installed in or attached or appurtenant to such airframe, and any and all Parts removed from such airframe, unless title to such Parts shall not be vested in Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon substitution of a Replacement Airframe under and in accordance with the Lease, such Replacement Airframe shall become subject to the Lease and shall be the "Airframe" for all purposes of the Lease and the other Operative Agreements and thereupon the Airframe for which the substitution is made shall no longer be subject to the Lease, and such replaced Airframe shall cease to be the "Airframe."

"AIRFRAME MANUFACTURER" means The Boeing Company, a Delaware corporation.

"AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as of any Payment Date, the amount determined by multiplying the percentage set forth opposite such Payment Date on the Amortization Schedule by the Original Amount of such Equipment Note.

"AMORTIZATION SCHEDULE" means, with respect to each Equipment Note, the amortization schedule for such Equipment Note delivered pursuant to Section 2.02 of the Trust Indenture.

"APPRAISER" means a firm of internationally recognized, independent aircraft appraisers.

"AVERAGE LIFE DATE" for any Equipment Note shall be the date which follows the time of determination by a period equal to the Remaining Weighted Average Life of such Equipment Note. "Remaining Weighted Average Life" on a given date with respect to any Equipment Note shall be the number of days equal to the quotient obtained by dividing (a) the sum of each of the products obtained by multiplying (i) the amount of each then remaining scheduled payment of principal of such Equipment Note by (ii) the number of days from and including such determination date to but excluding the date on which such payment of principal is scheduled to be made, by (b) the then outstanding principal amount of such Equipment Note.

"AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to be, and is, registered with any other Government Entity under and in accordance with Section 7.1.2 of the Lease, such other Government Entity.

"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Section 101 ET SEQ.

"BASE LEASE TERM" means the period beginning on and including the Commencement Date and ending on the Scheduled Expiration Date, or such earlier date on which the Term terminates in accordance with the provisions of the Lease.

"BASIC RENT" means the rent payable for the Aircraft pursuant to
Section 3.2.1(a) of the Lease.

"BENEFICIAL OWNER" when used in relation to an Equipment Note means a Person that, by reason of direct ownership, contract, share ownership or otherwise, has the right to receive or participate in receiving, directly or indirectly, payments of principal, interest or Make-Whole Amount in respect of such Equipment Note; provided that a Person shall not be deemed to be a Beneficial Owner of an Equipment Note solely because another Person in which such a Person owns common stock or other equity securities is a registered holder or Beneficial Owner of such Equipment Note unless such Person is an Affiliate of such other Person.

"BILLS OF SALE" means the FAA Bill of Sale and the Aircraft Bill of Sale.

"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required by law to close in New York, New York, Denver, Colorado, Salt Lake City, Utah, Wilmington, Delaware, or Chicago, Illinois.

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

"CHANGE IN TAX LAW" means any amendment, modification, addition or change in or to the provisions of the Code, any other federal tax statutes, the Treasury Regulations promulgated thereunder, the Internal Revenue Service Revenue Rulings, Revenue Procedures or other administrative or judicial interpretations of the Code or the federal tax statutes that affects the tax assumptions set forth in the Tax Indemnity Agreement or otherwise affects Owner Participant's anticipated Net Economic Return.

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

"CLASS A PASS THROUGH TRUST" means the Atlas Air Pass Through Trust 1998-1A.

"CLASS B PASS THROUGH TRUST" means the Atlas Air Pass Through Trust 1998-1B.

"CLASS C PASS THROUGH TRUST" means the Atlas Air Pass Through Trust 1998-1C.

"CLOSING" means the closing of the transactions contemplated by the Participation Agreement on the Delivery Date.

"CLOSING DATE" means the date on which the Closing occurs.

"CODE" means the Internal Revenue Code of 1986, as amended; PROVIDED, that when used in relation to a Plan, "Code" shall mean the Internal Revenue Code of 1986 and any regulations and rulings issued thereunder, all as amended and in effect from time to time.

"COMMENCEMENT DATE" is defined in Schedule 1 to the Lease.

"COMMITMENT" means, for any Participant, the amount of its participation in the payment of Lessor's Cost.

"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the Participation Agreement.

"CONSENT AND AGREEMENT" means the Manufacturer Consent and Agreement dated as of even date with the Participation Agreement, of Airframe Manufacturer.

"CONTINUOUS STAY PERIOD" is defined in Section 4.04(a) of the Trust Indenture.

"CORPORATE TRUST DEPARTMENT" or "TRUST OFFICE" means the principal corporate trust office of Owner Trustee located from time to time at Owner Trustee's address for notices under the Participation Agreement or such other office at which Owner Trustee's corporate trust business shall be administered which Owner Trustee shall have specified by notice in writing to Lessee, Mortgagee and each Note Holder.

"CORPORATE TRUST OFFICE" means the corporate trust administration office of WTC located at One Rodney Square, 1100 North Market Street, Wilmington, Delaware 19890 or, in the case of any replacement Mortgagee, the principal office of Mortgagee located at Mortgagee's address for notices under the Participation Agreement or such other office at which Mortgagee's corporate trust business shall be administered which Mortgagee shall have specified by notice in writing to Lessee, Owner Trustee and each Note Holder.

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

"CUT-OFF DATE" is defined in Section 1.01 of the Pass Through Trust Agreements.

"DEBT" means any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction or any other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments.

"DEBT RATE" means, with respect to (i) any Series, the rate per annum specified for such Series under the heading "Interest Rate" in Schedule I to the Trust Indenture and (ii) any other purpose, with respect to any period, the weighted average interest rate per annum during such period borne by the outstanding Equipment Notes, excluding any interest payable at the Payment Due Rate.

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

"DELAYED DELIVERY DATE" means a delayed Delivery Date notified to each Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.3 of the Participation Agreement, which delayed Delivery Date shall be a Business Day not later than the Commitment Termination Date.

"DELIVERY DATE" means the Business Day specified in Lease Supplement No. 1 as the date on which, among other things, the Aircraft is delivered to and accepted by Lessee under the Lease and the Closing occurs.

"DELIVERY PERIOD TERMINATION DATE" is defined in Section l(b) of the Note Purchase Agreement.

"DEPOSIT AGREEMENT" means each of the three Deposit Agreements between the Depositary and the Escrow Agent, dated as of the Issuance Date, each of which relates to one of the Pass Through Trusts, PROVIDED that, for purposes of any obligation of Lessee, no amendment, modification or supplement to, or substitution or replacement of, any such Deposit Agreement shall be effective unless consented to by Lessee.

"DEPOSITARY" means ABN-AMRO Bank N.V., acting through its Chicago Branch, as Depositary under each Deposit Agreement.

"DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency of the United States.

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

"EBO DATE" is defined in Schedule 1 to the Lease.

"EBO PRICE" is defined in Schedule 1 to the Lease.

"ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.

"ENGINE" means (a) each of the engines manufactured by Engine Manufacturer and identified by Engine Manufacturer's model number and Engine Manufacturer's serial number set forth in Lease Supplement No. 1 and originally installed on the Air-frame on delivery thereof pursuant to the Lease, and any Replacement Engine, in any case whether or not from time to time installed on such Airframe or installed on any other airframe or aircraft, and (b) any and all Parts incorporated or installed in or attached or appurtenant to such engine, and any and all Parts removed from such engine, unless title to such Parts shall not be vested in Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon substitution of a Replacement Engine under and in accordance with the Lease, such Replacement Engine shall become subject to the Lease and shall be an "Engine" for all purposes of the Lease and the other Operative Agreements and thereupon the Engine for which the substitution is made shall no longer be subject to the Lease, and such replaced Engine shall cease to be an "Engine."

"ENGINE CONSENT AND AGREEMENT" means the Engine Manufacturer Consent and Agreement dated as of even date with the Participation Agreement, of Engine Manufacturer.

"ENGINE MANUFACTURER" means General Electric Company, a New York corporation.

"EQUIPMENT NOTE REGISTER" is defined in Section 2.07 of the Trust Indenture.

"EQUIPMENT NOTES" means and includes any equipment notes issued under the Trust Indenture in the form specified in

Section 2.01 thereof (as such form may be varied pursuant to the terms of the Trust Indenture) and any Equipment Note issued under the Trust Indenture in exchange for or replacement of any Equipment Note.

"ERISA" means the Employee Retirement Income Security Act of 1974 and any regulations and rulings issued thereunder all as amended and in effect from time to time.

"ESCROW AGENT" means First Security Bank, National Association, as Escrow Agent under each of the Escrow Agreements.

"ESCROW AGREEMENT" means each of the three Escrow and Paying Agent Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers of the Pass Through Certificates named therein and one of the Pass Through Trustees, dated as of the Issuance Date, each of which relates to one of the Pass Through Trusts, PROVIDED that, for purposes of any obligation of Lessee, no amendment, modification or supplement to, or substitution or replacement of, any such Escrow Agreement shall be effective unless consented to by Lessee.

"EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.

"EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any Engine, any of the following circumstances, conditions or events with respect to such property, for any reason whatsoever:

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

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

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

(d) any seizure, condemnation, confiscation, taking or requisition of title to or use of such property (other than a requisition of use by the government of the United

States) for a period exceeding 180 consecutive days or, if earlier, at the end of the Term;

(e) any seizure, condemnation, confiscation, taking or requisition of use of such property by the government of the United States that continues until the 30th day after the last day of the Term, PROVIDED that no such Event of Loss shall exist if Lessor shall have elected not to treat such event as an Event of Loss pursuant to Section 10.6 of the Lease; and

(f) as a result of any law, rule, regulation, order or other action by the Aviation Authority or by any Government Entity of the government of registry of the Aircraft or by any Government Entity otherwise having jurisdiction over the operation or use of the Aircraft, the use of such property in the normal course of Lessee's business of cargo air transportation is prohibited for a period of 180 consecutive days, unless Lessee, prior to the expiration of such 180 day period, shall have undertaken and shall be diligently carrying forward such steps as may be necessary or desirable to permit the normal use of such property by Lessee and such normal use shall have been resumed prior to the expiration of a period of two consecutive years (or beyond the end of the Term), PROVIDED that no Event of Loss shall be deemed to have occurred after the expiration of such two-year period if (A) such prohibition has been applicable to Lessee's entire U.S. fleet of such property and (B) prior to the expiration of such two-year period, Lessee shall have conformed at least one Boeing 747-47UFF aircraft (but not necessarily an Aircraft) to the requirements of any such law, rule, regulation, order or other action and commenced regular commercial use of the same in such jurisdiction and
(C) Lessee shall be diligently carrying forward, in a manner which does not discriminate against such property in so conforming such property, steps which are necessary or desirable to permit the normal use of the Aircraft by Lessee and such normal use shall have resumed prior to the expiration of a period of three years or such use shall be prohibited at the expiration of the Term.

"EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by Lessee to or in respect of Owner Participant, or Owner Trustee in its individual capacity, their respective Affiliates, successors and permitted assigns and their directors, officers, employees, servants and agents pursuant to Sections 9 and 11 of the Participation Agreement or any corresponding pay-

ments under the Lease, (ii) proceeds of public liability insurance paid or payable as a result of insurance claims made, or losses suffered, by Owner Trustee in its individual capacity or by Owner Participant, that are payable directly to Owner Trustee in its individual capacity, or Owner Participant, respectively, for their own account, (iii) proceeds of insurance maintained with respect to the Aircraft by Owner Participant or any Affiliate thereof for its or their own account or benefit (whether directly or through Owner Trustee) and permitted under Section 11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity Agreement by Lessee whether or not denominated as Supplemental Rent, (v) any Transaction Expenses paid or payable by the Lessee to the Owner Trustee (to the extent for its sole benefit) or the Owner Participant pursuant to the Lease or the Participation Agreement, (vi) any amount payable to the Owner Participant by any transferee as the purchase price of the Owner Participant's interest in the Trust Estate, (vii) any interest that pursuant to the Operative Agreements may from time to time accrue in respect of any of the amounts described in clauses (i) through (vi) above, (viii) any right to enforce, against the primary obligor or any guarantor or similar party, the payment of any amount described in clauses (i) through (vii) above (PROVIDED, that the rights referred to in this clause (viii) shall not be deemed to include the exercise of any remedies provided for in the Lease other than the right to sue for specific performance of any covenant to make such payment or to sue for damages in respect of the breach of any such covenant) and (ix) any right to exercise any election or option or make any decision or determination, or to give or receive any notice, consent, waiver or approval, or to take any other action in respect of, but in each case, only to the extent relating to, any Excluded Payments.

"EXCESS AMOUNT" has the meaning specified in Section 2.03(b) of the Indenture.

"EXPENSES" means any and all liabilities, obligations, losses, damages, settlements, penalties, claims, actions, suits, costs, expenses and disbursements (including, without limitation, reasonable fees and disbursements of legal counsel, accountants, appraisers, inspectors or other professionals, and costs of investigation).

"FAA" means the Federal Aviation Administration of the United States or any Government Entity succeeding to the functions of such Federal Aviation Administration.

"FAA BILL OF SALE" means a bill of sale for the Aircraft on AC Form 8050-2 (or such other form as may be approved by the FAA) delivered to Owner Trustee on the Delivery Date by Airframe Manufacturer.

"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Trust Indenture, the Trust Agreement, the initial Trust Indenture Supplement, the FAA Bill of Sale and an application for registration of the Aircraft with the FAA in the name of Owner Trustee.

"FAA REGULATIONS" means the Federal Aviation Regulations issued or promulgated pursuant to the Act from time to time.

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

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

"FINANCING STATEMENTS" means, collectively, UCC-1 (and, where appropriate, UCC-3) financing statements (a) covering the Trust Indenture Estate, by Owner Trustee, as debtor, showing Mortgagee as secured party, for filing in Utah and each other jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien on the Trust Indenture Estate and (b) covering the Lease and the Aircraft, as a precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor and Mortgagee as assignee of Owner Trustee, for filing in Colo-

rado and each other jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably desirable.

"FIRST SECURITY" means First Security Bank, a national banking association, not in its capacity as Owner Trustee under the Trust Agreement, but in its individual capacity.

"FITCH" means Fitch IBCA, Inc.

"FUNDING DATE" has the meaning specified in Section 1(b) of the Note Purchase Agreement.

"GAAP" means generally accepted accounting principles as set forth in the statements of financial accounting standards issued by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants, as such principles may at any time or from time to time be varied by any applicable financial accounting rules or regulations issued by the SEC and, with respect to any person, shall mean such principles applied on a basis consistent with prior periods except as may be disclosed in such person's financial statements.

"GOVERNMENT ENTITY" means (a) any federal, state, provincial or similar government, and any body, board, department, commission, court, tribunal, authority, agency or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative or regulatory functions of such government or (b) any other government entity having jurisdiction over any matter contemplated by the Operative Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements.

"GTA" means the General Terms Agreement as defined in the Purchase Agreement Assignment.

"INDEMNITEE" means (i) First Security and Owner Trustee, (ii) WTC, Pass Through Trustee, Subordination Agent and Mortgagee, (iii) each separate or additional trustee appointed pursuant to the Trust Agreement or the Trust Indenture, (iv) each Participant, (v) the Trust Estate and the Trust Indenture Estate, (vi) each Affiliate of the persons described in clauses (i) through
(iv), inclusive, (vii) the respective directors, officers, employees, agents and servants of each of the persons described in clauses (i) through (iv) inclusive and in clause (vi), (viii) the successors and permitted assigns of the persons described in clauses (i) through (iv), inclusive, and in clauses (vi) and (vii) and (ix) the Pass Through Indemnitees;

PROVIDED THAT the Pass Through Indemnitees are Indemnitees only for purposes of
Section 9.1 of the Participation Agreement. If any Indemnitee is Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of either thereof, such Person shall be an Indemnitee only in its capacity as Owner Participant, Loan Participant or Note Holder.

"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Engine Consent and Agreement, the Bills of Sale, each Permitted Sublease and any other contract, agreement or instrument from time to time assigned or pledged under the Trust Indenture.

"INDENTURE DEFAULT" means any condition, circumstance, act or event that, with the giving of notice, the lapse of time or both, would constitute an Indenture Event of Default.

"INDENTURE EVENT OF DEFAULT" means any one or more of the conditions, circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.

"INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each separate or additional trustee appointed pursuant to the Trust Indenture, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) each Pass Through Trustee, (vi) the Paying Agent, (vii) the Escrow Agent and (viii) each of the respective directors, officers, employees, agents and servants of each of the persons described in clauses (i) through (vii) inclusive above.

"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Providers and the Subordination Agent, dated as of the Issuance Date, PROVIDED that, for purposes of any obligation of Lessee, no amendment, modification or supplement to, or substitution or replacement of, such Intercreditor Agreement shall be effective unless consented to by Lessee.

"IRS" means the Internal Revenue Service of the United States or any Government Entity succeeding to the functions of such Internal Revenue Service.

"ISSUANCE DATE" means February 9, 1998.

"LAW" means (a) any constitution, treaty, statute, law, decree, regulation, order, rule or directive of any Gov-

ernment Entity, and (b) any judicial or administrative interpretation or application of, or decision under, any of the foregoing.

"LEASE" or "LEASE AGREEMENT" means the Lease Agreement, dated as of even date with the Participation Agreement, between Owner Trustee and Lessee.

"LEASE DEFAULT" means any condition, circumstance, act or event that, with the giving of notice, the lapse of time or both, would constitute a Lease Event of Default.

"LEASE EVENT OF DEFAULT" means any one or more of the conditions, circumstances, acts or events set forth in Section 14 of the Lease.

"LEASE SUPPLEMENT" means a supplement to the Lease, in the form of Exhibit A to the Lease.

"LEASE SUPPLEMENT NO. 1" means the initial Lease Supplement, dated the Delivery Date.

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

"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date.

"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or other user or person in possession of the Aircraft, Airframe or an Engine with or without color of right, or any Affiliate of any of the foregoing (excluding any Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person using or claiming any rights with respect to the Aircraft, Airframe or an Engine directly by or through any of the persons in this parenthetical, but not excluding any Person claiming directly or indirectly through or under the Lease).

"LESSEE'S ADVISOR" is defined in Schedule 3 to the Participation Agreement.

"LESSOR" means Owner Trustee in its capacity as lessor under the Lease.

"LESSOR LIEN" means, with respect to any person and in respect of any property (including, without limitation, the Trust Estate, the Trust Indenture Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any payments, any Lien on such property or payments which (a) arises from claims against such person (if such person is a trustee, whether in its individual capacity or in its capacity as a trustee) not related to any of the transactions contemplated by the Operative Agreements, (b) results from acts or omissions of such person (if such person is a trustee, whether in its individual capacity or in its capacity as a trustee) in violation of such person's obligations under any of the terms of the Operative Agreements, or not related to the transactions contemplated by the Operative Agreements, (c) is imposed as a result of Taxes against such person (if such person is a trustee, whether in its individual capacity or in its capacity as a trustee) or any of its Affiliates not required to be indemnified by Lessee under the Participation Agreement, or (d) claims against such person arising out of any transfer by such person of its interest in the Aircraft, the Trust Estate or the Operative Agreements, other than a Transfer permitted by the terms of the Operative Agreements or pursuant to the exercise of remedies set forth in Section 15 of the Lease.

"LESSOR'S COST" means the aggregate of the amounts paid by Owner Trustee to Airframe Manufacturer and Lessee to purchase the Aircraft pursuant to the Purchase Agreement Assignment and the Participation Agreement, and is designated by Dollar amount in Schedule 3 to the Participation Agreement.

"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance, lease or security interest affecting the title to or any interest in property.

"LIQUIDITY FACILITIES" means (i) the Revolving Credit Agreement between the Subordination Agent, as borrower, and ABN-AMRO Bank, N.V., Chicago Branch, with respect to the Class A Pass Through Trust and (ii) the Revolving Credit Agreement between the Subordination Agent, as borrower, and Morgan Stanley Capital Services, Inc. with respect to the Class B Pass Through Trust and the Class C Pass Through Trust, each dated as of the Issuance Date, PROVIDED that, for purposes of any obligation of Lessee, no amendment, modification or supplement to, or substitution or replacement of, any such Liquidity Facility shall be effective unless consented to by Lessee.

"LIQUIDITY PROVIDER" means (i) ABN-AMRO Bank, N.V., Chicago Branch, as the Class A Liquidity Provider, and

(ii) Morgan Stanley Capital Services, Inc. as the Class B Liquidity Provider and the Class C Liquidity Provider (as such terms are defined in the Intercreditor Agreement) under the respective Liquidity Facilities, or any successor thereto.

"LOAN PARTICIPANTS" mean, until the Closing shall have been consummated, the Pass Through Trustees, and after the Closing shall have been consummated, each Note Holder.

"LOSS PAYMENT DATE" means the date on which payment is due pursuant to Section 10.1.2(a)(i) of the Lease.

"MAINTENANCE PROGRAM" is defined in Annex C to the Lease.

"MAJORITY IN INTEREST OF NOTE HOLDERS" means as of a particular date of determination, the holders of a majority in aggregate unpaid Original Amount of all Equipment Notes outstanding as of such date (excluding any Equipment Notes held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such party or any interests of Owner Trustee or Owner Participant therein by reason of subrogation pursuant to Section 4.03 of the Trust Indenture (unless all Equipment Notes then outstanding shall be held by Owner Trustee, Lessee, Owner Participant or any Affiliate of any thereof)); PROVIDED that for the purposes of directing any action or casting any vote or giving any consent, waiver or instruction hereunder any Note Holder of an Equipment Note or Equipment Notes may allocate, in such Note Holder's sole discretion, any fractional portion of the principal amount of such Equipment Note or Equipment Notes in favor of or in opposition to any such action, vote, consent, waiver or instruction.

"MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an amount (as determined by an independent investment banker of national standing) equal to the excess, if any, of (a) the present value of the remaining scheduled payments of principal and interest to maturity of such Equipment Note computed by discounting such payments on a semiannual basis on each Payment Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to the Treasury Yield over (b) the outstanding principal amount of such Equipment Note plus accrued interest to the date of determination. For purposes of determining the Make-Whole Amount, "Treasury Yield" means, at the date of determination with respect to any Equipment Note, the interest rate (expressed as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to

the semi-annual yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note and trading in the public securities markets either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in the public securities markets, (A) one maturing as close as possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Equipment Note is reported on the most recent H.15(519), such weekly average yield to maturity as published in such H.15(519) "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Amount shall be the third Business Day prior to the applicable payment or redemption date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable payment or redemption date.

"MANUFACTURER'S PURCHASE PRICE" means the amount required to be paid to the Airframe Manufacturer to purchase the Aircraft pursuant to the Purchase Agreement Assignment.

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

"MATERIALLY ADVERSE TAX EVENT" means any event (other than excessive foreign usage of the Aircraft) that makes it more likely than not that the Lessee will be required to indemnify any Indemnitee for Taxes under any of the Operative Agreements or the Owner Participant or any Tax Indemnitee under the Tax Indemnity Agreement, or both (but not for any loss of MACRS Deductions (as defined in the Tax Indemnity Agreement) as a result of foreign use, subleasing or reregistration of the Aircraft prior to the end of the Tax Attribute Period) (the determination of whether such event makes the foregoing more likely than not to be based upon a written opinion of independent tax counsel selected and compensated by Lessee and reasonably acceptable to Owner Participant to that effect, which opinion shall be addressed and delivered to both Lessee and Owner Par-

ticipant), provided that (i) the estimated aggregate of such indemnity payments (computed as a hypothetical adjustment of Basic Rent or, if applicable, Renewal Rent) over the then-remaining Term is equal to at least 5% of Basic Rent (and, if applicable, Renewal Rent) payable over the remaining Term, and (ii) future payments of the Taxes giving rise to the indemnity or indemnities will not be required if the Lessee purchases the Aircraft.

"MINIMUM LIABILITY INSURANCE AMOUNT" is defined in Schedule 1 to the Lease.

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

"MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.

"MORTGAGEE" means Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as loan trustee under the Trust Indenture.

"MORTGAGEE AGREEMENTS" means, collectively, the Participation Agreement, the Trust Indenture and each other agreement between Mortgagee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date.

"MORTGAGEE EVENT" means (i) in the event of a reorganization proceeding involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in such proceeding or the Lessee not assuming or agreeing to perform its obligations under the Lease, as contemplated under Section 1110, during the 60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any time after agreeing to perform or assuming such obligations, such trustee or the Lessee ceasing to perform such obligations with the result that the Continuous Stay Period comes to an end or (ii) either the Equipment Notes shall have become due and payable pursuant to Section 4.04(b) of the Trust Indenture or Mortgagee has taken action or notified Owner Trustee that it intends to take action to foreclose the Lien of the Trust Indenture or otherwise commence the exercise of any repossessory remedy in accordance with Section 4.04(a) of the Trust Indenture.

"NET ECONOMIC RETURN" means the Owner Participant's net after-tax yield utilizing the multiple investment sinking fund method of analysis and aggregate net after-tax cash flow,

computed on the basis of the same methodology and assumptions as were utilized by the initial Owner Participant in determining Basic Rent, Stipulated Loss Value percentages and Termination Value percentages, as of the Delivery Date, as such assumptions may be adjusted for events that have been the basis for adjustments to Basic Rent pursuant to Section 3.2.1(b) of the Lease or events that have given rise to indemnity payments pursuant to the Tax Indemnity Agreement; PROVIDED, that, if the initial Owner Participant shall have transferred its interest, Net Economic Return shall be calculated as if the initial Owner Participant had retained its interest; PROVIDED FURTHER, that, notwithstanding the preceding proviso, solely for purposes of Section 11 of the Participation Agreement and calculating any adjustments to Basic Rent, Stipulated Loss Values and Termination Values in connection with a refunding pursuant to such Section 11 at a time when Owner Participant is a transferee (other than an Affiliate of the initial Owner Participant), the after-tax yield (but not the after-tax cash flow) component of Net Economic Return shall be calculated on the basis of the methodology and assumptions utilized by the transferee Owner Participant as of the date on which it acquired its interest.

"NET PRESENT VALUE OF RENTS" is defined in Schedule 1 to the Lease.

"NET WORTH" means, for any person, the excess of its total assets over its total liabilities.

"NEW DEBT" means debt securities in an aggregate principal amount specified in the Refunding Information.

"NON-U.S. PERSON" means any Person other than a United States person, as defined in Section 7701(a)(30) of the Code.

"NOTE HOLDER" means at any time each registered holder of one or more Equipment Notes.

"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement, dated as of the Issuance Date, among Atlas Air, Inc., the Subordination Agent, the Escrow Agent, the Paying Agent and the Pass Through Trustee under each Pass Through Trust Agreement providing for, among other things, the issuance and sale of Equipment Notes.

"OFFICER'S CERTIFICATE" means, in respect of any party to the Participation Agreement, a certificate signed by the Chairman, the President, any Vice President (including

those with varying ranks such as Executive, Senior, Assistant or Staff Vice President), the Treasurer or the Secretary of such party.

"OPERATIVE AGREEMENTS" means, collectively, the Participation Agreement, the Trust Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Engine Consent and Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the initial Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity Agreement and the Equipment Notes.

"OPERATIVE INDENTURES" means each of the indentures under which notes have been issued and purchased by the Pass Through Trustees pursuant to the Note Purchase Agreement.

"OP JURISDICTION" is defined in Schedule 3 to the Participation Agreement.

"ORIGINAL AMOUNT." with respect to an Equipment Note, means the stated original principal amount of such Equipment Note and, with respect to all Equipment Notes, means the aggregate stated original principal amounts of all Equipment Notes.

"OWNER PARTICIPANT" means the person executing the Participation Agreement as "Owner Participant" or, if a second person becomes an "Owner Participant" pursuant to Section 10.1.1 of the Participation Agreement, both of such persons; PROVIDED that if an Owner Participant Transfers 100% of its interest to a successor Owner Participant, such transferring Owner Participant shall thereafter no longer be considered an "Owner Participant".

"OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation Agreement, the Tax Indemnity Agreement, the Trust Agreement and each other agreement between Owner Participant and any other party to the Participation Agreement relating to the Transactions, delivered on the Delivery Date.

"OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's Cost allocated to the Owner Participant in Schedule 2 to the Participation Agreement.

"OWNER TRUSTEE" means First Security Bank, National Association, a national banking association, not in its individual capacity, except as expressly provided in any Operative Agreement, but solely as Owner Trustee under the Trust Agreement.

"OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust Indenture, the initial Trust Indenture Supplement, the Equipment Notes, the Purchase Agreement Assignment, and each other agreement between Owner Trustee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date.

"PARTICIPANTS" means, collectively, Owner Participant and each Loan Participant and "Participant" means Owner Participant or a Loan Participant, individually.

"PARTICIPATION AGREEMENT" means the Participation Agreement dated as of the July 29, 1998 among Lessee, Owner Participant, Owner Trustee, the Pass Through Trustees, Subordination Agent and Mortgagee.

"PARTS" means all appliances, parts, components, instruments, appurtenances, accessories, furnishings, seats and other equipment of whatever nature (other than (a) Engines or engines, and (b) any items leased by Lessee from a third party other than Lessor)), that may from time to time be installed or incorporated in or attached or appurtenant to the Airframe or any Engine.

"PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements, the Note Purchase Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Liquidity Facilities and the Fee Letters referred to in Section 2.03 of each of the Liquidity Facilities, PROVIDED, that no amendment, modification or supplement to, or substitution or replacement of, any such Fee Letter shall be effective for purposes of any obligation of Lessee, unless consented to by Lessee.

"PASS THROUGH CERTIFICATES" means the pass through certificates issued by the Pass Through Trusts (and any other pass through certificates for which such pass through certificates may be exchanged).

"PASS THROUGH INDEMNITEES" means (i) the Subordination Agent, the Paying Agent, the Escrow Agent, the Liquidity Providers, the Depositary and the Pass Through Trustees, (ii) each Affiliate of a person described in the preceding clause (i), (iii) the respective directors, officers, employees, agents and servants of each of the persons described in the preceding clauses
(i) and (ii) and (iv) the successors and per-

mitted assigns of the persons described in the preceding clauses (i), (ii) and (iii).

"PASS THROUGH TRUST" means each of the three separate pass through trusts created under the Pass Through Trust Agreements.

"PASS THROUGH TRUST AGREEMENT" means each of the three separate Pass Through Trust Agreements, each dated as of the Issuance Date, by and between the Lessee and Pass Through Trustee.

"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware banking corporation, in its capacity as trustee under each Pass Through Trust Agreement.

"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement, the Pass Through Trust Agreements, the Note Purchase Agreement, the Deposit Agreements, the Escrow Agreements, and the Intercreditor Agreement.

"PAYMENT DATE" means each January 2 and July 2 during the Term, commencing with the first such date to occur after the Commencement Date.

"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.

"PAYMENT PERIOD" means each of the consecutive semiannual periods during the Term ending on a Payment Date, the first such period commencing on and including the Commencement Date.

"PAYING AGENT" means Wilmington Trust Company, as Paying Agent under each of the Escrow Agreements.

"PERMITTED AIR CARRIER" means (i) any manufacturer of airframes or aircraft engines, or any Affiliate of a manufacturer of airframes or aircraft engines domiciled in the United States, (ii) any Permitted Foreign Air Carrier,
(iii) any person approved in writing by Lessor or (iv) any U.S. Air Carrier.

"PERMITTED COUNTRY" means any country listed on Schedule 5 to the Lease.

"PERMITTED FOREIGN AIR CARRIER" means any air carrier with its principal executive offices in any Permitted Country and which is authorized to conduct commercial airline opera-

tions and to operate jet aircraft similar to the Aircraft under the applicable Laws of such Permitted Country.

"PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii) any Government Entity if the Aircraft is then registered under the laws of the country of such Government Entity.

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

"PERMITTED LIEN" means any Lien described in clauses (a) through
(g), inclusive, of Section 6 of the Lease.

"PERMITTED SUBLEASE" means a sublease permitted under Section 7.2.7 of the Lease.

"PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.

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

"PLAN" means any employee benefit plan within the meaning of Section 3(3) of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.

"PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.

"PTT PERCENTAGE" means, with respect to each Pass Through Trustee, the percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2 to the Participation Agreement.

"PURCHASE AGREEMENT" means the Purchase Agreement dated as of June 6, 1997 between Airframe Manufacturer and Lessee (including all exhibits thereto, together with all letter agreements entered into that by their terms constitute part of

such Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement Assignment.

"PURCHASE AGREEMENT ASSIGNMENT" means the Purchase Agreement and Engine Warranties Assignment dated as of even date with the Participation Agreement, between Lessee and Owner Trustee.

"PURCHASE DATE" means the last day, or if such day is not Business Day, the immediately succeeding Business Day of the originally scheduled Base Lease Term or any Renewal Lease Term, as specified in any Purchase Notice.

"PURCHASE NOTICE" is defined in Section 17.3.1 of the Lease.

"OIB" is defined in Section 2.08 of the Trust Indenture.

"REFUNDING CERTIFICATE" means a certificate of an authorized representative of Owner Participant delivered pursuant to Section 11.1.1 of the Participation Agreement, setting forth (a) the Refunding Date and (b) the following information, subject to the limitations set forth in Section 11 of the Participation Agreement: (i) the principal amount of debt to be issued by Owner Trustee on the Refunding Date, (ii) the proposed adjusted debt/equity ratio and
(iii) the proposed revised schedules of Basic Rent, Stipulated Loss Value percentages, Termination Value percentages, EBO Price and EBO Date and the proposed Amortization Schedules, calculated in accordance with Section 3.2.1 of the Lease.

"REFUNDING DATE" means the proposed date on which the outstanding Equipment Notes will be redeemed and refinanced pursuant to Section 11 of the Participation Agreement.

"REFUNDING INFORMATION" means the information set forth in the Refunding Certificate (other than the Refunding Date) as such information may have been revised by any verification procedures demanded by Lessee pursuant to
Section 3.2.1(d) of the Lease.

"RENEWAL LEASE TERM" means either term for which the Lease is extended by Lessee pursuant to Section 17 of the Lease, if any.

"RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.

"RENEWAL RENT" for the Aircraft means the rent payable therefor in respect of a Renewal Lease Term determined pursuant to Section 17.2.2 of the Lease.

"RENEWAL RENT CAP" is defined in Schedule 1 to the Lease.

"RENEWAL TERM EXPIRATION DATE" means, in the case of either Renewal Lease Term, the date determined by Lessee, which date shall be between three months and two years from the commencement date of each Renewal Lease Term.

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

"REPLACEMENT AIRFRAME" means any airframe substituted for the Airframe pursuant to Section 10 of the Lease.

"REPLACEMENT ENGINE" means an engine substituted for an Engine pursuant to the Lease.

"RESTRICTED PERIOD" means the period commencing on the Delivery Date and ending on the close of the calendar year in which occurs the seventh anniversary of the Delivery Date.

"RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement, dated as of the date the Aircraft is returned to Lessor pursuant to Section 5 of the Lease, by Lessor and Lessee substantially in the form of Exhibit B to the Lease.

"SCHEDULED DELIVERY DATE" means the expected Delivery Date notified to each Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.1 of the Participation Agreement, which expected Delivery Date shall be a Business Day not later than the Commitment Termination Date.

"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.

"SEC" means the Securities and Exchange Commission of the United States, or any Government Entity succeeding to the functions of such Securities and Exchange Commission.

"SECOND AIRCRAFT" means the Boeing Model 747-47UF aircraft (other than the Aircraft) which is the subject of a participation agreement entered into in 1998 to which FINOVA Capital Corporation is an original signatory in the capacity of

owner participant and Atlas Air, Inc. is an original signatory in the capacity of lessee.

"SECTION 1110" means 11 U.S.C. Section 1110 of the Bankruptcy Code or any successor or analogous section of the federal bankruptcy Law in effect from time to time.

"SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust Indenture.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SECURITY" means a "security" as defined in Section 2(1) of the Securities Act.

"SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.

"SERIES" means any of Series A, Series B or Series C.

"SERIES A" or "SERIES A EQUIPMENT NOTES" means Equipment Notes issued under the Trust Indenture and designated as "Series A" thereunder, in the Original Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A."

"SERIES B" or "SERIES B EQUIPMENT NOTES" means Equipment Notes issued under the Trust Indenture and designated as "Series B" thereunder, in the Original Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series B."

"SERIES C" or "SERIES C EQUIPMENT NOTES" means Equipment Notes issued under the Trust Indenture and designated as "Series C" thereunder, in the Original Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C."

"SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.

"SPECIFIED DEFAULT" means (i) the occurrence of any event set forth in Section 14.1 of the Lease that with the passage of time and/or the giving of notice would become a Lease Event of Default or (ii) the occurrence of any event set forth in Section 14.5(a) of the Lease or any event set forth in Section 14.5(b) or (c) of the Lease which, upon the passage of the

90 day period referred to therein, would become a Lease Event of Default.

"STANDARD & POOR'S" means Standard & Poor's Ratings Services.

"STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during the Base Lease Term, the amount determined by multiplying (i) the percentage set forth in Schedule 3 to the Lease (as adjusted from time to time in accordance with Section 3.2.1 of the Lease) opposite the Stipulated Loss Value Date by (ii) Lessor's Cost and (b) during any Renewal Lease Term, the amount determined pursuant to Section 17.2.3 of the Lease. Notwithstanding anything to the contrary in any Operative Agreement, Stipulated Loss Value shall always be sufficient to pay in full, as of the date of payment thereof (assuming timely payment of the Equipment Notes prior to such date), the aggregate unpaid principal amount of all Equipment Notes outstanding as of such date, together with accrued and unpaid interest on all such Equipment Notes as of such date.

"STIPULATED LOSS VALUE DATE" means, for any month, the day in such month specified in Schedule 3 to the Lease or, if such day is not a Business Day, the immediately succeeding Business Day.

"SUBORDINATION AGENT" means Wilmington Trust Company, as subordination agent under the Intercreditor Agreement.

"SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement, the Liquidity Facilities and the Intercreditor Agreement.

"SUBSEQUENT RENEWAL LEASE TERM" means the term for which the Lease is extended by Lessee, if any, after the first Renewal Lease Term.

"SUPPLEMENTAL RENT" means, without duplication (a) all amounts, liabilities, indemnities and obligations (other than Basic Rent or Renewal Rent but including Make-Whole Amount, if any) that Lessee assumes or becomes obligated to or agrees to pay under any Lessee Operative Agreement to or on behalf of Lessor or any other Person, including, without limitation, payments of Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, but excluding any amount as to which Lessee is obligated to pay a pro rata share pursuant to clause (e) of this definition, (b) (i) to the extent not payable (whether or not

in fact paid) under Section 6(a) of the Note Purchase Agreement (as originally in effect or amended with the consent of the Owner Participant), an amount or amounts equal to the fees paid to the relevant Liquidity Provider under Section 2.03 of each Liquidity Facility and the related Fee Letter (as defined in the Intercreditor Agreement) multiplied by a fraction the numerator of which shall be the then outstanding aggregate principal amount of the Series A Equipment Notes, Series B Equipment Notes and Series C Equipment Notes and the denominator of which shall be the then outstanding aggregate principal amount of all "Series A Equipment Notes", "Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note Purchase Agreement); (ii) (x) the amount equal to interest on any Downgrade Advance (other than any Applied Downgrade Advance) payable under Section 3.07(e) of each Liquidity Facility minus Investment Earnings from such Downgrade Advance multiplied by (y) the fraction specified in the foregoing clause (i); (iii) (x) the amount equal to interest on any Non-Extension Advance (other than any Applied Non-Extension Advance) payable under Section 3.07(a)(i) of each Liquidity Facility minus Investment Earnings from such Non-Extension Advance multiplied by (y) the fraction specified in the forgoing clause (i); (iv) if any payment default shall have occurred and be continuing with respect to interest on any Series A Equipment Notes, Series B Equipment Notes or Series C Equipment Notes, (x) the excess, if any, of (1) an amount equal to interest on any Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension Advance payable under Section 3.07(a) of each Liquidity Facility over (2) the sum of Investment Earnings from any Final Advance plus any amount of interest at the Payment Due Rate actually payable (whether or not in fact paid) by Lessee in respect of the overdue scheduled interest on the Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction the numerator of which shall be the then aggregate overdue amounts of interest on the Series A Equipment Notes, Series B Equipment Notes and Series C Equipment Notes (other than interest becoming due and payable solely as a result of acceleration of any such Equipment Notes) and the denominator of which shall be the then aggregate overdue amounts of interest on all "Series A Equipment Notes", "Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note Purchase Agreement) (other than interest becoming due and payable solely as a result of acceleration of any such "Equipment Notes"); and
(v) Lessee's pro rata share of any other amounts owed to the Liquidity Providers by the Subordination Agent as borrower under each Liquidity Facility (other than amounts due as repayment of advances thereunder or as in-

terest on such advances), except to the extent payable pursuant to clause (ii),
(iii) or (iv) above, (c) Lessee's pro rata share of all compensation and reimbursement of expenses, disbursements and advances payable by Lessee under the Pass Through Trust Agreements, (d) Lessee's pro rata share of all compensation and reimbursement of expenses and disbursements payable to the Subordination Agent under the Intercreditor Agreement except with respect to any income or franchise taxes incurred by the Subordination Agent in connection with the transactions contemplated by the Intercreditor Agreement, (e) Lessee's pro rata share of any amount payable under Section 9.1 (and, if attributable thereto, Section 9.5) of the Participation Agreement to any Pass Through Indemnitee to the extent such amount relates to, results from or arises out of or in connection with (i) the Pass Through Agreements or the enforcement of any of the terms of any of the Pass Through Agreements, (ii) the offer, sale, or delivery or the Pass Through Certificates or any interest therein or represented thereby or (iii) any breach of or failure to perform or observe, or any other noncompliance with, any covenant or agreement or other obligation to be performed by Lessee under any Pass Through Agreement or the falsity of any representation or warranty of Lessee in any Pass Through Agreement and (f) in the event Lessee requests any amendment to any Operative Agreement or Pass Through Agreement, Lessee's pro rata share of all reasonable fees and expenses (including, without limitation, fees and disbursements of counsel) of the Escrow Agents and the Paying Agents in connection therewith payable by the Pass Through Trustees under the Escrow Agreements. As used herein, "Lessee's pro rata share" means as of any time a fraction, the numerator of which is the principal balance then outstanding of Equipment Notes and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" (as such term is defined in each of the Operative Indentures). For purposes of this definition, the terms "Applied Downgrade Advance", "Applied Non-Extension Advance", "Cash Collateral Account", "Downgrade Advance", "Final Advance", "Investment Earnings", "Non-Extension Advance" and "Unpaid Advance" shall have the meanings specified in each Liquidity Facility.

"TAX ATTRIBUTE PERIOD" means the Restricted Period or, in the event the Aircraft, the Airframe, any Engine or any Part is used "predominantly outside the United States" (within the meaning of Section 168(g)(1)(A) of the Code) or becomes "tax-exempt use property" (within the meaning of Section 168(h) of the Code) (in either case to the extent resulting in a Tax Loss as defined in the Tax Indemnity Agreement) at any time during the Restricted Period, the period commencing on the De-

livery Date and ending on the close of the calendar year in which occurs the end of the new "recovery period" (as determined under Section 168(g) of the Code) resulting from such use or from such status as "tax-exempt use property"; PROVIDED, HOWEVER, upon the occurrence, in either case, of an event described in
Section 2.2(b) of the Tax Indemnity Agreement, the Tax Attribute Period shall end on the close of the calendar year in which occurs the end of the applicable recovery period as determined in accordance with such Section.

"TAX INDEMNITEE" means (a) First Security and Owner Trustee, (b) WTC, Pass Through Trustee, Subordination Agent and Mortgagee, (c) each separate or additional trustee appointed pursuant to the Trust Agreement or the Trust Indenture, (d) each Participant, (e) the Trust Estate and the Trust Indenture Estate and (f) the respective successors, assigns, agents and servants of the foregoing. For purposes of this definition, the term "Owner Participant" shall include any member of an affiliated group (within the meaning of Section 1504 of the Code) of which Owner Participant is, or may become, a member if consolidated, joint or combined returns are filed for such affiliated group for federal, state or local income tax purposes.

"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated as of even date with the Participation Agreement, between Lessee and Owner Participant.

"TAXES" means all license, recording, documentary, registration and other similar fees and all taxes, levies, imposts, duties, charges, assessments or withholdings of any nature whatsoever imposed by any Taxing Authority, together with any penalties, additions to tax, fines or interest thereon or additions thereto.

"TAXING AUTHORITY" means any federal, state or local government or other taxing authority in the United States, any foreign government or any political subdivision or taxing authority thereof, any international taxing authority or any territory or possession of the United States or any taxing authority thereof.

"TERM" means the term, commencing on the Delivery Date, for which the Aircraft is leased pursuant to Section 3 of the Lease, and shall include the Base Lease Term and, if applicable, any Renewal Lease Term; PROVIDED that if at the scheduled end of the Term the Aircraft or Airframe is being used, or was within six (6) months prior thereto being used, by the U.S. Government pursuant to CRAF, the Term shall be deemed extended

for the period necessary to accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any such period of extension at a semiannual rate equal to the average of the Basic Rent paid during the Base Lease Term or the applicable Renewal Lease Term, whichever shall have ended immediately prior to such extension.

"TERMINATION DATE" means any Payment Date occurring after the seventh anniversary of the Delivery Date on which the Lease shall terminate in accordance with Section 9 of the Lease.

"TERMINATION VALUE" means, with respect to the Aircraft, the amount determined by multiplying (a) the percentage set forth in Schedule 4 to the Lease (as adjusted from time to time in accordance with Section 3.2.1 of the Lease) opposite the Termination Value Date by (b) Lessor's Cost. Notwithstanding anything to the contrary in any Operative Agreement, Termination Value shall always be sufficient to pay in full, as of the date of payment thereof (assuming timely payment of the Equipment Notes prior to such date), the aggregate unpaid principal amount of all Equipment Notes outstanding as of such date, together with accrued and unpaid interest on all such Equipment Notes as of such date.

"TERMINATION VALUE DATE" means, for any month, the day in such month specified in Schedule 4 to the Lease or, if such day is not a Business Day, the immediately succeeding Business Day.

"THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.

"TRANSACTIONS" means the transactions contemplated by the Participation Agreement and the other Operative Agreements.

"TRANSACTION EXPENSES" means: (i) the reasonable and actual fees, expenses and disbursements incurred in connection with the negotiation, execution and delivery of the Operative Agreements of (1) Morris, James, Hitchens & Williams, special counsel for Mortgagee and the Loan Participants, such information to be furnished by the Subordination Agent, (2) Crowe & Dunlevy, special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (3) Cahill Gordon & Reindel, special counsel to Lessee, such information to be furnished by Lessee and (4) Ray, Quinney & Nebeker, special counsel to the Owner Trustee, such information to be provided by

the Owner Trustee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of Mortgagee under the Trust Indenture, such information to be furnished by Mortgagee, (v) the fee of the Appraiser with respect to the appraisal of the Aircraft referred to in Section 5.1.2(xv) of the Participation Agreement, such information to be furnished by the Owner Participant, (vi) subject to the limitations set forth in a separate agreement between Owner Participant and Lessee, the reasonable and actual fees, out-of-pocket expenses and disbursements of special counsel to the Owner Participant (as defined in Schedule 3 to the Participation Agreement), such information to be furnished by the Owner Participant, (vii) the reasonable out-of-pocket costs, fees, expenses and disbursements incurred by Lessee in respect of the transactions contemplated by the Pass Through Trust Agreements and the Operative Agreements, such information to be furnished by Lessee, and
(viii) the equity placement and debt arrangement fees and reasonable disbursements of Lessee's Advisor, such information to be furnished by Lessee.

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

"TRANSFEREE" means a person to which any Owner Participant, Owner Trustee or any Loan Participant or Note Holder purports or intends to Transfer any or all of its right, title or interest in the Trust Estate or in its Equipment Note and the Trust Indenture Estate, respectively, as described in
Section 10.1.1 (a), 10.1.2 or 10.1.3 (but excluding participants in any participation referred to in Section 10.1.3), respectively, of the Participation Agreement.

"TRIGGERING EVENT" is defined in Section 1.1 of the Intercreditor Agreement.

"TRUST" means the trust created by the Trust Agreement.

"TRUST AGREEMENT" means the Trust Agreement dated as of even date with the Participation Agreement, between Owner Participant and Owner Trustee.

"TRUST ESTATE" means all estate, right, title and interest of Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement and the Purchase Agreement including, without limitation, all amounts of Basic Rent and Supplemental Rent including, without limitation, insurance proceeds and requisition, indemnity or other payments of any kind for of with respect to the Aircraft. Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payment.

"TRUST INDENTURE" means the Trust Indenture and Mortgage dated as of even date with the Participation Agreement, between Owner Trustee and Mortgagee.

"TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the Trust Indenture.

"TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage Supplement, substantially in the form of Exhibit A to the Trust Indenture, with appropriate modifications to reflect the purpose for which it is being used.

"UCC" means the Uniform Commercial Code as in effect in any applicable jurisdiction.

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

"U.S. AIR CARRIER" means any United States air carrier that is a U.S. Person and a Citizen of the United States holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of title 49 of the United States Code for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the FAA Regulations, or which may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof.

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

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

"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any specified Debt, at the time of the determination thereof the number of years obtained by dividing the then Remaining Dollar-years of such Debt by the then outstanding principal amount of such Debt. The term "Remaining Dollar-years" shall mean the amount obtained by (1) multiplying the amount of each then-remaining principal payment on such Debt by the number of years (calculated at the nearest one-twelfth) that will elapse between the date of determination of the Weighted Average Life to Maturity of such Debt and the date of that required payment and (2) totaling all the products obtained in clause (1) above.

"WET LEASE" means any arrangement, including, but not limited to an ACMI Contract, whereby Lessee or a Permitted Sublessee agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant to which the Aircraft, Airframe or Engine shall at all times be in the operational control of Lessee or a Permitted Sublessee, provided that Lessee's obligations under the Lease shall continue in full force and effect notwithstanding any such arrangement.

"WTC" means Wilmington Trust Company, a Delaware banking corporation, not in its capacity as Mortgagee under the Trust Indenture, but in its individual capacity.

------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
PROGRAM YEAR       REGISTRATION NUMBER     RESTRUCTURE AGREEMENT TYPE         LESSOR                         LESSEE
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1998               N494MC                  Owned Aircraft Restructure         Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1998               N408MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1998               N491MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1998               N492MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1998               N493MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1999               N495MC                  Owned Aircraft Restructure         Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1999               N496MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1999               N497MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1999               N498MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
1999               N499MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
2000               N409MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------
2000               N412MC                  Leased Aircraft Restructure        Wells Fargo Bank Northwest,    Atlas Air, Inc.
                                           Agreement                          National Association
------------------ ----------------------- ---------------------------------- ------------------------------ -----------------------

EXHIBIT 10.4.2

Federal Aviation Administration
Date __02/08/2005___ Time __2:13 PM__
Conveyance Number ______D001034_______
By ___________________________________
Formerly N491MC_______________________

This AMENDMENT NO. 1 to Lease Agreement (this "AMENDMENT"), dated as of July 27, 2004, between WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (formerly known as FIRST SECURITY BANK, NATIONAL ASSOCIATION), not in its individual capacity except as expressly provided herein, but solely as Owner Trustee ("LESSOR" or "OWNER TRUSTEE"), and ATLAS AIR, INC., a Delaware corporation ("LESSEE"), amends that certain Original Lease (as defined below). All capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Lease (as defined below).

WHEREAS, Lessor and Lessee are parties to that certain Lease Agreement, dated as of July 29, 1998, supplemented by Lease Supplement No. 1 dated July 29, 1998, both recorded by the FAA on July 30, 1998, as Conveyance No. P16372 (collectively, the "ORIGINAL LEASE"), pursuant to which Lessee has leased from Lessor the Aircraft as defined in the Original Lease (the Original Lease, as amended by this Amendment, the "LEASE").

WHEREAS, as contemplated by the Restructure Agreement (the "RESTRUCTURE AGREEMENT"), dated as of July 27, 2004, by and among Lessee, Lessor and the other parties named therein, all such parties desire that Lessee and Lessor enter into this Amendment to set forth the manner in which the restructuring of the terms of payment by Lessee of certain installments of Basic Rent payable under the Original Lease and the agreements with respect to other amendments and other matters pertaining to the Original Lease are to be definitively documented and implemented.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. AMENDMENTS TO ANNEX A TO THE ORIGINAL LEASE. Annex A to the Original Lease is hereby amended as follows:

(i) ADDITIONS. The following definitions are hereby added to Annex A to the Original Lease in appropriate alphabetical order:

"ACCELERATION" is defined in Section 14.6 of the Lease.

"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person outstanding on the date on which such Person becomes a Subsidiary or Indebtedness assumed in connection with the acquisition of assets from any Person.

"ACTION EVENT" means (a) any acceleration or other exercise of rights or remedies by Mortgagee as assignee of Lessor as a result of a Cross Default under Section 15.1.7(a) of the Lease, or (b) the giving of instructions or directions by the Controlling Certificateholders to exercise any such rights or remedies.

"ADDITIONAL INDEBTEDNESS INCURRENCE CONDITIONS" means:

(a) no Lease Default or Lease Event of Default shall have occurred and be continuing,

(b) the Fixed Charge Coverage Ratio determined as of the last day of the last fiscal quarter for which financial statements are then available is greater than 1.25 to 1.00 and

(c) the aggregate principal amount of Indebtedness incurred pursuant to Section 8.4.1(b) does not exceed $50,000,000 at any one time outstanding.

If, before the occurrence of an Action Event, a Bank Debt Refinancing occurs, and the documents executed in connection with such Bank Debt Refinancing contain a restriction on the incurrence by Lessee of indebtedness (as defined under such Bank Debt Refinancing), this definition and the definition of "Indebtedness" for purposes of this definition shall thereafter be deemed to have been amended to provide for the same restriction on the incurrence of indebtedness and the same definition of indebtedness as is provided in the documents executed in connection with such Bank Debt Refinancing (and such lenders shall be "Bank Lenders" for purposes of the Lease and such documents executed in connection with such Bank Debt Refinancing shall be "Bank Lender Documents" for purposes of the Lease). If such Bank Debt Refinancing is with more than one lender under separate Bank Lender Documents, this definition and the definition of "Indebtedness" for purposes of this definition shall thereafter be deemed to have been amended to provide for the same restriction on the incurrence of indebtedness and the same definition of indebtedness as are provided in those of such Bank Lender Documents which evidence the highest dollar amount of such indebtedness.

"ADDITIONAL LEASE INCURRENCE CONDITIONS" means

(a) no Lease Default or Lease Event of Default shall have occurred and be continuing,

(b) the Fixed Charge Coverage Ratio determined as of the last date of the last fiscal quarter for which financial statements are then available is greater than 1.25 to 1.00; PROVIDED, HOWEVER, that Parent or any of its Subsidiaries may enter into any lease if the cash scheduled rental payments required to be made under all leases entered into after the Restructure Agreement Execution Date (including, without limitation, the lease proposed to be entered into) do not exceed $15,000,000 during any fiscal year, without having to comply with this clause (b), and

(c) the aggregate principal amount of Capital Leases entered into pursuant to Section 8.4.1(c) does not exceed $50,000,000 at anyone time outstanding.

If, before the occurrence of an Action Event, a Bank Debt Refinancing occurs, and the documents executed in connection with such Bank Debt Refinancing contain a restriction

on the entering into by Lessee of leases or subleases, this definition shall thereafter be deemed to have been amended to provide for the same restriction on the entering by Lessee into of leases or subleases as is provided in the documents executed in connection with such Bank Debt Refinancing (and such lenders shall be "Bank Lenders" for purposes of the Lease and such documents executed in connection with such refinancing shall be "Bank Lender Documents" for purposes of the Lease). If such Bank Debt Refinancing is with more than one such lender under separate Bank Lender Documents, this definition shall thereafter be deemed to have been amended to provide for the same restriction on the entering into of leases or subleases by Lessee as is provided in those of such Bank Lender Documents which evidence the highest dollar amount of such indebtedness.

"AFL III" means Atlas Freighter Leasing III, Inc., a Delaware corporation, a subsidiary of Parent, the sole business of which is the ownership of the AFL III Equipment and the leasing of the AFL III Equipment to Lessee pursuant to the AFL III Leases and obtaining financing with respect thereto.

"AFL III EQUIPMENT" is defined in Schedule 1 to the Lease.

"AFL III FINANCING AGREEMENT" means that certain Credit Agreement dated as of April 25, 2000, and amended and restated as of July 27, 2004, by and among AFL III, the lenders party thereto and Deutsche Bank Trust Company Americas, as agent, as such agreement may be amended, amended and restated, modified and/or supplemented from time to time in accordance with the terms thereof.

"AFL III LEASES" means one or more triple net leases by and between Lessee and AFL III with respect to the AFL III Equipment, as lessor thereunder, as such leases may be amended, amended and restated, modified and/or supplemented from time to time.

"ALLONGES" is defined in the definition of "Equipment Notes".

"AMENDMENT NO. 1 TO LEASE AGREEMENT" or "AMENDMENT" means that certain Amendment No. 1 to Lease Agreement, dated as of July 27, 2004, between Lessor and Lessee in connection with the Lease.

"APPRAISAL" is defined in the Intercreditor Agreement.

"ASSUMPTIONS" is defined in Section 8.4.4(e) of the Lease.

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

"BANK DEBT REFINANCING" means any unsecured or secured refinancing of the indebtedness owed to the Bank Lenders under the Bank Lender Documents (i) with institutional lenders or (ii) with the proceeds of a private or public debt offering to lenders,

which institutional lenders or lenders are not Affiliates of Lessee or Parent and which refinancing pays such indebtedness in full (or any such refinancing the indebtedness of which is subsequently refinanced with Bank Debt Refinancing).

"BANK LENDER DOCUMENTS" means the Credit Agreement and the documents executed in connection therewith and the documents executed in connection with any subsequent extension or renewal thereof or any Bank Debt Refinancing.

"BANK LENDERS" means lenders under the Bank Lender Documents.

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

"BOEING" means Boeing Capital Corporation and its Affiliates.

"BOEING DOCUMENTS" means that certain lease agreement listed on Schedule 1 to the Lease opposite the heading "Boeing Documents" and the documents executed in connection therewith other than that certain Supplemental Agreement, dated as of June 1, 2002, between the owner participant named therein and Lessee, as amended by Amendment No. 1 to Supplemental Agreement dated as of October 31, 2003, which relates solely to the tax indemnity agreement between such owner participant and Lessee and the general tax indemnity agreement among the parties to such transaction.

"BUSINESS PLAN" means Debtors' business plan filed with the Securities and Exchange Commission on Form 8-K on December 12, 2003 (as amended and modified) and attached to the Disclosure Statement as Exhibit G.

"CAPITAL LEASE" means, as applied to any Person, 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.

"CHAPTER 11 CASE" means the bankruptcy case commenced by Lessee under Chapter 11 of Title 11 of the Bankruptcy Code on January 30, 2004 in the United States Bankruptcy Court for the Southern District of Florida.

"CONSOLIDATED ADJUSTED EBITDA" means, for any period, 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, all of the foregoing as determined on a consoidated basis for Parent and its Subsidiaries in conformity with GAAP and, (vii) for all periods through the first anniversary of the Restructure Agreement Execution Date, expenses incurred in connection with the Plan of Reorganization, including professional fees and expenses, severance, key employee retention plans, executory contract and lease rejection claims, asset write downs and any other such costs determined by Parent' independent accountants to be reported as "Reorganization Costs".

"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 Parent and its Subsidiaries) by Parent 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 Parent and its Subsidiaries plus (ii) to the extent not covered by clause (i) of this definition, the aggregate of all expenditures by Parent 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 Parent.

"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of the amounts for such period (without duplication) of (i) Consolidated Interest Expense for such period paid in cash, (ii) Consolidated Rental Payments for such period paid in cash, (iii) Consolidated Capital Expenditures paid in cash for such period (other than Consolidated Capital Expenditures funded with the proceeds of sales of assets), (iv) any Restricted Junior Payments actually made during such period and (v) the scheduled principal amount of all amortization payments with respect to the Bank Lender Documents (assuming for this purpose that the maximum amount of principal deferral permitted pursuant to Section 2.4A(ii) of the AFL III Financing Agreement shall have occurred (whether or not the conditions thereto shall have been satisfied)) and other Indebtedness of Parent and its Subsidiaries required to be made during such period (as determined on the first day of such period).

"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 Parent and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Parent 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.

"CONSOLIDATED NET INCOME" means, for any period, the net income (or loss) of Parent 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 Parent) in which any other Person (other than Parent or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Parent 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 Parent or is merged into or consolidated with Parent or any of its Subsidiaries or that Person's assets are acquired by Parent or any of its Subsidiaries, (iii) the income of any Subsidiary of Parent 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 a sale of assets 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 RENTAL PAYMENTS" means, for any period, the aggregate amount of all rents with respect to aircraft and engines paid or payable by Parent and its Subsidiaries on a consolidated basis during that period under all Operating Leases to which Parent 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, (x) all rental payments to AFL III shall not be included in Consolidated Rental Payments and (y) payments in respect of Capital Leases shall not be included in Consolidated Rental Payments.

"CONSULTANT" means Simat Helliesen & Eichner, Inc. or Avitas, Inc., or such other aircraft professional designated from time to time by Mortgagee.

"CONSULTANT COSTS AND EXPENSES" is defined in Section 8.4.4(h) of the Lease.

"CONTINGENT OBLIGATIONS" or "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 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 nonperformance by any other party or parties to an agreement, and (c) any liability of such Person for the obligation of another through any agreement (contingent or otherwise) (X) to purchase, repurchase or otherwise acquire such obligation or any security therefore, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (Y) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is as described in the preceding sentence. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if less, the amount to which such Contingent Obligation is specifically limited.

"CONTROLLING CERTIFICATEHOLDERS" means, as of a particular date of determination, the 1998 Class A Certificateholders beneficially holding 1998 Class A Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in

the Class A Pass Through Trust (excluding any 1998 Class A Certificates beneficially held by Lessee or any Affiliate thereof; PROVIDED, HOWEVER, the foregoing exclusion shall not apply if Lessee and/or its Affiliates beneficially hold 100% of the 1998 Class A Certificates as of a particular date of determination).

"CREDIT AGREEMENT" means the Fifth Amended and Restated Credit Agreement, dated July 27, 2004 by and among Atlas Air Worldwide Holdings, Inc., Atlas Air, Inc., the lenders party thereto from time to time and Deutsche Bank Trust Company Americas, as administrative agent.

"CROSS DEFAULT" means a Lease Event of Default that occurs due to the occurrence of an Other Creditor Payment Default, an Other Creditor Non-Payment Default or an Acceleration.

"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 Parent or any of its Subsidiaries against fluctuations in currency values.

"DEBTORS" means, collectively, Parent, Lessee, Polar, Airline Acquisition Corp. I and Atlas Worldwide Aviation Logistics, Inc.

"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.

"DISCLOSED OTHER CREDITOR DOCUMENT" is defined in Section 7(a)(xiii) of the Restructure Agreement.

"DISCLOSURE STATEMENT" means the Second Amended Disclosure Statement filed with the Bankruptcy Court by the Debtors under 11 U.S.C. ss. 1125 in support of the Debtors' Second Amended Joint Chapter 11 Plan and approved by the Bankruptcy Court on June 8, 2004.

"EETC AMENDMENT FEE CONSIDERATION" is defined in Section 2 of the Restructure Agreement.

"ENGINE MAINTENANCE CONTRACT" means that certain Engine Maintenance Agreement (1998 EETC Series-CF6-80C2 Engines) dated Apri1 30, 2004 between Lessee and the Engine Maintenance Contractor, any other engine maintenance contract that is reasonably acceptable to Mortgagee (or the Consultant) and Lessor with any other Engine Maintenance Contractor, and any replacements thereof in accordance with
Section 8.4.4(d) or Section 14.7 of the Lease, as amended from time to time, relating to the Aircraft; PROVIDED, HOWEVER, that Lessor shall not have any rights with respect to the acceptance of any Engine Maintenance Contract (and, therefore, only Mortgagee shall have rights with respect to the acceptance of any Engine Maintenance Contract) so long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been discharged.

"ENGINE MAINTENANCE CONTRACT ASSIGNMENT" means that certain Collateral Assignment of Engine Maintenance Contract dated as of the Restructure Agreement Execution Date from Lessee to Lessor relating to the Aircraft and any assignment of any other Engine Maintenance Contract which replaces any Engine Maintenance Contract Assignment entered into pursuant to this Lease from time to time.

"ENGINE MAINTENANCE CONTRACTOR" means MTU Maintenance Hannover GmbH, a German limited liability company, any other engine overhaul contractor of international stature that is reasonably acceptable to Mortgagee (or the Consultant) and the Lessor, and any replacements thereof in accordance with Section 8.4.4(d) or Section 14.7 of the Lease; PROVIDED, HOWEVER, that Lessor shall not have any rights with respect to the acceptance of any Engine Maintenance Contractor (and, therefore, only Mortgagee shall have rights with respect to the acceptance of any Engine Maintenance Contractor) so long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been discharged.

"ENHANCEMENT" means (a) new or increased rent, debt payments, maintenance reserves or other form of additional payment, (b) new fees or other compensation, (c) an increase in interest rate, (d) additional collateral or credit support, (e) materially improved maintenance provisions or return condition provisions, or (f) other form of material enhancement.

"ENHANCEMENT RENT" is defined in Section 8.4.2.

"EXISTING INDEBTEDNESS" means any Indebtedness of Parent and its Subsidiaries outstanding on and as of the Restructure Agreement Execution Date as set forth in Schedule 8.4.1(b) of Amendment No. 1 to Lease Agreement.

"EXIT FACILITY" means the primary senior revolving credit facility of the Parent or Lessee, now existing or hereafter created, which is secured by, among other things, a first lien on the accounts receivable and inventory of the Parent or Lessee, which facility allows the Parent or Lessee (and which facility may also permit any Affiliate thereof) to borrow and reborrow amounts (and which may also provide for letters of credit to be issued at the request of the Parent or Lessee) up to a borrowing base determined pursuant to the documents evidencing such facility.

"FIXED CHARGE COVERAGE RATIO" means as of any date, the ratio of (i) the sum of (x) Consolidated Adjusted EBITDA for the period of twelve consecutive months ending on such date (a "TEST PERIOD") and (y) Consolidated Rental Payments for such Test Period to (ii) Consolidated Fixed Charges for such Test Period.

"FRACTIONAL UNDIVIDED INTEREST" means the fractional undivided interest in the Class A Pass Through Trust.

"GECAS" means General Electric Capital Aviation Services and its Affiliates.

"GECAS DOCUMENTS" means those certain lease and sublease agreements listed on Schedule 1 to the Lease opposite the heading "GECAS Documents" and the docu-

ments executed in connection therewith (other than the tax indemnity or tax indemnification agreements, as amended, executed in connection with the lease and subleases listed on Schedule 1 to Amendment No. 1 to Lease Agreement).

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

"INTERCOMPANY LOAN" means any loans and advances from any Loan Party to any other Loan Party.

"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 Parent or any of its Subsidiaries against fluctuations in interest rates.

"INSPECTING PARTIES" is defined in Section 12(a) of the Lease.

"LEASE AMENDMENT DEFAULT AMOUNT" is defined in Section 19 of the Lease.

"LESSEE SECURITY AGREEMENT" means that certain Security Agreement dated as of the Restructure Agreement Execution Date from Lessee to Lessor relating to the Aircraft.

         "LOAN PARTIES" means Lessee, Parent and Polar.

         "MAINTENANCE  SCHEDULE" is defined in Section  8.4.4(c) of the
Lease.

"N409 RESTRUCTURING EVENT" means the consummation of a transaction on terms substantially similar with respect to covenants and lease events of default set forth in the lease documentation for the Aircraft, the 1998 EETC Aircraft bearing U.S. registration number * and the 1999 EETC Aircraft bearing U.S. registration number * pursuant to which Lessee or an Affiliate of Lessee has become the sole owner participant of the trust of which the owner trustee is the owner of the 2000 EETC Aircraft bearing U.S. registration number * (except for the addition of covenants regarding the maintenance of an airframe maintenance contract).

"OBJECTIVES" is defined in Section 8.4.4(b) of the Lease.

"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.

"ORIGINAL LEASE" means the Lease Agreement, dated as of July 29, 1998 between the Owner Trustee, as Lessor, and Lessee, as Lessee, as supplemented by Lease Supplement No. 1 dated July 29, 1998.

"OTHER ACCELERATED CREDITOR" means any holder (other than GECAS, Boeing, any of the Bank Lenders and any Other EETC Transaction Person) of any Indebtedness of Lessee or any personal or real property lease or sublease to which Lessee is bound, other than the Lease.

"OTHER ACCELERATED CREDITOR DOCUMENTS" means the documents executed in connection with any Indebtedness owed by Lessee to, or any lease or sublease by Lessee of any personal or real property from, an Other Accelerated Creditor, and the documents executed in connection with any extension or renewal thereof, other than the Lease,

"OTHER AIRCRAFT" means the Other 1998 EETC Aircraft, the 1999 EETC Aircraft and the 2000 EETC Aircraft.

"OTHER CREDITOR" means GECAS, Boeing, the Bank Lenders, the Other EETC Transaction Persons and the Other Accelerated Creditors.

"OTHER CREDITOR AMENDMENT" is defined in the Restructure Agreement.

"OTHER CREDITOR NON-PAYMENT DEFAULT" is defined in Section 14.6 of the Lease.

"OTHER CREDITOR PAYMENT DEFAULT" is defined in Section 14.6 of the Lease.

"OTHER EETC TRANSACTION DOCUMENTS" means the documents entered into with respect to the lease and financing of the Other Aircraft, PROVIDED that, unless an N409 Restructuring Event has occurred on or prior to December 1, 2004, the term Other EETC Transaction Documents as used in Section 14.6 hereof does not include the documents entered into solely with respect to the 2000 EETC Aircraft bearing U.S. registration number *.

"OTHER EETC TRANSACTION PERSONS" means the Persons party to the Other EETC Transaction Documents (other than Lessee, Parent and Polar).

"OTHER EETC TRANSACTIONS" means the transactions pursuant to which the Other Aircraft are leased and financed.

"OTHER 1998 EETC AIRCRAFT" is defined in Schedule 1 to the Lease.

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

"PARENT GUARANTY" means that certain Guaranty Agreement dated as of the Restructure Agreement Execution Date from the Parent to Lessor relating to the Aircraft.

"PARENT SECURITY AGREEMENT" means that certain Security Agreement dated as of the Restructure Agreement Execution Date from the Parent to Lessor relating to the Aircraft.

"PARENT'S PROJECTED EBITDA" means Parent's Projected EBITDA as referenced in the Business Plan.

"PERMITTED EXTENSION INDEBTEDNESS" means renewals, extensions, substitutions, refinancings or replacements (each an "extension") by Parent or any of its Subsidiaries of any Indebtedness of Parent or such Subsidiary, including any such successive transactions thereby, so long as (i) any such Indebtedness bears interest at a rate which 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 Parent or such Subsidiary 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 Lessee under the Lease 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 notes issued in connection with the Bank Lender Documents 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 Parent and its Subsidiaries or any more favorable, from the perspective of Mortgagee, than those contained in the Indebtedness immediately prior to such extension.

"PERMITTED INDEBTEDNESS" means

(i) Indebtedness incurred with respect to the Bank Lender Documents;

(ii) the Parent Guaranty and the Polar Guaranty;

(iii) any Existing Indebtedness;

(iv) any Permitted Extension Indebtedness;

(v) with respect solely to AFL III, any Indebtedness incurred by AFL III with respect to the AFL III Financing Agreement and the AFL III Leases;

(vi) any Indebtedness incurred with respect to the Lease;

(vii) any Indebtedness incurred with respect to the Other EETC Transactions;

(viii) the Exit Facility, PROVIDED that the aggregate principal amount thereof (including any letters of credit issued thereunder) shall not exceed $60,000,000.00 at any one time outstanding;

(ix) any Indebtedness constituting Intercompany Loans; and

(x) any other Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any one time outstanding.

"PLAN CONFIRMATION DATE" means the date of entry of the order of the Bankruptcy Court confirming the Plan of Reorganization, which order is final and unstayed.

"PLAN OF REORGANIZATION" means the Final Modified Second Amended Joint Plan of Reorganization of the Debtors dated as of July 14, 2004 and confirmed by order of the Bankruptcy Court entered on July 16, 2004.

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

"POLAR GUARANTY" means that certain Guaranty Agreement dated as of the Restructure Agreement Execution Date from Polar to Lessor relating to the Aircraft.

"POLAR SECURITY AGREEMENT" means that certain Security Agreement dated as of the Restructure Agreement Execution Date from Polar to Lessor relating to the Aircraft;

"REQUIRED RATING" means a rating of "BB-" by S&P or "Ba3" by Moody's.

"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Lessee or Parent now or hereafter outstanding or any Affiliate of Lessee or Parent other than dividends or other distributions payable solely in such class of stock of Lessee, Parent or any Affiliate of Lessee or Parent, as applicable, to the holders of that class and except for any distribution or dividend that is made solely to Parent, Polar or Lessee (and, if an Affiliate is not a wholly-owned Subsidiary, to the other shareholders of such Subsidiary on a pro rata basis or on a basis that results in the receipt by Parent, Polar or Lessee of dividends or distributions of greater value than it would receive on a pro rata basis), (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 Lessee, Parent or any Affiliate of Lessee or Parent now or hereafter outstanding and (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of Lessee, Parent or any Affiliate of Lessee or Parent now or hereafter outstanding.

-------------------------------------------------------
                                         MINIMUM
FOR THE PERIOD                          LIQUIDITY
-------------------------------------------------------
September 1 to October 7, 2004          $55,000,000
-------------------------------------------------------
October 8 to November 7, 2004           $60,000,000
-------------------------------------------------------
November 8 to  December 7, 2004         $65,000,000
-------------------------------------------------------
December 8, 2004 to January 7, 2005     $70,000,000
-------------------------------------------------------
January 8 to April 7, 2005              $75,000,000
-------------------------------------------------------
April 8, 2005 to September 30, 2005     $85,000,000
-------------------------------------------------------
October 1, 2005 to December 31, 2005    $95,000,000
-------------------------------------------------------
January 1, 2006 to December 31, 2006    $110,000,000
-------------------------------------------------------
January 1, 2007 and thereafter          $125,000,000
-------------------------------------------------------

Notwithstanding the "at any time" requirement, within each calendar month, Unrestricted Cash and Cash Equivalents, and Availability may be less than the Minimum Liquidity set forth above for one period not to exceed five consecutive business days.

"RESTRUCTURE AGREEMENT" means the certain Restructure Agreement dated as of July 27, 2004 among Lessee, Lessor, Mortgagee, Owner Participant and others relating to the Aircraft.

"RESTRUCTURE AGREEMENT EXECUTION DATE" means July 27, 2004.

"SPECIAL COVENANTS TERMINATION DATE" means the earlier of (i) the date that the 1998 Class A Certificates are paid in full or (ii) the first date that the senior unsecured debt of Lessee achieves the Required Rating which comes after the debt to the Bank Lenders has been paid in full; PROVIDED that a payment directly or indirectly from the proceeds of a Bank Debt Refinancing shall not be deemed to be a payment in full of the debt to the Bank Lenders.

"SPECIAL INSPECTOR" is defined in Section 12(g) of the Lease.

"SPECIFIED PRIOR DEFAULTS" means any Lease Default or Lease Event of Default arising out of or in connection with (i) Lessee's failure to make payments of Basic Rent that were due under the Original Lease on July 2, 2003, January 2, 2004 and July 2, 2004

and were due under the Lease on February 2, 2004 and March 2, 2004;
(ii) Lessee's failure to deliver certain financial information and other reports, certificates or other information as required by Section 8.2.1 of the Original Lease for periods ending prior to July 1, 2004;
(iii) Lessee's representations and warranties contained in certificates delivered prior to the Restructure Agreement Execution Date with respect to Lessee's financial statements; and (iv) the filing of Lessee's Chapter 11 Case.

"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.

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

"1998 CLASS A CERTIFICATEHOLDERS" means the Persons who beneficially hold through the Depository Trust Company the 1998 Class A Certificates.

"1998 CLASS A CERTIFICATES" means the 7.38% Atlas Air Initial Pass Through Certificates, Series 1998-1A and 7.38% Atlas Air Exchange Pass Through Certificates, Series 1998-1A issued by the Class A Pass Through Trust.

"1998 EETC AIRCRAFT" means the following:

(a) the Aircraft; and

(b) the Other 1998 EETC Aircraft.

"1999 EETC AIRCRAFT" is defined in Schedule 1 to the Lease.

"2000 EETC AIRCRAFT" is defined in Schedule 1 to the Lease.

"747-200 AIRCRAFT" is defined in Section 6(k) of the Restructure Agreement.

"747-400 AIRCRAFT" is defined in Section 6(k) of the Restructure Agreement.

"747-400 AIRCRAFT AGREEMENT" is defined in Section 6(k) of the Restructure Agreement.

(ii) CHANGES. The definitions of the following terms in Annex A to the Original Lease are amended by deleting each definition in its entirety and inserting the following definitions in lieu thereof:

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

"CLASS A PASS THROUGH TRUST" means that certain Atlas Air Pass Through Trust 1998-1A-S formed pursuant to that certain Pass Through Trust Agreement dated as of February 9, 1998 between Lessee and Wilmington Trust Company, as Trustee, as amended by that certain 1998 Class A Pass Through Trust Supplement dated as of the Restructure Agreement Execution Date.

"EQUIPMENT NOTES" means and includes any equipment notes issued under the Trust Indenture in the form specified in Section 2.01 thereof (as such form may be varied pursuant to the terms of the Trust Indenture), including the applicable allonge (each, an "ALLONGE" and collectively, the "ALLONGES") thereto dated the Restructure Agreement Execution Date and executed by the Owner Trustee and any Equipment Note issued under the Trust Indenture in exchange or replacement for any Equipment Note.

"FAIR MARKET RENTAL VALUE" shall be determined as provided in
Section 15.4 of the Lease.

"LEASE" or "LEASE AGREEMENT" means the Lease Agreement, dated as of July 29, 1998 between the Owner Trustee, as lessor, and Lessee, as lessee, as supplemented by Lease Supplement No. 1 dated July 29, 1998, and amended by Amendment No. 1 to Lease Agreement.

"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the Lease, the Purchase Agreement Assignment, the Lessee Security Agreement, the Engine Maintenance Contract Assignment, the Restructure Agreement and each other agreement between Lessee and any other party to the Participation Agreement and/or the Restructure Agreement, in each case relating to the transactions contemplated thereby (other than the related tax indemnity agreement, which has been terminated).

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

"OPERATIVE AGREEMENTS" means, collectively, the Participation Agreement, the Trust Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Engine Consent and Agreement, the Lease, the Trust Indenture, the Bills of Sale, the Assignment and Assumption Agreement(s), if any, executed pursuant to Section 10 of the Participation Agreement, the Equipment Notes, the Lessee Security Agreement, the Engine Maintenance Contract Assignment, the Polar Guaranty, the Polar Security Agreement, the Parent Guaranty, the Parent Security and the Restructure Agreement.

"OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation Agreement, the Trust Agreement and each other agreement between the Owner Participant and any other party to the Participation Agreement (other than the related tax indemnity agreement, which has been terminated).

"PASS THROUGH TRUST AGREEMENT" means each of the three separate Pass Through Trust Agreements, each dated as of the Issuance Date, by and between Lessee and Pass Through Trustee, and in the case of the Class A Pass Through Trust, includes the 1998 Class A Pass Through Trust Supplement dated as of the Restructure Agreement Execution Date.

"PAYMENT DATE" means (a) for the period from the Delivery Date up to and including January 2, 2003 each January 2 and July 2, commencing with the first such date to occur after the Commencement Date and (b) after January 2, 2003, each date set forth on Schedule 2 to Amendment No. 1 to Lease Agreement.

"PAYMENT PERIOD" means (a) for the period from the Delivery Date up to and including January 2, 2003, each of the consecutive semiannual periods (or, if applicable, such shorter period ended on the first Payment Date of the Base Lease Term) during such portion of the Term ending on a Payment Date, the first such period commencing on and including the Commencement Date and (b) after January 2, 2003, means each of the consecutive monthly periods during such portion of the Term ending on the date immediately proceding a Payment Date (or, if applicable, such shorter period ended on the Scheduled Expiration Date), the first such period commencing on January 2, 2004; PROVIDED, HOWEVER, that the period commencing after January 2, 2003 up to and including January 1, 2004 shall have no Payment Period and Basic Rent for such period shall be paid on the dates set forth in Schedule 2 to Amendment No. 1 to Lease Agreement.

"PURCHASE DATE" means the last day, or if such day is not a Business Day, the immediately succeeding Business Day, of the Base Lease Term, as specified in any Purchase Notice.

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

"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to Amendment No. 1 to Lease Agreement.

"SERIES A" or "SERIES A EQUIPMENT NOTES" means Equipment Notes issued under the Trust Indenture and designated as "Series A" thereunder, in the Original Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A", as such Equipment Notes have been amended by the applicable Allonge.

"SERIES B" or "SERIES B EQUIPMENT NOTES" means Equipment Notes issued under the Trust Indenture and designated as "Series B" thereunder, in the Original Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series B", as such Equipment Notes have been amended by the applicable Allonge.

"SERIES C" or "SERIES C EQUIPMENT NOTES" means Equipment Notes issued under the Trust Indenture and designated as "Series C" thereunder, in the Original Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C", as such Equipment Notes have been amended by the applicable Allonge.

"STANDARD & POOR'S" or "S&P" means Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., and its successors.

"STIPULATED LOSS VALUE" means, with respect to the Aircraft, during the Base Lease Term, (a) for the period from the Delivery Date up to and including January 2, 2003, the amount determined by multiplying (i) the percentage set forth in Schedule 3 to the Original Lease opposite the Stipulated Loss Value Date as of which Stipulated Loss Value is required to be computed by (ii) Lessor's Cost and (b) after January 2, 2003 (except as otherwise provided pursuant to Section 19), the amount set forth in Schedule 3 to Amendment No. 1 to Lease Agreement opposite the Stipulated Loss Value Date as of which Stipulated Loss Value is required to be computed. Notwithstanding anything to the contrary in any Operative Agreement, Stipulated Loss Value shall always be sufficient to pay in full, as of the date of payment thereof (assuming timely payment of the Equipment Notes prior to such date), the aggregate unpaid principal amount of all Equipment Notes outstanding as of such date, together with accrued and unpaid interest on all such Equipment Notes as of such date.

"STIPULATED LOSS VALUE DATE" means, for any month, (a) for the period from the Delivery Date up to and including January 2, 2003, the day in such month specified in Schedule 3 to the Original Lease or, if such a day is not a Business Day, the immediately succeeding Business Day and (b) after January 2, 2003, the day in such month specified in Schedule 3 to Amendment No. 1 to Lease Agreement or, if such a day is not a Business Day, the immediately succeeding Business Day.

"SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Basic Rent and Enhancement Rent but including Make-Whole Amount, if any, EETC Amendment Fee Consideration, if any, and Enhancements pursuant to clause (ii) of Section 8.4.2, if any) that Lessee assumes or becomes obligated to or agrees to pay under any Lessee Operative Agreement to or on behalf of Lessor or any other Person, including, without limitation, payments of Stipulated Loss Value, Termination Value and payments of indemnities under Section 9 of the Participation Agreement, but excluding any amount as to which Lessee is obligated to pay a Pro Rata Share pursuant to clause (e) of this definition, (b) (i) to the extent not payable (whether or not in fact paid) under Section 6(a) of the Note Purchase Agreement (as originally in effect or amended), an amount or amounts equal to the fees paid to the relevant Liquidity Provider under Section 2.03 of each Liquidity Facility and the related Fee Letter (as defined in the Intercreditor Agreement) multiplied by a fraction the numerator of which shall be the then outstanding aggregate principal amount of the Series A Equipment Notes, Series B Equipment Notes and Series C Equipment Notes and the denominator of which shall be the then outstanding aggregate principal amount of all "Series A Equipment Notes", "Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note Purchase Agreement); (ii) (x) the amount equal to interest on any Downgrade Advance (other than any Applied Downgrade Advance) payable under Section 3.07(e) of each Liquidity Facility minus Investment Earnings from such Downgrade Advance multiplied by (y) the fraction specified in the foregoing clause (i); (iii) (x) the amount equal to interest on any Non-Extension Advance (other than any Applied Non-Extension Advance) payable under
Section 3.07(a)(i) of each Liquidity Facility minus Investment Earnings from such Non-Extension Advance multiplied by (y) the fraction specified in the forgoing clause (i); (iv) if any payment default shall have occurred and be continuing with respect to interest on any Series A Equipment Notes, Series B

Equipment Notes or Series C Equipment Notes, (x) the excess, if any, of
(1) an amount equal to interest on any Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension Advance payable under
Section 3.07(a) of each Liquidity Facility over (2) the sum of Investment Earnings from any Final Advance plus any amount of interest at the Payment Due Rate actually payable (whether or not in fact paid) by Lessee in respect of the overdue scheduled interest on the Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction the numerator of which shall be the then aggregate overdue amounts of interest on the Series A Equipment Notes, Series B Equipment Notes and Series C Equipment Notes (other than interest becoming due and payable solely as a result of acceleration of any such Equipment Notes) and the denominator of which shall be the then aggregate overdue amounts of interest on all "Series A Equipment Notes", "Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note Purchase Agreement) (other than interest becoming due and payable solely as a result of acceleration of any such "Equipment Notes"); and
(v) Lessee's pro rata share of any other amounts owed to the Liquidity Providers by the Subordination Agent as borrower under each Liquidity Facility (other than amounts due as repayment of advances thereunder or as interest on such advances), except to the extent payable pursuant to clause (ii), (iii) or (iv) above, (c) Lessee's pro rata share of all compensation and reimbursement of expenses, disbursements and advances payable by Lessee under the Pass Through Trust Agreements, (d) Lessee's pro rata share of all compensation and reimbursement of expenses and disbursements payable to the Subordination Agent under the Intercreditor Agreement except with respect to any income or franchise taxes incurred by the Subordination Agent in connection with the transactions contemplated by the Intercreditor Agreement, (e) Lessee's pro rata share of any amount payable under Section 9.1 (and, if attributable thereto, Section 9.5) of the Participation Agreement to any Pass Through Indemnitee to the extent such amount relates to, results from or arises out of or in connection with (i) the Pass Through Agreements or the enforcement of any of the terms of any of the Pass Through Agreements, (ii) the offer, sale, or delivery of the Pass Through Certificates or any interest therein or represented thereby or
(iii) any breach of or failure to perform or observe, or any other noncompliance with, any covenant or agreement or other obligation to be performed by Lessee under any Pass Through Agreement or the falsity of any representation or warranty of Lessee in any Pass Through Agreement and (f) in the event Lessee requests any amendment to any Operative Agreement or Pass Through Agreement, Lessee's pro rata share of all reasonable fees and expenses (including, without limitation, fees and disbursements of counsel) of the Escrow Agents and the Paying Agents in connection therewith payable by the Pass Through Trustees under the Escrow Agreements. As used herein, "Lessee's pro rata share" means as of any time a fraction, the numerator of which is the principal balance then outstanding of Equipment Notes and the denominator of which is the aggregate principal balance then outstanding of all "Equipment Notes" (as such term is defined in each of the Operative Indentures). For purposes of this definition, the terms "Applied Downgrade Advance", "Applied Non-Extension Advance", "Cash Collateral Account", "Downgrade Advance", "Final Advance", "Investment Earnings", "Non-Extension Advance" and "Unpaid Advance" shall have the meanings specified in each Liquidity Facility.

"TERM" means the Base Lease Term; PROVIDED that if at the scheduled end of the Base Lease Term the Aircraft or Airframe is being used, or was within six (6) months prior thereto being used, by the U.S. Government pursuant to CRAF, the Term shall be deemed extended for the period necessary to accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months thereafter, and Lessee shall be obligated to pay with respect to any such period of extension (i) Basic Rent at a daily equivalent rate equal to the average of the Basic Rent paid during the Base Lease Term plus (ii) the daily equivalent rate of Enhancement Rent, if applicable at the time, paid during the final Payment Period.

"TERMINATION VALUE" means, with respect to the Aircraft, during the Base Lease Term, (a) for the period from the Delivery Date up to and including January 2, 2003, the amount determined by multiplying (i) the percentage set forth in Schedule 4 to the Original Lease opposite the Termination Value Date as of which Termination Value is required to be computed by (ii) Lessor's Cost and (b) after January 2, 2003 (except as otherwise provided pursuant to Section 19), the amount set forth in Schedule 4 to Amendment No. 1 to Lease Agreement opposite the Termination Value Date as of which Termination Value is required to be computed. Notwithstanding anything to the contrary in any Operative Agreement, Termination Value shall always be sufficient to pay in full, as of the date of payment thereof (assuming timely payment of the Equipment Notes prior to such date), the aggregate unpaid principal amount of all Equipment Notes outstanding as of such date, together with accrued and unpaid interest on all such Equipment Notes as of such date.

"TERMINATION VALUE DATE" means, for any month, (a) for the period from the Delivery Date up to and including January 2, 2003, the day in such month specified in Schedule 4 to the Original Lease or, if such a day is not a Business Day, the immediately succeeding Business Day and (b) after January 2, 2003, the day in such month specified in Schedule 4 to Amendment No. 1 to Lease Agreement or, if such a day is not a Business Day, the immediately succeeding Business Day.

"TRUST INDENTURE" means the Trust Indenture and Mortgage dated as of even date with the Participation Agreement, between Owner Trustee and Mortgagee, as supplemented by the Trust Indenture and Mortgage Supplement dated July 29, 1998 and the Trust Indenture and Mortgage Supplement dated March 19, 2004 and as further supplemented by the Trust Indenture and Mortgage Supplement dated as of the Restructure Agreement Execution Date.

(iii) DELETIONS. The definitions of the terms "ADVERSE CHANGE IN TAX LAW", "CHANGE IN TAX LAW", "EBO DATE", "EBO PRICE", "EXCLUDED PAYMENTS", "MATERIALLY ADVERSE TAX EVENT", "NEW DEBT", "REFUNDING CERTIFICATE", "REFUNDING DATE", "REFUNDING INFORMATION", "RENEWAL LEASE TERM", "RENEWAL NOTICE", "RENEWAL RENT", "RENEWAL RENT CAP", "RENEWAL TERM EXPIRATION DATE", "SUBSEQUENT RENEWAL LEASE TERM", "TAX ATTRIBUTE PERIOD" and "TAX INDEMNITY AGREEMENT" are hereby deleted from Annex A to the Original Lease in their entirety.

SECTION 2. AMENDMENTS TO SECTION 3 OR THE ORIGINAL LEASE. (A)
Section 3.1 of the Original Lease is hereby amended by deleting the second sentence of such Section 3.1 in its entirety.

(B) Clauses (a) through (d) of Section 3.2.1 of the Original Lease are hereby amended by deleting such clauses in their entirety and inserting the following in lieu thereof:

(a) During the Base Lease Term, (i) up to and including January 2, 2003, Lessee shall pay to Lessor, on each Payment Date, Basic Rent in the amount specified in Schedule 2 to the Original Lease for such Payment Date, which shall be allocated to the Payment Period ending on such Payment Date, if designated as a payment in arrears, or allocated to the Payment Period commencing on such Payment Date, if designated as a payment in advance, in each case as specified in Schedule 2 to the Original Lease and (ii) after January 2, 2003, Lessee shall, except as otherwise provided pursuant to Section 19, pay to Lessor, on each Payment Date, Basic Rent in the amount specified in Schedule 2 to Amendment No. 1 to Lease Agreement for such Payment Date, which shall be allocated to the Payment Period ending on such Payment Date, if designated as a payment in arrears, or allocated to the Payment Period commencing on such Payment Date, if designated as a payment in advance, in each case as specified in Schedule 2 to Amendment No. 1 to Lease Agreement; PROVIDED, HOWEVER, that Basic Rent paid on the July 2, 2003, October 1, 2003, October 30, 2003, November 5, 2003 and December 17, 2003 Payment Dates and Basic Rent paid on January 30, 2004 and March 17, 2004 shall be allocated as provided in Schedule 2 to Amendment No. 1 to Lease Agreement.

(C) Clause (e) of Section 3.2.1 of the Original Lease is hereby amended by relettering such clause as clause "(b)".

(D) Section 3.3(a) of the Original Lease is hereby amended by adding the following words to the end of Section 3.3(a): "So long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been discharged, if (i) Lessee consolidates a wire transfer of Basic Rent with payments of Enhancement Rent or Supplemental Rent for the Aircraft, or (ii) Lessee consolidates a wire transfer of Rent with payments of rent under leases and/or principal or interest under equipment notes (as applicable) for any Other Aircraft and such wire transfer contains payments of Enhancement Rent or Supplemental Rent for the Aircraft and/or similar payments, AMLR and/or Excess Rent (as defined in the leases for certain of the Other Aircraft) with respect to such Other Aircraft, then, at least one (1) Business Day prior to Mortgagee's receipt of such Rent described in clauses (i) or (ii) above, Lessee shall provide Mortgagee with a spreadsheet itemizing by U.S. registration mark how the payments of Basic Rent, Enhancement Rent or Supplemental Rent with respect to the Aircraft and, if applicable, such similar payments and/or AMLR or Excess Rent with respect to such Other Aircraft should be applied among the Aircraft and such Other Aircraft.

(E) Section 3.3(c) of the Original Lease is hereby amended by deleting the words ", other than Excluded Payments" therefrom.

(F) Section 3.3(d) of the Original Lease is hereby amended by deleting such section in its entirety.

(G) Clause (e) of Section 3.3 of the Original Lease is hereby amended by relettering such clause as clause "(d)".

SECTION 3. AMENDMENT TO SECTION 4.7(b) OF THE ORIGINAL LEASE.
Section 4. 7(b) of the Original Lease is hereby amended by adding the following to the end of such Section 4.7(b):

Notwithstanding the foregoing, at all times on and after the date that Lessee or any Affiliate of Lessee is the Owner Participant or otherwise beneficially owns (or has the contractual option to acquire) a majority of the Owner Participant's interest in the Aircraft (including all times after Lessee or any Affiliate of Lessee ceases to be the Owner Participant or to beneficially own or have the contractual option to acquire such Owner Participant's interest), Lessor will not have the right to exercise its rights as a "secured party", "lessor", or "conditional vendor", or their equivalent, under Section 1110 for any purpose in connection with such Aircraft in any case commenced under the Bankruptcy Code (and this clause constitutes a waiver, to the extent set forth herein, of Lessor's and the Owner Participant's rights under Section 12 of the Participation Agreement), provided, however, that (i) Mortgagee will nevertheless have all of the rights of a secured party and lessor unless and until the Equipment Notes have been indefeasibly paid in full in cash (including any such rights that Mortgagee has as an assignee of Lessor under the Trust Indenture), it being understood that, to the extent necessary for Mortgagee to exercise any such rights as its assignee, Lessor will retain all such rights that it may have even though it is waiving, as between Lessor and Mortgagee, the right to exercise such rights under the circumstances set forth above, and (ii) Lessee is not waiving herein any rights it has or could have under Section 1110 as a lessee of the Aircraft. For the avoidance of doubt, Lessee's options to purchase the Aircraft pursuant to Sections 10 and 17 of this Lease do not constitute "the contractual option to acquire a majority of the Owner Participant's interest in the Aircraft".

SECTION 4. AMENDMENTS TO SECTION 7 OF THE ORIGINAL LEASE.
Section 7 of the Original Lease is hereby amended by (i) deleting the proviso contained in Section 7.1.2, (ii) deleting the words "or any Renewal Lease Term" from Section 7.2.7(c) and (iii) deleting Section 7.2.7(i) in its entirety.

SECTION 5. AMENDMENTS TO SECTION 8 OF THE ORIGINAL LEASE. (A)
Section 8 of the Original Lease is hereby amended by deleting Sections 8.2.1(a) and (b) in their entirety and substituting the following in lieu thereof:

(a) Within 90 days after the end of each of the first three fiscal quarters in each fiscal year of Parent, an unaudited balance sheet of Parent and its consolidated affiliates as of the end of such quarter and unaudited related statements of income and cash flows for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, prepared in accordance with GAAP and in the case of the fiscal quarter ending March 31, 2005 and each and every fiscal quarter ending thereafter setting forth in comparative form the corresponding figures for the corresponding period in the

preceding fiscal year, prepared in accordance with GAAP; PROVIDED that, so long as Parent is subject to the reporting requirements of the Securities Exchange Act of 1934, a copy of Parent's report on Form 10-Q for such fiscal quarter (excluding exhibits) will satisfy this paragraph (a); PROVIDED, FURTHER, that for fiscal quarters ending March 31, 2004, June 30, 2004 and September 30, 2004, Lessee will provide an unaudited balance sheet and unaudited related statements of income and cash flow of Parent and its consolidated affiliates within 120 days of the end of such quarter.

(b) Within 120 days after the end of each fiscal year of Parent, an audited balance sheet of Parent and its consolidated affiliates as of the end of such fiscal year and related audited statements of income and cash flows for such fiscal year, prepared in accordance with GAAP, together with a report of Lessee's independent certified public accountants with respect to their audit of such financial statements, and in the case of the fiscal year ending December 31, 2005 and each and every fiscal year ending thereafter in comparative form with the preceding fiscal year; PROVIDED that, so long as Parent is subject to the reporting requirements of the Securities Exchange Act of 1934, a copy of Parent's report on Form 10-K for such fiscal year (excluding exhibits) will satisfy this paragraph
(b); PROVIDED, FURTHER, that for the fiscal year ended December 31, 2003, Lessee shall provide an audited balance sheet of Parent and its consolidated affiliates and audited related statements of income and cash flows as soon as such audited balance sheet and audited related statements of income and cash flows are available.

(c) Notwithstanding the foregoing, as soon as available, and in any event within thirty (30) days following the date of filing with the Securities and Exchange Commission, one copy of each Quarterly Report on Form 10-Q (or any successor form thereto promulgated by the Securities and Exchange Commission) of Parent and each Annual Report on Form 10-K (or any successor form thereto promulgated by the Securities and Exchange Commission) of Parent filed with the Securities and Exchange Commission.

(d) Lessee shall deliver to Mortgagee a copy of any officer's certificate or notice that Lessee is required to deliver to the administrative agent under the Bank Lender Documents pursuant to Sections 5. 1 (viii), (ix), (x) and (xii) of the Credit Agreement or any comparable section of any Bank Lender Documents executed in connection with a Bank Debt Refinancing or any amendment of the Credit Agreement.

(e) In the event that an executive officer (or any officer with responsibility in relation to this Lease or any other person determining senior management policies or exercising executive responsibilities) of Lessee shall have actual knowledge of the failure by Lessee to observe or perform (or cause to be observed or performed) in any material respect any of its covenants, agreements or obligations in Sections 8.4.1, 8.4.2, 8.4.3, 8.4.4 or 12(g), Lessee shall deliver, within five (5) Business Days of such actual knowledge, an affirmative written notice thereof to Lessor, Owner Participant and Mortgagee.

(f) Lessee shall deliver to Lessor, Owner Participant and Mortgagee as soon as available and in any event within five (5) Business Days after the end of each quarter of each fiscal year, an officer's certificate certifying that Lessee is in compliance with its

covenants, agreements and obligations in Sections 8.4.1, 8.4.2, 8.4.3, 8.4.4 or 12(g) or, if Lessee is not in compliance, specifying the nature of the non-compliance, the period of existence of the non-compliance and the action that Lessee has taken or proposes to take with respect thereto.

(B) Section 8 of the Original Lease is amended by adding the following to the end of such Section 8 as new Sections 8.3 and 8.4:

8.3 [Intentionally Omitted]

8.4.1 RESTRICTED PAYMENTS; RESTRICTIONS ON INDEBTEDNESS; RESTRICTIONS ON LEASES AND SUBLEASES: MERGERS; LINES OF BUSINESS; SUBORDINATED DEBT; CONTINGENT OBLIGATIONS.

From and after the Restructure Agreement Execution Date and prior to the Special Covenants Termination Date, Lessee will not, and Lessee will not permit Parent or any Subsidiary or any Affiliate of Lessee or Parent to:

(a) make any Restricted Junior Payment, unless the Restricted Junior Payment Conditions are satisfied both immediately prior to giving effect to the making of such Restricted Junior Payment and after giving effect to the making of such proposed Restricted Junior Payment;

(b) create, incur (by merger, conversion, exchange or otherwise), assume, guarantee or become liable, contingently or otherwise, for any Indebtedness (including any Acquired Indebtedness), unless the Additional Indebtedness Incurrence Conditions are satisfied both immediately prior to giving effect to the creation, incurrence, assumption or guarantee of such other Indebtedness and after giving effect to such proposed creation, incurrence, assumption or guarantee of such other Indebtedness; PROVIDED, HOWEVER, this Section 8.4.l(b) shall not apply to Permitted Indebtedness; and PROVIDED, FURTHER, for the avoidance of doubt and notwithstanding anything to the contrary contained in this Lease, the accrual of interest, accretion or amortization of original issue discount and the payment of interest or dividends in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness;

(c) enter into any lease or sublease of any real or personal property as lessee or sublessee (other than intercompany leases between Parent, Polar and Lessee), unless the Additional Lease Incurrence Conditions are satisfied both immediately prior to giving effect to the entering into of such other lease or sublease and after giving effect to such entering into of such other proposed lease or sublease; PROVIDED, HOWEVER, Operating Leases and Capital Leases entered into after the Restructure Agreement Execution Date which are replacements of Operating Leases or Capital Leases in effect on the Restructure Agreement Execution Date (and related to the same property), shall be deemed to have been entered into after the Restructure Agreement Execution Date only to the extent that the scheduled cash rental payments required to be made thereunder during any fiscal year of Lessee exceed the scheduled cash rental payments required to be made during any

fiscal year of Lessee under the replaced leases as in effect on the Restructure Agreement Execution Date;

(d) (x) 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, sublease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its business, property or fixed assets, whether now owned or hereafter acquired, (y) change to any substantial extent any line or lines of business activity engaged in by Lessee as described in the Business Plan, or (z) engage to any substantial extent in any line or lines of business other than airfreight and airfreight services consistent with the Business Plan; PROVIDED, HOWEVER:

(i) any Subsidiary of Parent may be merged with or into Parent, Lessee or Polar, or (other than Lessee or Polar) be liquidated, wound up or dissolved; PROVIDED that, in the case of such a merger, Parent, Lessee or Polar shall be the continuing or surviving corporation; and

(ii) any Subsidiary of Parent may convey, lease (subject, in the case of Lessee, to
Section 7.2.7), license, sell or otherwise transfer all or substantially all of its business, properties or assets to Parent, Lessee or Polar in one transaction or a series of transactions, so long as any security interests and liens granted to Lessor and Mortgagee in the assets so transferred shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such transfer) and all actions required to maintain said perfected status have been taken;

(e) in addition to and not in limitation of, any other term, covenant or condition set forth in this Lease (x) any Indebtedness of Parent and its Subsidiaries which shall be subordinated in right of payment to any other Indebtedness of Parent and its Subsidiaries shall also be expressly subordinated in right of payment on the same basis to the obligations under the Credit Agreement, the Lease, the Equipment Notes, the Other EETC Transactions and AFL III Financing Agreement and (y) no repayments of any such subordinated Indebtedness (except scheduled payments of principal and interest or mandatory prepayments of principal) shall be made unless, on a pro forma basis after giving effect to such repayment, Parent and its Subsidiaries shall be able to incur an additional $1.00 of Indebtedness under the Additional Indebtedness Incurrence Conditions; or

(f) create or become or remain liable with respect to any Contingent Obligation, except:

(i) Parent and any Subsidiary may become and remain liable with respect to Contingent Obligations arising under their guaranties under the Credit Agreement, the Lease, the Other EETC Transactions, the Polar Guaranty and the Parent Guaranty;

(ii) Lessee may become and remain liable with respect to Contingent Obligations under Interest Rate Agreements and Currency Agreements with a lender under the Credit Agreement;

(iii) Parent 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 sales of assets or securities;

(iv) Parent and its Subsidiaries may become and remain liable with respect to letters of credit issued under the Exit Facility;

(v) Parent and its Subsidiaries may become and remain liable with respect to letters of credit issued in the ordinary course of business of Parent and its Subsidiaries in an amount not to exceed $5,000,000 in the aggregate at any time;

(vi) Parent and its Subsidiaries, as applicable, may remain liable with respect to Contingent Obligations described in Schedule 8.4.1
(f)(vi) annexed hereto (other than in respect of letters of credit);

(vii) Parent and its Subsidiaries may become and remain liable with respect to Contingent Obligations to the extent such Contingent Obligations are permitted pursuant to Section 8.4.1(c); and

(viii) Parent and its Subsidiaries may become and remain liable with respect to other Contingent Obligations; PROVIDED that the maximum aggregate liability, contingent or otherwise, of Lessee and its Subsidiaries in respect of all such Contingent Obligations shall at no time exceed $10,000,000.

8.4.2 ENHANCEMENTS

If, after the Restructure Agreement Execution Date and prior to the Special Covenants Termination Date, any Other Creditor receives any Enhancement in connection with any amendment, waiver or modification of the terms of such Other Creditor's written contract with Lessee regarding any action, inaction, state of affairs or item which constitutes an event of default or may have become an event of default under the terms of such Other Creditor's written contract with Lessee without such amendment, waiver or modification. Lessee shall (a) give prompt notice to Mortgagee and Lessor describing in reasonable detail the amendment, waiver or modification and the Enhancement given in connection therewith, and (b) cause Lessor to simultaneously receive equal and identical (or if identical is not possible, substantially identical) Enhancements (calculated as the net economic benefit to such Other Creditor, but not less than zero); PROVIDED that any settlement by Lessee in the ordinary course of business of contractual aircraft return condition obligations of Lessee regarding an aircraft which does not exceed the amount of the applicable contractual aircraft return condition obligation of Lessee shall not constitute an Enhancement for the purposes hereof. Enhancements which are calculated on a

per unit basis will be provided to Lessor on a per unit basis, and Enhancements which are provided as a percentage of outstanding obligations shall be provided to Lessor pro rata in the proportion that the debt then outstanding on the Series A Equipment Notes bears to the amount of the obligation owed to such Other Creditor. Enhancements which are payable in cash shall be paid by Lessee to Lessor hereunder either (i) as additional Rent in the case of Enhancements which are being provided because an Other Creditor is receiving new or increased rent, debt payments or other periodic payments, fees or compensation ("ENHANCEMENT RENT") or (ii) as Supplemental Rent in the case of Enhancements which are being provided because an Other Creditor received maintenance reserves or other non-periodic payments, fees or compensation.

8.4.3 ADDITIONAL SALE PROVISIONS. Lessee agrees to comply with the provisions of Schedule 8.4.3.

8.4.4 PROTECTIONS FOR THE USE AND DEPRECIATION OF THE AIRCRAFT

Without limiting the generality of the provisions of Section 8.1 hereof, after the Restructure Agreement Execution Date, Lessee shall have the following obligations, in addition to any other obligations under this Lease with respect to the maintenance of the Aircraft and Engines:

(a) Lessee shall at all times maintain the Airframe and each Engine in airworthy condition, including the performance of all procedures and checks necessary to keep the Aircraft and each Engine in an airworthy condition, and without limiting the generality of the foregoing, Lessee shall perform all airframe "D-Checks" as required for further operation of the Aircraft (with no extensions of D-Check intervals by more than one year beyond the manufacturer's recommended D-Check interval, in each case as approved by the FAA), and perform all Engine overhauls as required by the Engine's condition.

(b) Lessee shall establish, maintain in effect at all times and timely fund all payments under an Engine Maintenance Contract designed to meet the objectives set forth in paragraphs 1(a)(i) and (ii) of the Maintenance Schedule (as that term is defined in clause (c) below) (the "OBJECTIVES").

(c) Schedule 8.4.4(c) (the "MAINTENANCE SCHEDULE") sets forth responsibilities and obligations that Lessee will timely and fully perform and Lessee agrees to each of the terms, conditions, covenants and other requirements set forth therein. Capitalized terms used in this Section 8.4.4 and not otherwise defined in this Amendment No. 1 to Lease Agreement shall have the meanings ascribed to them in the Maintenance Schedule.

(d) Except as otherwise provided in Section 8.4.4(f), (g) or (i) or the Maintenance Schedule, Lessee (i) will maintain the Engine Maintenance Contract in accordance with the terms thereof, (ii) will not consent to any amendment, supplement or waiver of any of the provisions of the Engine Maintenance Contract without the prior written consent of Mortgagee and Lessor (other than amend-

ments, supplements or waivers that (A) have no adverse effect on any obligation to maintain the Airframe or the Engines or (B) have no material effect on any other provision of the Engine Maintenance Contract), or (iii) will not enter into any additional Engine Maintenance Contract in replacement (whether in partial replacement or complete replacement) of the Engine Maintenance Contract without the prior written consent of Mortgagee and Lessor; PROVIDED, HOWEVER, that the consent of Lessor shall not be required under this clause (d) so long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been duly discharged. For the avoidance of doubt, any reduction to or delay in any payment obligation under any Engine Maintenance Contract shall be material except any such change, reduction or delay which is effected pursuant to Section 8.4.4(g).

(e) To monitor the maintenance activities contemplated by the Engine Maintenance Contract, (i) not later than the fifteenth day of each calendar month, Lessee shall provide to the Consultant the Report required by paragraph 1(e) of the Maintenance Schedule with respect to the use and operation of each Engine in the immediately preceding month,
(ii) not later than the twenty-fifth day of each month Lessee shall cause the Engine Maintenance Contractor to provide the Consultant with a report that indicates the current credit balance for each Engine under the applicable Engine Maintenance Contract, and (iii) not later than the twentieth day after December 31, 2005 and not later than the twentieth day after every second year thereafter commencing with 2007, Lessee shall provide to the Consultant a certificate from an executive officer of Lessee certifying, as of the relevant date, (A) that all of the assumptions set forth in Schedule 8.4.4(e) to Amendment No. 1 to Lease Agreement (the "ASSUMPTIONS") continue to be correct and accurate in all respects ( or, if the Assumptions are no longer correct and accurate, certifying as to the ways in which the Assumptions have changed) and (B) that the maintenance programs provided under the Engine Maintenance Contract have met the Objectives (or, if they have not met the Objectives, certifying as to the ways in which the Objectives have not been met).

(f) If the information provided to or obtained by the Consultant indicates that the Objectives are not being met, including without limitation, due to a failure to meet the obligations under the Engine Maintenance Contract, or that there has been either a change in any material respect in the Assumptions upon which the Engine Maintenance Contract is based or any material variance in meeting the Objectives, the Consultant, after consultation with the 1998 Class A Certificateholders as Consultant can reasonably identify and after reasonable discussions and consultation with Lessee, shall by written notice to Lessee (x) advise Lessee of such non-compliance, failure to meet its obligations, changed circumstances or a material variance, and (y) specify reasonable actions or adjustments respecting maintenance in order to comply with its obligations contemplated by this
Section and the Maintenance Schedule. Lessee shall have 30 days from the delivery of such notice to comply with the obligations specified in the Consultant's notice, which shall be implemented as provided in clause (g) hereof.

(g) Beginning December 31, 2005 and every two years thereafter the Consultant will review the Assumptions to determine whether changes in the Assumptions that have occurred, or are reasonably expected to occur, require changes to the remaining life limits and/or rate per flight hour amounts so that the Objectives can be met. Within 20 days of December 31, 2005 and within 20 days of every second year thereafter commencing with December 31, 2007, Lessee shall provide to the Consultant the maintenance conditions of the Engines and Airframe and the variance of such conditions from the Objectives (the "VARIANCE"), together with the engine overhaul costs pursuant to the then Engine Maintenance Contract and the contractor quotes or cost estimates for the next D-checks (including landing gear, if necessary) for the Airframe and the then-applicable values for the Assumptions. If the Variance is more than 0.5% of the time remaining under either of the two Objectives or there are material differences for the future periods in the Assumptions, then Lessee will propose to the Consultant an increase or decrease in the monthly payments per engine flight hour under the then-applicable Engine Maintenance Contract so as to eliminate such Variance over the next twelve (12) months, giving effect to Assumptions then applicable for future periods; PROVIDED that the Variance will be eliminated over a period longer than twelve (12) months, but not to exceed twenty-four (24) months, if such increase in payments per flight hour would have been more than 110% of the payments per flight hour applicable for the month ended December 31, 2005, or the month ended December 31 of every second year thereafter commencing with December 31, 2007.

(h) Lessee shall pay, promptly upon demand, all reasonable costs and expenses of the Consultant in connection with Lessee's compliance with this Section 8.4.4 (the "CONSULTANT COSTS AND EXPENSES"). The Consultant Costs and Expenses shall be paid by Lessee directly and shall not be satisfied from any amounts otherwise paid by Lessee under the Operative Agreements.

(i) Lessee's obligation to maintain the Engine Maintenance Contract will end on the earlier to occur of (i) the date that the aggregate amount outstanding on the Series A Equipment Notes for the Aircraft is $30 million or less, and
(ii) the date that the senior unsecured debt of Lessee achieves the Required Rating, in either case, however, only if
(x) the Aircraft and the Other 1998 EETC Aircraft are then in compliance with the provisions of Section 8.1 and of this section 8.4.4 or (y) Lessee is no longer subject to any obligation to maintain the Engine Maintenance Contract with respect to such Other 1998 EETC Aircraft.

(j) Notwithstanding anything to the contrary contained herein, (i) Lessee shall not take the Aircraft out of use or operation other than for required maintenance, unless at such time the Objectives have been met, (ii) at all times while the Aircraft is taken out of use or operation Lessee shall comply with the requirements set forth in Section 8.1 and this Section 8.4.4, and (iii) this Section 8.4.4 shall in no way result in any adverse change to Lessee's obligations to maintain the Aircraft under the Original Lease.

(k) Notwithstanding anything to the contrary herein, this Section 8.4.4 is intended to supplement Lessee's maintenance obligations set forth in Section 8.1 and Annex C and the return conditions set forth in Section 5 and Annex B; PROVIDED, HOWEVER, if any of the obligations, standards or requirements set forth in this Section 8.4.4 conflict with or are inconsistent with Section 8.1 or Annex C or Section 5 or Annex B and such conflict or inconsistency (i) results in any adverse effect on Lessor's rights with respect to any of the maintenance provisions contained in Section 8.1 or Annex C or any of the return conditions contained in Section 5 or Annex B or (ii) reduces any of Lessee's obligations or requirements or makes any of the standards less restrictive under Section 8.1 or Annex C or Section 5 or Annex B, then Lessee shall comply with the relevant obligation(s), standard(s) or requirement(s) set forth in the applicable provisions of Section 8.1 or Annex C or Section 5 or Annex B, as the case may be.

8.4.5 BANK LENDER COVENANTS

If, before the occurrence of an Action Event, the Bank Lenders waive or amend Sections 6.1,6.4,6.7, 6.9(A), 6.14 or 6.16 of the Credit Agreement (and the definitions relating thereto), then Sections
8.4.1(b) - (f) (and the definitions relating thereto) shall be deemed to have been waived or amended in the same manner, so long as Lessee has complied with Section 8.4.2; PROVIDED, HOWEVER, that the provisions of Sections 8.4.1(b) - (f) shall not be amended, waived or otherwise affected by any amendments or waivers that were made or given in anticipation of or in connection with any payment in full (or securing by collateral consisting of cash, cash equivalents, letters of credit, surety bonds or the equivalent thereof) of the obligations owed to such Bank Lenders.

SECTION 6. AMENDMENTS TO SECTION 9 OF THE ORIGINAL LEASE. (A)
Section 9.2.2(b)(i) of the Original Lease is hereby amended by deleting such section in its entirety and substituting the following in lieu thereof:

(i) all unpaid Basic Rent or Enhancement Rent due at any time prior to such Termination Date but excluding any Basic Rent or Enhancement Rent payable on such Termination Date; plus

(B) Section 9.2.2(c)(ii) of the Original Lease is hereby amended by deleting such section in its entirety and substituting the following in lieu thereof:

(ii) the obligation of Lessee to pay Basic Rent or Enhancement Rent on or after the Payment Date with reference to which Termination Value is computed, shall cease, and the Term for the Aircraft shall end effective as of the date of such sale.

(C) Section 9.3(a)(iii)(1) of the Original Lease is hereby amended by deleting such section in its entirety and substituting the following in lieu hereof:

(1) all unpaid Basic Rent and Enhancement Rent due at any time prior to such Termination Date (or any later date agreed by the parties pursuant to Section 9.2.2(d)) but excluding any Basic Rent and Enhancement Rent payable on such Termination Date (or any later date agreed by the parties pursuant to Section 9.2.2(d)); plus

(D) Section 9.3(b)(ii) of the Original Lease is hereby amended by deleting such section in its entirety and substituting the following in lieu thereof:

(i) The obligation of Lessee to pay Basic Rent and Enhancement Rent otherwise due on or after the Termination Date shall cease, and the Term for the Aircraft shall end effective as of such Termination Date.

SECTION 7. AMENDMENTS TO SECTION 10 OF THE ORIGINAL LEASE. (A) Section 10.1.2(a)(i) of the Original Lease is hereby amended by deleting such clause in its entirety and substituting the following in lieu thereof:

(i) on the Stipulated Loss Value Date next following the earlier of (x) the 180th day following the date of the occurrence of such Event of Loss, and (y) no later than the third Business Day following the receipt of all insurance proceeds with respect to such occurrence (but in any event not earlier than the date of Lessee's election under Section 10.1.1 to make payment under this Section 10.1.2), Lessee shall pay to Lessor an amount equal to the Stipulated Loss Value of the Aircraft as of the Loss Payment Date plus (a) all unpaid Basic Rent or Enhancement Rent, as the case may be, due prior to the Loss Payment Date, but excluding any unpaid Basic Rent or Enhancement Rent, as the case may be, payable on or before such Loss Payment Date, plus (b) all amounts of Supplemental Rent due on or before the Loss Payment Date and any reasonable expenses and costs incurred in connection with such Event of Loss by Lessor or Mortgagee (including with respect to Make-Whole Amount, if any).

(B) Section 10.1.2(b) of the Original Lease is hereby amended by deleting such clause in its entirety and substituting the following in lieu thereof:

(b) Upon payment in full of all amounts described in the foregoing paragraph (a), (i) the obligation of Lessee to pay Basic Rent and Enhancement Rent hereunder with respect to the Aircraft shall terminate, (ii) the Term for the Aircraft shall end and (iii) Lessor will transfer the Aircraft to Lessee, as-is and where-is, and subject to any insurer's salvage rights, but otherwise in the manner described in Section 4.5.

(C) Section 10.5.3(a) of the Original Lease is hereby amended by deleting the words ", except with respect to Excluded Payments" therefrom.

(D) Section 10.6 of the Original Lease is hereby amended by deleting such section in its entirety and substituting the following in lieu thereof:

10.6 REQUISITION OF AIRCRAFT FOR USE

If any Government Entity shall requisition for use the Airframe and the Engines or engines installed thereon (including the U.S. Government pursuant to CRAF), and if the same does not constitute an Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such requisition and all of Lessee's obligations under this Agreement shall continue to the same extent as if such requisition had not occurred; PROVIDED, HOWEVER, that if the Airframe and Engines or engines installed thereon are not returned to Lessor by Lessee at the end of the Term or within 180 days thereafter, and Lessor, upon notice

given not less than 30 days nor more than 120 days before the end of the Term, shall have elected to treat such event as constituting an Event of Loss with respect to the Aircraft, Lessee shall then be deemed to have made the election set forth in Section 10.1.2 with the effect that Lessee shall be obligated to pay the Stipulated Loss Value and all other amounts payable pursuant to Section 10.1.2 with respect to the Aircraft as if an Event of Loss had occurred as of the end of the Term. If Lessor shall not have elected to treat such event as an Event of Loss, Lessee shall be obligated to return the Airframe and Engines or engines to Lessor pursuant to, and in all other respects to comply with the provisions of, Section 5 promptly upon their return by such Government Entity, and Lessee shall pay to Lessor upon such return for each day after the end of the Term to but excluding the day of such return, up to a maximum of 30 days, an amount equal to (i) the daily equivalent rate equal to average daily Basic Rent payable by Lessor during the Base Lease Term plus (ii) the daily equivalent rate of Enhancement Rent, if applicable at the time, payable during the final Payment Period.

SECTION 8. AMENDMENT TO SECTION 12 OF THE ORIGINAL LEASE.
Section 12 of the Original Lease is hereby amended by adding the following to the end of such Section 12 as a new clause (g):

(g) In addition to any inspection as provided hereunder, an aviation professional designated by Mortgagee and Lessor and chosen from the list attached to Amendment No.1 to Lease Agreement in Schedule
12(g) (the "SPECIAL INSPECTOR") may, at the times and intervals and on the other terms and conditions set forth in this Section 12 as are provided with respect to the Inspecting Parties, inspect the Aircraft, the Airframe and the Engines (including without limitation, the Aircraft Documents), make copies of such Aircraft Documents not reasonably deemed confidential by Lessee or such Permitted Sublessee, and share the results of such inspection and such copies with Mortgagee and Lessor, and such Special Inspector shall have such rights to information as the other Inspecting Parties have under this Section 12; PROVIDED, HOWEVER, that Lessor shall not have any rights with respect to the designation of the Special Inspector (and, therefore, only Mortgagee shall have rights with respect to the designation of the Special Inspector) so long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been duly discharged.

SECTION 9. AMENDMENTS TO SECTION 13 OF THE ORIGINAL LEASE. (A) Section 13.2.1 of the Original Lease is hereby amended by adding the words "Subject to the provisions of Section 8.4.1 (d)," in front of the first word of such section.

(B) Section 13.3 of the Original Lease is hereby amended by deleting the words "(other than Excluded Payments)" therefrom.

SECTION 10. AMENDMENTS TO SECTION 14 OF THE ORIGINAL LEASE. (A) Section 14 of the Original Lease is hereby amended as follows: The eighth line of Section 14 is amended by adding the phrase "within any cure period provided for herein with respect to such matter" after the word "remedied" and before the ":".

(B) Section 14.1 of the Original Lease is hereby amended by deleting such section in its entirety and substituting the following in lieu thereof:

14.1 PAYMENTS

Lessee shall fail to pay any amount of Basic Rent, Stipulated Loss Value, Termination Value or Enhancement Rent when due and such failure shall continue for ten (10) Business Days after the same shall have become due; or Lessee shall fail to pay any Supplemental Rent (other than Stipulated Loss Value or Termination Value) when due and such failure shall continue for ten (10) Business Days from and after the date of any written notice to Lessee from Lessor or Mortgagee of the failure to make such payment when due.

(C) Sections 14.3 and 14.4 of the Original Lease are hereby amended by deleting such sections in their entirety and substituting the following Sections 14.3 and 14.4 in lieu thereof:

14.3 OTHER COVENANTS

(a) If Lessee shall fail to observe or perform (or cause to be observed and performed) in any material respect any other covenant, agreement or obligation set forth herein or in any other Lessee Operative Agreement (other than the covenants, agreements and obligations set forth in Sections 8.4.1, 8.4.2, 8.4.3, 8.4.4 and 12(g)) and such failure continues unremedied for a period of 30 days from and after the date of written notice thereof to Lessee from Lessor or Mortgagee, unless such failure is capable of being corrected and Lessee shall be diligently proceeding to correct such failure, in which case there shall be no Lease Event of Default unless and until such failure shall continue unremedied for a period of 120 days after receipt of such notice.

(b) If Parent or Polar shall fail to observe or perform (or cause to be observed and performed) in any material respect any covenant, agreement or obligation set forth in the Parent Guaranty, the Parent Security Agreement, the Polar Guaranty or the Polar Security Agreement, and such failure continues unremedied for a period of 30 days from and after the date of written notice thereof to Lessee from Lessor or Mortgagee, unless such failure is capable of being corrected and Polar or Parent, as applicable, shall be diligently proceeding to correct such failure, in which case there shall be no Lease Event of Default unless and until such failure shall continue unremedied for a period of 120 days after receipt of such notice.

14.4 REPRESENTATIONS AND WARRANTIES

(a) Any representation or warranty made by Lessee herein, in the Participation Agreement or in any other Lessee Operative Agreement or in any certificate required to be delivered by Lessee pursuant thereto (other than the representations and warranties made by Lessee in clauses (x), (xi), (xii), (xiii) and (xv) in Section 7(a) of the Restructure Agreement) (i) shall prove to have been untrue or inaccurate in any material respect as of the date made, (ii) such untrue or inaccurate representation or warranty is material at the time in question and (iii) the same shall remain uncured (to the extent of the adverse im-

pact of such incorrectness on the interest of the Participants or Lessor) for a period of 30 days from and after the date of written notice thereof to Lessee from Lessor or Mortgagee.

(b) Any representation or warranty made by Parent or Polar, in the Parent Guaranty, the Parent Security Agreement, the Polar Guaranty or the Polar Security Agreement, (i) shall prove to have been untrue or inaccurate in any material respect as of the date made, (ii) such untrue or inaccurate representation or warranty is material at the time in question and (iii) the same shall remain uncured (to the extent of the adverse impact of such incorrectness on the interest of the Participants or Lessor) for a period of 30 days from and after the date of written notice thereof to Lessee from Lessor or Mortgagee.

(D) Section 14 of the Original Lease is hereby amended by adding the following to the end of Section 14.5 as new Sections 14.5(d) through (i):

(d) Parent shall consent to the appointment of or the taking of possession by a receiver, trustee or liquidator of itself or of substantially all of its property, or Parent shall admit in writing its inability to pay its debts generally as they come due, or does not pay its debts generally as they become due or shall make a general assignment for the benefit of creditors, or Parent shall file a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or other relief in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) or an answer admitting the material allegations of a petition filed against Parent in any such case, or Parent shall seek relief by voluntary petition, answer or consent, under the provisions of any other bankruptcy or other similar Law providing for the reorganization or winding-up of corporations (as in effect at such time), or Parent shall seek an agreement, composition, extension or adjustment with its creditors under such Laws, or Parent's board of directors shall adopt a resolution authorizing any of the foregoing; or

(e) an order, judgment or decree shall be entered by any court of competent jurisdiction appointing, without the consent of Parent, a receiver, trustee or liquidator of Parent or of substantially all of its property, or substantially all of the property of Parent shall be sequestered, and any such order, judgment or decree of appointment or sequestration shall remain in force undismissed, unstayed and unvacated for a period of 90 days after the date of entry thereof; or

(f) a petition against Parent in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) is filed and not withdrawn or dismissed within 90 days thereafter, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Parent, any court of competent jurisdiction assumes jurisdiction, custody or control of Parent or of substantially all of its property and such jurisdiction, custody or control remains in force unrelinquished, unstayed and unterminated for a period of 90 days.

(g) Polar shall consent to the appointment of or the taking of possession by a receiver, trustee or liquidator of itself or of substantially all of its property, or Polar shall admit in writing its inability to pay its debts generally as they come due, or does not pay its debts generally as they become due or Polar shall make a general assignment for the benefit of creditors, or Polar shall file a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or other relief in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) or an answer admitting the material allegations of a petition filed against Polar in any such case, or Polar shall seek relief by voluntary petition, answer or consent, under the provisions of any other bankruptcy or other similar Law providing for the reorganization or winding-up of corporations (as in effect at such time), or Polar shall seek an agreement, composition, extension or adjustment with its creditors under such Laws, or Polar's board of directors shall adopt a resolution authorizing any of the foregoing; or

(h) an order, judgment or decree shall be entered by any court of competent jurisdiction appointing, without the consent of Polar, a receiver, trustee or liquidator of Polar or of substantially all of its property, or substantially all of the property of Polar shall be sequestered, and any such order, judgment or decree of appointment or sequestration shall remain in force undismissed, unstayed and unvacated for a period of 90 days after the date of entry thereof; or

(i) a petition against Polar in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) is filed and not withdrawn or dismissed within 90 days thereafter, or if, under the provisions of any Law providing for reorganization or winding-up of corporations which may apply to Polar, any court of competent jurisdiction assumes jurisdiction, custody or control of Polar or of substantially all of its property and such jurisdiction, custody or control remains in force unrelinquished, unstayed and unterminated for a period of 90 days.

(E) Section 14 of the Original Lease is hereby amended by adding the following to the end of such Section 14 as new Sections 14.6, 14.7, 14.8 and 14.9:

14.6 CROSS DEFAULT

Following the Restructure Agreement Execution Date, (a) Lessee shall fail to pay when due, or within any applicable grace period, any obligation under the GECAS Documents, the Boeing Documents, the Bank Lender Documents or the Other EETC Transaction Documents (an "OTHER CREDITOR PAYMENT DEFAULT"), (b) Lessee shall fail to observe or perform any term, covenant or agreement contained in the GECAS Documents, the Boeing Documents, the Bank Lender Documents or the Other EETC Transaction Documents for such period of time as would permit (assuming the giving of appropriate notice if required) GECAS, Boeing, the Bank Lenders or any Other EETC Transaction Person to accelerate the maturity of any indebtedness of Lessee relating thereto or to terminate the lease relating thereto (an "OTHER CREDITOR NON-PAYMENT DEFAULT") or (c) there is an acceleration of obligations exceeding $50,000,000 in the aggregate owed to one or more Other Accelerated Creditors (an "ACCELERATION"); PROVIDED, HOWEVER, that no default under subsection 7.2(i) and 7.2(ii) of the Credit Agreement (or any similar provi-

sion subsequently incorporated therein or included in any documents executed in connection with a Bank Debt Refinancing) based on a default under an agreement with an Other Accelerated Creditor shall constitute a Lease Event of Default under this Section 14.6, unless there is an acceleration of obligations exceeding $50,000,000 with respect to such default or there is an acceleration of default by GECAS, Boeing or the Bank Lenders as a result of such default.

14.7 MAINTENANCE CONTRACTS

If (a) Lessee fails or refuses to comply with the obligations in the Consultant's notice referred to in Section 8.4.4(f), (b) Lessee defaults on any of its material obligations under any Engine Maintenance Contract, and (c) any Engine Maintenance Contractor breaches any of its material obligations under any Engine Maintenance Contract, such breach is not remedied within any cure period set forth in such Engine Maintenance Contract, and Lessee fails to replace such Engine Maintenance Contractor with another maintenance contractor of international stature acceptable (and pursuant to a contract that is acceptable and an assignment that is acceptable to Lessor and Mortgagee and executed by Lessee) to Lessor and Mortgagee within 90 days after the date of such breach by Engine Maintenance Contractor (or, if there is a cure period, after the end of such cure period), which replacement maintenance contract is funded at the same level as the maintenance contract that it replaced, and any of the foregoing continues for 30 days after the earlier of (i) notice thereof to Lessee from Lessor or Mortgagee, and (ii) knowledge thereof by any executive officer (or any officer with responsibility in relation to this Lease or any other person determining senior management policies or exercising executive responsibilities) of Lessee; PROVIDED, HOWEVER, that Lessor shall not have any rights with respect to the acceptance of any Engine Maintenance Contract or Engine Maintenance Contractor so long as Mortgagee has not given notice to Lessee that the Lien of the Trust Indenture has been duly discharged.

14.8 SPECIAL COVENANT DEFAULT

Subject to Section 8.4.5 hereof, if Lessee shall fail to observe or perform (or cause to be observed and performed) in any material respect any covenant, agreement or obligation set forth in Sections 8.4.1, 8.4.2, 8.4.3, 8.4.4 or 12(g) and such failure continues Unremedied for a period of 30 days from and after the earlier of the date of (i) written notice thereof to Lessee from Lessor or Mortgagee, and (ii) actual knowledge thereof by any executive officer (or any officer with responsibility in relation to this Lease or any other person determining senior management policies or exercising executive responsibilities) of Lessee, unless such failure is capable of being corrected and Lessee shall be diligently proceeding to correct such failure, in which case there shall be no Lease Event of Default unless and until such failure shall continue unremedied for a period of 120 days after receipt of the notice referenced in clause (i) hereof or the date such officer or other person referred to in clause (ii) has actual knowledge, as applicable.

14.9 SPECIAL REPRESENTATION DEFAULT

If any representation or warranty made by Lessee in clause
(x), (xi), (xii), (xiii) or (xv) in Section 7(a) in the Restructure Agreement (i) shall prove to have been untrue or inaccurate in any material respect as of the date made, (ii) such untrue or inaccurate representation or warranty is material at the time in question and
(iii) the same shall remain uncured (to the extent of the adverse impact of such incorrectness on the interest of Mortgagee or Lessor) for a period of 30 days from and after (1) with respect to a representation or warranty which is untrue or inaccurate in any material respect due to a provision in a Disclosed Other Creditor Document (as defined in clause (xiii) of Section 7(a) of the Restructure Agreement) other than a provision thereof which was not delivered to the Mortgagee, the date of written notice thereof to Lessee from Lessor or Mortgagee, or (2) with respect to a representation or warranty which is untrue or inaccurate in any material respect due to a provision in any Other Creditor Amendment with respect to a 747-400 Aircraft, a provision in any 747-400 Aircraft Agreement, or a provision in any Other Creditor Amendment with respect to a lease, indenture, mortgage, contract or other agreement to which the Lessee and the Bank Lenders are parties with respect to 747-200 Aircraft, which is not a Disclosed Other Creditor Document (or a provision in a Disclosed Other Creditor Document with respect to any of the foregoing which was not delivered to the Mortgagee), the earlier of
(x) the date of written notice thereof to Lessee from Lessor or Mortgagee, and (y) the date that any executive officer (or any officer with responsibility in relation to this Lease or any other person determining senior management policies or exercising executive responsibilities) of Lessee obtains actual knowledge of such provision that has resulted in such representation or warranty being untrue or inaccurate, unless (in the case of clause (1) or (2)) such adverse impact is capable of being corrected and Lessee shall be diligently proceeding to correct such adverse impact, in which case there shall be no Lease Event of Default under this Section 14.9 as a result of such representation or warranty being untrue or inaccurate unless and until such adverse impact shall continue unremedied for a period of 120 days after, in the case of clause (1), the giving of the notice referenced in clause (1) hereof or, in the case of clause (2), the earlier of the dates referred to in clauses (x) and (y) of such clause (2).

SECTION 11. AMENDMENTS TO SECTION 15 OF THE ORIGINAL LEASE. (A) Section 15.1.1 of the Original Lease is hereby amended by deleting the words "or any Renewal Lease Term."

(B) The eleventh line of Section 15.1.3 of the Original Lease is hereby amended by deleting the words "or Renewal Rent" and substituting the words "and Enhancement Rent" in their stead.

(C) Section 15.1.3(a) is hereby amended by deleting the words "or Renewal Rent" and substituting the words "and Enhancement Rent" in their stead.

(D) Section 15.1.3(b)(i) is hereby amended by deleting such clause in its entirety and substituting the following in lieu thereof:

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

(E) Line 10 of Section 15.1.4 and Section 15.1.4(a) are hereby amended by deleting the words "or Renewal Rent," and substituting the words "and Enhancement Rent" in their stead.

(F) Section 15 of the Original Lease is hereby amended by adding the following to the end of such Section 15 as a new Section 15.1.7:

15.1.7 SPECIFIC REMEDIES UPON A CROSS DEFAULT

(a) Notwithstanding the foregoing, if a Lease Event of Default occurs due to a Cross Default pursuant to Section 14.6 (and so long as the term, covenant or agreement the non-observance or non-performance of which gave rise to the Lease Event of Default pursuant to Section 14.6 is not also a term, covenant or agreement under the Lessee Operative Agreements that if not observed or performed would constitute a Lease Event of Default other than pursuant to
Section 14.6), Lessor may exercise its rights and remedies under this Lease only after the earliest of (i) 30 days following the occurrence of an Other Creditor Payment Default or 60 days following the occurrence of an Other Creditor NonPayment Default, (ii) acceleration of the obligation that is the subject of the Other Creditor Payment Default or the Other Creditor Non-Payment Default and (iii) an Acceleration.

(b) If, before the occurrence of an Action Event, GECAS, Boeing, any Other EETC Transaction Person, the Bank Lenders or any Other Accelerated Creditor (i) waive an Other Creditor Payment Default or an Other Creditor Non-Payment Default under the GECAS Documents, the Boeing Documents, the Other EETC Transaction Documents or the Bank Lender Documents, respectively, or cancel or rescind the Acceleration or (ii) amend the provisions of the GECAS Documents, the Boeing Documents, the Bank Lender Documents, the Other EETC Transaction Documents or Other Accelerated Creditor Documents which gave rise to the Other Creditor Payment Default, Other Creditor Non-Payment Default or Acceleration such that the Other Creditor Payment Default, the Other Creditor Non-Payment Default or the Acceleration no longer exists, then the Cross Default that would otherwise have occurred shall be deemed to have been waived on the same terms and conditions, so long as (x) the provision of the GECAS Documents, the Boeing Documents, the Bank Lender Documents, the Other EETC Transaction Documents or the Other Accelerated Creditor Documents which was so waived or amended is not also a provision under the Lessee Operative Agreements that if not waived or amended would constitute a Lease Event of Default other than pursuant to Section 14.6, and (y) Lessee has complied with Section 8.4.2 hereof.

SECTION 12. AMENDMENT TO SECTION 16 OF THE ORIGINAL LEASE.
Section 16(c) of the Original Lease is hereby amended by deleting the words "Renewal Rent" and substituting the words "Enhancement Rent" in their stead.

SECTION 13. AMENDMENT TO SECTION 17 OF THE ORIGINAL LEASE.
Section 17 of the Original Lease is hereby deleted and the following is substituted in lieu thereof:

SECTION 17. PURCHASE OPTIONS

17.1 PRELIMINARY NOTICES

At least 180 days prior to the Scheduled Expiration Date, Lessee may provide written notice to Lessor that Lessee may exercise the option to purchase the Aircraft on the Scheduled Expiration Date pursuant to Section 17.3.1(a). Any such notice (a "PRELIMINARY NOTICE") shall not be binding on Lessee. Promptly upon delivery of a Preliminary Notice, Lessee and Lessor shall determine the Fair Market Sales Value under Section 17.3.2. If within the 35 days allowed for determination of the Fair Market Sales Value, the parties have not succeeded in reaching agreement with respect to such Fair Market Sales Value, Lessee and Lessor shall commence the appraisal process provided for in Section 17.4, and shall be subject to the timing constraints set forth in
Section 17.4.

17.2 [Intentionally Omitted]

17.3 PURCHASE OPTIONS

17.3.1 ELECTION

(a) Subject to the terms and conditions of this Section
17.3. Lessee or its designee may elect to purchase the Aircraft, on the Purchase Date, at a purchase price equal to the Fair Market Sales Value of the Aircraft (or, if greater, the Termination Value) computed as of the Purchase Date.

(b) Lessee may exercise its option to purchase the Aircraft by delivery of a written notice (a "PURCHASE NOTICE") to Lessor not less than 90 days prior to the Scheduled Expiration Date.

(c) Notwithstanding anything to the contrary in this
Section 17:

(i) Any Purchase Notice under Section 17.3.1(b) shall be irrevocable and shall constitute an unconditional obligation of Lessee to purchase the Aircraft under this Section 17.3.

(ii) No Purchase Notice under Section 17.3.1(b) shall be binding on Lessor if any Lease Event of Default or Specified Default shall have occurred and be continuing on the Purchase Date.

(iii) At the election of Lessee. any purchase option described in this Section 17.3 may be exercised by a designee of Lessee.

17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE

The Fair Market Sales Value of the Aircraft shall be determined by mutual agreement of Lessor and Lessee (i) within 35 days after delivery of a Preliminary Notice, if a Preliminary Notice has been given, or (ii) if no Preliminary Notice has been given, within 35 days after delivery of a Purchase Notice under this Section 17.3 or, in either case, if they shall be unable to agree, by an appraisal in accordance with Section 17.4.

17.3.3 TITLE

Upon full and final payment by Lessee of (a) the applicable purchase price of the Aircraft, (b) all unpaid Rent due and payable through and including the Purchase Date, and (c) all other amounts due and payable by Lessee under this Lease and any other Operative Agreement, Lessor will transfer to Lessee or to a Person designated by Lessee title to the Aircraft in accordance with Section 4.5.

17.4 APPRAISALS

Whenever Fair Market Sales Value of the Aircraft is required to be determined by an appraisal under the foregoing provisions of this
Section 17, Lessee and Lessor shall, within seven days after the expiration of the 35-day period referred to in Section 17.3.2, appoint a mutually satisfactory Appraiser to complete such appraisal within seven days of the appointment and the determination of such Appraiser shall be final and binding on Lessor and Lessee. If Lessee and Lessor fail to agree within such 7-day period upon a satisfactory Appraiser then each shall within one day thereafter appoint a separate Appraiser and such Appraisers shall within seven days of such appointment jointly determine such amount, and such jointly determined amount shall be final and binding on Lessor and Lessee. If either Lessee or Lessor fails to so appoint an Appraiser, the determination of the single Appraiser appointed shall be final and binding on Lessor and Lessee. If two Appraisers are appointed and within seven days after the appointment of the latter of such two Appraisers, they cannot agree upon such amount, such two Appraisers shall, within two days after such seventh day, appoint a third Appraiser and such amount shall be determined by such three Appraisers, who shall make their separate appraisals within seven days following the appointment of the third Appraiser, and any determination so made shall be conclusive and binding upon Lessor and Lessee in accordance with the following provisions of this Section 17. If three Appraisers are appointed and the difference between the determination which is farther from the middle determination and the middle determination is more than 125% of the difference between the middle determination and the third determination, then such farther determination shall be excluded, the remaining two determinations shall be averaged and such average shall be final and binding upon Lessor and Lessee. Otherwise, the average of all three determinations shall be final and binding upon Lessor and Lessee. If no such third Appraiser is appointed within such 2-day period, either Lessor or Lessee may apply to the American Arbitration Association to make such appointment, and both parties shall cooperate in making, and be bound by, such appointment. The fees and expenses of all such Appraisers and such appraisal procedure shall be borne by Lessee.

SECTION 14. NEW SECTION 19 TO THE ORIGINAL LEASE. The Original Lease is hereby amended by adding the following section after Section 18 of the Original Lease as a new Section 19:

19. LEASE EVENT OF DEFAULT

At any time after the Restructure Agreement Execution Date, if a Lease Event of Default occurs (it being understood that for purposes of this Section 19 a Lease Event of Default pursuant solely to Section 14.6 shall not take effect until the expiration of the applicable cure periods set forth in clauses (i) and (ii) of Section 15.1.7(a) of this Lease (a "15.1.7(a)(i) or (ii) EVENT") and that this Section 19 shall take effect solely as a result of a 15.1.7(a)(i) or (ii) Event only if such default has not been waived prior to the expiration of the applicable cure periods), (a) an amount equal to the excess, if any, of
(x) the Basic Rent that would have been payable under this Lease pursuant to Schedule 2 of the Original Lease after January 2, 2003 (which amount shall be determined by reference to Schedule 19 of Amendment No. 1 to Lease Agreement for purposes of this Section 19 instead of Schedule 2 to the Original Lease) over (y) the sum of (i) the Basic Rent that was paid under this Lease pursuant to Schedule 2 to Amendment No. 1 to Lease Agreement after January 2, 2003 up to the date of such Lease Event of Default plus (ii) the aggregate amount, if any, of Enhancement Rent that was paid under this Lease prior to such Lease Event of Default shall become immediately due and payable by Lessee to Lessor on the date that such Lease Event of Default occurs (such amounts payable under clause (a), the "LEASE AMENDMENT DEFAULT AMOUNT"), shall become immediately due and payable by Lessee to Lessor on the date that such Lease Event of Default occurs and (b) regardless of whether any amounts are payable under clause (a) of this paragraph, Basic Rent shall thereafter be payable under this Lease each month in an amount equal to the higher of (A) the amount due under Schedule 19 to Amendment No. 1 to Lease Agreement in such month or (B) the amount due under Schedule 2 to Amendment No.1 to Lease Agreement in such month, and Lessee's obligation to pay Enhancement Rent shall cease. Upon the occurrence of a Lease Event of Default, any claim by Lessor for any Termination Value or Stipulated Loss Value payable pursuant to this Lease shall be determined, for any date of determination, by reference to the higher of (A) the Termination Value or Stipulated Loss Value (as the case may be) as set forth in Schedules 3 or 4 (as the case may be) to the Original Lease or (B) the Termination Value or Stipulated Loss Value (as the case may be) as set forth in Schedules 3 or 4 (as the case may be) to Amendment No. 1 to Lease Agreement. For the avoidance of doubt, if Lessee pays Lessor any Lease Amendment Default Amount upon the occurrence of a Lease Event of Default, Lessee shall not be liable for such particular Lease Amendment Default Amount again, regardless of the number of times Lessee defaults under this Lease. In addition, for purposes of calculating the Lease Amendment Default Amount, payments made by Lessee under Schedule 2 to Amendment No. 1 to Lease Agreement as Basic Rent shall be applied against the payments of Basic Rent which are set forth on Schedule 19 to Amendment No. 1 to Lease Agreement in the order received. Nothing in this Section 19 is intended to or shall limit or prejudice in any manner or to any extent the right of Lessor or Mortgagee, as applicable, to exercise all rights and remedies that are available to Lessor or Mortgagee, as applicable, under this Lease or under applicable law after the occurrence and during the continuance of a Lease Event of Default.

SECTION 15. AMENDMENT TO SCHEDULE 1 - CERTAIN TERMS TO THE ORIGINAL LEASE. Schedule 1 - Certain Terms to the Original Lease is hereby deleted in its entirety and Schedule 1 Certain Terms attached to Exhibit A to this Amendment is hereby substituted in lieu thereof.

SECTION 16. AMENDMENT TO ANNEX B TO THE ORIGINAL LEASE. Annex B to the Original Lease is hereby amended by deleting the words "or the end of any Renewal Lease Term" from the fIrst paragraph thereof.

SECTION 17. WAIVER. Lessor hereby waives the Specified Prior Defaults and agrees that Lessor will not exercise remedies solely by reason of or in respect of any Specified Prior Default. For the avoidance of doubt, Lessee acknowledges that the foregoing waiver does not extend to (i) any failure by Lessee to pay as and when due Basic Rent, Supplemental Rent or any other obligation under the Lease after giving effect to this Amendment (other than the failure to make the Basic Rent payments as and when due on February 2, 2004 and March 2, 2004), including without limitation, any failure by Lessee to pay the amounts required to be paid pursuant to Section 19 of the Lease as added by this Amendment, (ii) any failure by Lessee to deliver financial statements as provided in Section 8.2.1 of the Lease after giving effect to this Amendment or
(iii) any event or circumstance that constitutes a Lease Event of Default after giving effect to this Amendment (other than the failure to make the Basic Rent payments as and when due on February 2, 2004 and March 2, 2004), if such event or circumstance continues to exist after the Restructure Agreement Execution Date (other than the failure to make the Basic Rent Payments when due on February 2, 2004 and March 2, 2004).

SECTION 18. LEASE. Except as amended by this Amendment, the Original Lease remains unchanged and in full force and effect.

SECTION 19. LESSOR REPRESENTATION. Lessor confirms that the Owner Participant has instructed Lessor to execute and deliver this Amendment No. 1 to Lease Agreement.

SECTION 20. ENTIRETIES. This Amendment represents the final agreement between the parties about the subject matter of this Amendment and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. This Amendment shall be considered an "Operative Agreement" as such term is defined in the Lease.

SECTION 21. COUNTERPARTS. This Amendment may be executed by one of more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts when taken together shall constitute one and the same instrument. Except as expressly provided for herein, no modification, amendment or waiver of any provision of this Amendment shall be effective unless such modification, amendment or waiver is in writing and signed by each of the parties hereto.

SECTION 22. FURTHER ASSURANCES. Each of the parties shall take such further action as may be reasonably requested by the other to carry out the purposes and intent of this Amendment and shall refrain from taking any action which would frustrate the purposes and intent of this Amendment.

SECTION 23. SEVERABILITY. If any provision of this Amendment is held to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision or part thereof and the remaining part of such provision hereof shall continue in full force and effect.

SECTION 24. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.

(a) THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION. VALIDITY AND PERFORMANCE. THIS AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.

(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES THAT THE SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS. NOTICES AND DOCUMENTS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE ADDRESS SET FORTH PURSUANT TO SECTION 18.6 OF THE LEASE. EACH PARTY HERETO HEREBY AGREES THAT SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS SECTION 24, SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY, AND EACH PARTY HERETO HEREBY AGREES, THAT THE FAILURE OF ANY OF ITS AGENTS TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON.

(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AMENDMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS.

(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING TO THIS AMENDMENT.

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

ATLAS AIR, INC., Lessee

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

WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION (not in its individual
capacity except as expressly provided herein,
but solely as Owner Trustee), Lessor

Title:

[THIS IS A DUPLICATE EXECUTED COUNTERPART, AND IS NOT
THE ORIGINAL COUNTERPART FOR CHATTEL PAPER PURPOSES.]

[N491MC]

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

ATLAS AIR, INC., Lessee

Title:

WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION (not in its
individual capacity except as expressly provided
herein, but solely as Owner Trustee), Lessor

By:  /s/ Michael D. Hoggan
    --------------------------
Name:   Michael D. Hoggan
Title:  Vice President

[THIS IS A DUPLICATE EXECUTED COUNTERPART, AND IS NOT
THE ORIGINAL COUNTERPART FOR CHATTEL PAPER PURPOSES.]

[N491MC]

------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
PROGRAM YEAR       REGISTRATION NUMBER      RESTRUCTURE AGREEMENT TYPE         LESSOR                          LESSEE


------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1998               N494MC                   Owned Aircraft Restructure         Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1998               N408MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1998               N491MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1998               N492MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1998               N493MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1999               N495MC                   Owned Aircraft Restructure         Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1999               N496MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1999               N497MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1999               N498MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
1999               N499MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
2000               N409MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------
2000               N412MC                   Leased Aircraft Restructure        Wells Fargo Bank Northwest,     Atlas Air, Inc.
                                            Agreement                          National Association
------------------ ------------------------ ---------------------------------- ------------------------------- ---------------------

EXHIBIT 10.5.1

FIFTH AMENDED AND RESTATED

CREDIT AGREEMENT

DATED AS OF JULY 27, 2004

AMONG

ATLAS AIR, INC.,

AS BORROWER,

THE LENDERS LISTED HEREIN,

AS LENDERS,

AND

DEUTSCHE BANK TRUST COMPANY AMERICAS,

AS ADMINISTRATIVE AGENT

ARRANGED BY:

DEUTSCHE BANK SECURITIES INC.

ATLAS AIR, INC.

FIFTH AMENDED AND RESTATED

CREDIT AGREEMENT

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

SECTION 1. DEFINITIONS ..................................................     2
   1.1    Certain Defined Terms .........................................     2
   1.2    Accounting Terms; Utilization of GAAP for Purposes of
          Calculations Under Agreement ..................................    27
   1.3    Other Definitional Provisions .................................    27

SECTION 2. AMOUNTS AND TERMS OF LOANS ...................................    27
   2.1    Loans; Making of Loans; Notes; Register .......................    27
   2.2    Interest on the Loans .........................................    29
   2.3    Fees ..........................................................    31
   2.4    Repayments, Prepayments and Reductions in Loans; General
          Provisions Regarding Payments .................................    32
   2.5    Use of Proceeds ...............................................    36
   2.6    Special Provisions Governing Eurodollar Rate Loans ............    36
   2.7    Increased Costs; Taxes; Capital Adequacy ......................    38
   2.8    Obligation of Lenders to Mitigate .............................    42
   2.9    Release of Collateral .........................................    43

SECTION 3. CONDITIONS TO FIFTH RESTATEMENT EFFECTIVE DATE ...............    43
   3.1    Conditions to Effectiveness ...................................    43

SECTION 4. REPRESENTATIONS AND WARRANTIES ..................... .........    47
   4.1    Organization, Powers, Qualification, Good Standing, Business
          and Subsidiaries ..............................................    47
   4.2    Authorization, etc. ...........................................    48
   4.3    Financial Condition ...........................................    49
   4.4    No Material Adverse Change; No Restricted Junior Payments .....    49
   4.5    Title to Properties; Liens ....................................    49
   4.6    Litigation; Adverse Facts .....................................    50
   4.7    Payment of Taxes ..............................................    50
   4.8    Performance of Agreements; Materially Adverse Agreements ......    50
   4.9    Governmental Regulation .......................................    51
   4.10   Securities Activities .........................................    51
   4.11   Employee Benefit Plans ........................................    51
   4.12   Certain Fees ..................................................    51
   4.13   Environmental Protection ......................................    52
   4.14   Employee Matters ..............................................    52
   4.15   Solvency ......................................................    52
   4.16   Disclosure ....................................................    52

SECTION 5. AFFIRMATIVE COVENANTS ........................................    53
   5.1    Financial Statements and Other Reports ........................    53

   5.2    Corporate Existence ...........................................    57
   5.3    Payment of Taxes and Claims; Tax Consolidation ................    57
   5.4    Maintenance of Properties; Insurance ..........................    57
   5.5    Inspection; Lender Meeting ....................................    58
   5.6    Compliance with Laws, etc. ....................................    58
   5.7    Environmental Indemnity .......................................    58
   5.8    Holdings' Remedial Action Regarding Hazardous Materials .......    58
   5.9    Further Assurances; New Subsidiaries ..........................    59
   5.10   Appraisals ....................................................    59
   5.11   Maintenance Contracts .........................................    59
   5.12   Employee Benefit Plans ........................................    59
   5.13   Registration of Foreign Leased Aircraft with FAA ..............    60
   5.14   Civil Reserve Air Fleet Program ...............................    60
   5.15   Engine Maintenance ............................................    60
   5.16   Grounding of Financed Aircraft ................................    62
   5.17   Maintain Aircraft Airworthiness ...............................    62

SECTION 6. NEGATIVE COVENANTS ...........................................    62
   6.1    Indebtedness ..................................................    63
   6.2    Liens and Related Matters .....................................    64
   6.3    Investments; Joint Ventures ...................................    65
   6.4    Contingent Obligations ........................................    66
   6.5    Restricted Junior Payments ....................................    66
   6.6    Financial Covenants ...........................................    67
   6.7    Restriction on Fundamental Changes and Asset Sales ............    68
   6.8    Amendments of Material Agreements .............................    71
   6.9    Restriction on Leases .........................................    71
   6.10   Sales and Lease-Backs .........................................    73
   6.11   Sale or Discount of Receivables ...............................    73
   6.12   Transactions with Shareholders, Affiliates and GSS ............    73
   6.13   Disposal of Subsidiary Stock ..................................    74
   6.14   Conduct of Business ...........................................    74
   6.15   Change To Legal Names; Organizational Identification Numbers,
          Jurisdiction or Type of Organization ..........................    74
   6.16   Subordinated Indebtedness .....................................    74

SECTION 7. EVENTS OF DEFAULT ............................................    75
   7.1    Failure to Make Payments When Due .............................    75
   7.2    Default in Other Agreements ...................................    75
   7.3    Breach of Certain Covenants ...................................    75
   7.4    Breach of Warranty ............................................    76
   7.5    Other Defaults Under Loan Documents ...........................    76
   7.6    Involuntary Bankruptcy; Appointment of Receiver, etc. .........    76
   7.7    Voluntary Bankruptcy; Appointment of Receiver, etc. ...........    76
   7.8    Judgments and Attachments .....................................    77
   7.9    Dissolution ...................................................    77

                                      (ii)

   7.10   Change in Control .............................................    77
   7.11   Failure of Security ...........................................    77
   7.12   Guaranties ....................................................    78
   7.13   Certificated as Air Carrier ...................................    78
   7.14   Material Agreements ...........................................    78
   7.15   Pass Through Trust Documents ..................................    78
   7.16   Equity Issuance ...............................................    78

SECTION 8. AGENT ........................................................    79
   8.1    Appointment ...................................................    79
   8.2    Powers and Duties; General Immunity ...........................    79
   8.3    Representations and Warranties; No Responsibility For Appraisal
          of Creditworthiness ...........................................    81
   8.4    Right to Indemnity ............................................    81
   8.5    Collateral Documents ..........................................    81
   8.6    Successor Administrative Agent ................................    82

SECTION 9. MISCELLANEOUS ................................................    82
   9.1    Assignments and Participations in Loans .......................    82
   9.2    Expenses ......................................................    84
   9.3    Indemnity .....................................................    85
   9.4    Set-Off .......................................................    86
   9.5    Ratable Sharing ...............................................    86
   9.6    Amendments and Waivers ........................................    87
   9.7    Independence of Covenants .....................................    88
   9.8    Notices .......................................................    88
   9.9    Survival of Representations, Warranties and Agreements ........    88
   9.10   Failure or Indulgence Not Waiver; Remedies Cumulative .........    89
   9.11   Marshalling; Payments Set Aside ...............................    89
   9.12   Severability ..................................................    89
   9.13   Obligations Several; Independent Nature of Lenders' Rights ....    89
   9.14   Headings ......................................................    90
   9.15   Applicable Law ................................................    90
   9.16   Successors and Assigns ........................................    90
   9.17   Consent to Jurisdiction and Service of Process ................    90
   9.18   Waiver of Jury Trial ..........................................    91
   9.19   Confidentiality ...............................................    91
   9.20   Counterparts; Effectiveness; Effect if Agreement Does Not
          Become Effective ..............................................    92
   9.21   Replacement Engines ...........................................    92

ATLAS AIR, INC.

FIFTH AMENDED AND RESTATED

CREDIT AGREEMENT

This FIFTH AMENDED AND RESTATED CREDIT AGREEMENT is dated as of July 27, 2004 and entered into by and among ATLAS AIR WORLDWIDE HOLDINGS, INC., a Delaware corporation ("HOLDINGS"), ATLAS AIR, INC., a Delaware corporation ("COMPANY"), THE LENDERS PARTY HERETO FROM TIME TO TIME, and DEUTSCHE BANK TRUST COMPANY AMERICAS ("DBTCA"), as administrative agent for Lenders (in such capacity, "ADMINISTRATIVE AGENT"). Capitalized terms used herein and not otherwise defined shall have the meanings specified in Section 1.

RECITALS

WHEREAS, pursuant to that certain Fourth Amended and Restated Credit Agreement dated as of April 25, 2000 (as so amended and restated, and as the same has been further amended, modified and/or supplemented to, but not including, the Fifth Restatement Effective Date, the "EXISTING CREDIT AGREEMENT ") among the Company, the financial institutions listed on the signature pages thereof and the Administrative Agent, the lenders thereunder have made certain credit facilities available to the Company for the purpose of acquisition and modification of certain Financed Aircraft to be used in the Company's air cargo business;

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

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

WHEREAS, prior to filing for relief under the Bankruptcy Code, Holdings, the Company and certain of the Lenders renegotiated certain of the terms of the Existing Credit Agreement and the other Existing Loan Documents in accordance with the Forbearance Agreement and the Letter Agreement and Term Sheet annexed thereto, dated February 2, 2004

among the Company, Holdings, and the lenders party thereto (collectively, as amended, modified or supplemented from time to time, the "TERM SHEET"), which contemplated, among other things, an amendment and restatement of the Existing Credit Agreement on terms satisfactory to the Lenders;

WHEREAS, the parties hereto desire to amend and restate the Existing Credit Agreement in order to implement the agreements set forth in the Plan of Reorganization, the Forbearance Agreement and the Term Sheet and to make certain other amendments contained herein;

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

WHEREAS, the Lenders identified on the signature pages hereof hold all of the "Loans" under the Existing Credit Agreement as identified on Schedule 1.1;

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

SECTION 1. DEFINITIONS

1.1 CERTAIN DEFINED TERMS.

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

"ACMI CONTRACT" means (i) any contract entered into by Company pursuant to which Company 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 Company's historical practices.

"ACMI CONTRACTED AIRCRAFT" means an aircraft acquired by Company or its Subsidiaries and dedicated to a new ACMI Contract entered into in connection with the acquisition of such aircraft (which ACMI Contract shall not represent a renewal or replacement of a prior ACMI Contract unless the aircraft dedicated 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 dedicated to 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 Company 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 Company 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.

"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination Date the rate per annum obtained by DIVIDING the offered rate (expressed as a rate per annum and rounded upward to the nearest 1/16 of one percent) appearing on the Dow Jones/Telerate Monitor on Telerate Access Service Page 3750 (British Bankers Association Settlement Rate) (or such other page as may, in the opinion of Administrative Agent, replace such page on that system for the purpose of displaying such rate) at or about 11:00 a.m. (London time) on such Interest Rate Determination Date for U.S. dollar deposits of amounts in same day funds comparable to the principal amount of the Eurodollar Rate Loan for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to the Interest Period for which such Adjusted Eurodollar Rate will apply BY (ii) a percentage equal to 100% MINUS the stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) applicable on such Interest Rate Determination Date to any member bank of the Federal Reserve System in respect of "Eurodollar liabilities" as defined in Regulation D (or any successor category of liabilities under Regulation D).

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

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

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

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

"controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

"AFL III" means Atlas Freighter Leasing III, Inc., a Delaware corporation, a subsidiary of Holdings, the sole business of which is the ownership of the AFL III Equipment and the leasing of the AFL III Equipment to Company pursuant to the AFL III Leases and obtaining financing with respect thereto.

"AFL III EQUIPMENT" means (i) thirteen Boeing 747-200 aircraft (including the engines attached thereto) with registration numbers N505MC, N509MC, N512MC, N517MC, N522MC, N523MC, N524MC, N526MC, N527MC, N528MC, N534MC, N808MC and N809MC, (ii) nine General Electric CF6-50E2 engines and (iii) three General Electric CF6-80C2 engines.

"AFL III FINANCING" means Indebtedness incurred by AFL III pursuant to the AFL III Financing Agreement.

"AFL III FINANCING AGREEMENT" means that certain Credit Agreement dated as of April 25, 2000, and amended and restated as of July 27, 2004, by and among AFL III, the lenders party thereto and Deutsche Bank Trust Company Americas, as Agent, as such agreement may be amended, amended and restated, modified and/or supplemented from time to time in accordance with the terms thereof.

"AFL III LEASES" means one or more triple net leases by and between Company and AFL III with respect to the AFL III Equipment, as lessor thereunder, as such leases may be amended, amended and restated, modified and/or supplemented from time to time in accordance with the provisions of this Agreement.

"AGGREGATE AMOUNTS DUE" has the meaning assigned to that term in subsection 9.5.

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

"AIRCRAFT CHATTEL MORTGAGE" means any or all of the First Aircraft Chattel Mortgages and the Second Aircraft Chattel Mortgages.

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

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

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

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

"APPROVED LEASE" means, with respect to any Financed Aircraft, any lease designated as an Approved Lease by Administrative Agent in its sole discretion; PROVIDED that, the term of any such lease shall not exceed 36 months.

"ASSET SALE" means the sale (including any sale-leaseback transaction other than sale-leaseback transactions permitted by subsections 6.9 and 6.10 hereof) by Holdings or any of its Subsidiaries to any other Person of
(i) any of the stock of any of Holdings' Subsidiaries, (ii) substantially all of the assets of any division or line of business of Holdings or any of its Subsidiaries, or (iii) any other assets (whether tangible or intangible) of Holdings 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 $2,500,000 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 (other than any engines encumbered pursuant to an Aircraft Chattel Mortgage); PROVIDED that the assets received by Holdings 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 Holdings or any Subsidiary with a fair market value exceeding $10,000,000, such determination shall be made by the Board of Directors of Company));

(D) asset sales involving obsolete, worn-out, excess or redundant 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 subsection 9.21 of the AFL III Financing Agreement; and

(F) the sale by AFL III of up to four AFL III Equipment aircraft pursuant to subsection 6.6(i) of the AFL III Financing Agreement.

"ASSIGNED VALUE" means for any Financed Aircraft at any time, 33 1/3% of the aggregate principal amount of the Loans outstanding at such time, provided that (x) if only two Financed Aircraft are included in the Collateral at such time, such percentage shall be 50% and (y) if only one Financed Aircraft is included in the Collateral at such time, such percentage shall be 100%.

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

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

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

"BACK-TO-BIRTH TRACEABILITY ISSUE" has the meaning assigned to that term in subsection 5.16C.

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

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

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

"BASE RATE LOANS" means Loans bearing interest at rates determined by reference to the Base Rate as provided in subsection 2.2A.

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

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

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

"CASH EQUIVALENTS" means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within two years after the date of purchase; (ii) marketable direct obligations (fixed and/or floating rate) issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within two years after the date of

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

"CASH PROCEEDS" means, (i) with respect to any Asset Sale other than an Asset Sale of Financed Aircraft, Cash payments (including any Cash received by way of deferred payment pursuant to, or monetization of, a note receivable or otherwise, but only as and when so received) received from such Asset Sale and (ii) with respect to any Asset Sale of Financed Aircraft, the sum of Cash payments received from such Asset Sale.

"C-CHECK" has the meaning assigned to that term in the Company's FAA approved maintenance program.

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

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

"COLLATERAL DOCUMENTS" means each First Aircraft Chattel Mortgage and each Second Aircraft Chattel Mortgage and any security agreement executed pursuant to subsection 5.9.

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

"COMPANY 401(k) PLAN" has the meaning assigned to that term in subsection 4.11.

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

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

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

"CONSOLIDATED ADJUSTED EBITDA" means, for any period, 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, all of the foregoing as determined on a consolidated basis for Holdings and its Subsidiaries in conformity with GAAP and, (vii) for all periods through the first anniversary of the Fifth Restatement Effective Date, expenses incurred in connection with the Plan of Reorganization, including professional fees and expenses, severance, key employee retention plans, executory contract and lease rejection claims, asset write downs and any other such costs determined by Holdings' independent accountants to be reported as "Reorganization Costs".

"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 Holdings and its Subsidiaries) by Holdings 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 Holdings and its Subsidiaries PLUS (ii) to the extent not covered by clause (i) of this definition, the aggregate of all expenditures by Holdings 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 Holdings.

"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of the amounts for such period (without duplication) of (i) Consolidated Interest Expense for such period paid in cash, (ii) Consolidated Rental Payments for such period paid in cash, (iii) Consolidated Capital Expenditures paid in cash for such period (other than Consolidated Capital Expenditures funded with the proceeds of Asset Sales pursuant to Section 6.7(vii)(z)), (iv) any Restricted Junior Payments actually made during such period and (v) the scheduled principal amount of all amortization payments with respect to the Loans and other Indebtedness of Holdings and the Subsidiaries required to be made during such period (as determined on the first day of such period) (assuming for this purpose that the maximum amount of principal deferral permitted pursuant to
Section 2.4A(ii) of the AFL III Financing Agreement shall have occurred (whether or not the conditions thereto shall have been satisfied)).

"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 Holdings and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Holdings 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.

"CONSOLIDATED NET INCOME" means, for any period, the net income (or loss) of Holdings 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 Holdings) in which any other Person (other than Holdings or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Holdings 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 Holdings or is merged into or consolidated with Holdings or any of its Subsidiaries or that Person's assets are acquired by Holdings or any of its Subsidiaries, (iii) the income of any Subsidiary of Holdings 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 RENTAL PAYMENTS" means, for any period, the aggregate amount of all rents with respect to aircraft and engines paid or payable by Holdings and its Subsidiaries on a consolidated basis during that period under all Operating Leases to which Holdings 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, (x) all rental payments to AFL III shall not be included

in Consolidated Rental Payments and (y) payments in respect of Capital Leases shall not be included in Consolidated Rental Payments.

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

"CONTINUING DIRECTORS" shall mean the directors of a Person on the Fifth Restatement Effective 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.

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

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

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

"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 Pass Through Trust Documents, the AFL III Financing Agreement, any Other Permitted Indebtedness and any Permitted Extension Indebtedness in respect of the foregoing.

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

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

"DRY LEASE" has the meaning assigned to such term in subsection 6.7(viii) hereof.

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

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

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

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

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

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

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

"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 Holdings including, without limitation, additional issuances of Holdings Common Stock.

"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 which 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) which 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.

"EURODOLLAR RATE LOANS " means Loans bearing interest at rates determined by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A.

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

"EVENT OF LOSS" shall mean any of the following events with respect to any Financed Aircraft (whether the Airframe or an Engine of such Financed Aircraft or Spare Engine or both):

(A) loss of such Financed Aircraft or Spare Engine or the use thereof due to theft or disappearance of such Financed Aircraft or Spare Engine which shall result 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 Financed Aircraft or Spare Engine);

(B) the destruction, damage beyond repair or rendition of such Financed Aircraft or Spare Engine permanently unfit for normal use for any reason whatsoever;

(C) the condemnation, confiscation or seizure of, or requisition of title to, or use or possession (other than use by the United States Government if Company obtains adequate compensation from the United States Government) of such Financed Aircraft or Spare Engine;

(D) as a result of any rule, regulation, order or other action by the FAA or other governmental body having jurisdiction, the use of such Financed Aircraft or Spare Engine in the normal course of interstate air transportation of persons or cargo shall have been prohibited for a period of more than nine consecutive months unless Company, prior to the expiration of such nine month period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit the normal use of such property by Company or, in any event, if such use shall have been prohibited for a period of twelve (12) consecutive months;

(E) the operation or location of such Financed Aircraft or Spare Engine, while under requisition for use by the United States or any instrumentality or agency thereof, in any area excluded from coverage by any insurance policy in effect with respect to such Financed Aircraft or Spare Engine, if Company shall be unable to obtain indemnity in lieu thereof from the United States;

(F) any damage which results in an insurance settlement with respect to such Financed Aircraft or Spare Engine on the basis of an actual or constructive total loss; or

(G) a divestiture of such Airframe or Spare Engine as described in
Section 4(d)(iii), Section 4(d)(vi), Section 4(d)(vii)(B) or Section 4(d)(viii)(B) of any Aircraft Chattel Mortgage. An Event of Loss with respect to any Financed Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe of such Financed Aircraft.

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

"EXISTING AIRCRAFT" means the aircraft identified on Schedule 1.1 annexed hereto.

"EXISTING CREDIT AGREEMENT" has the meaning provided in the recitals hereto.

"EXISTING INDEBTEDNESS" has the meaning assigned to that term in subsection 6.1.

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

"EXIT FACILITY" means the credit agreement to be entered into among Holdings and the lenders party thereto providing financing for working capital and other general corporate

purposes, as same may be amended, modified, supplemented, refinanced or replaced from time to time.

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

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

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

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

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

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

"FINAL SCHEDULED MATURITY DATE" means February 28, 2011.

"FINANCED AIRCRAFT" means all Existing Aircraft, including the airframes and engines, all of which have been purchased by Company with proceeds of Loans made or deemed made under this Agreement and with respect to which a First Aircraft Chattel Mortgage has been executed and delivered.

"FIRST AIRCRAFT CHATTEL MORTGAGE" means, with respect to each Financed Aircraft, a Security Agreement and Chattel Mortgage substantially in the form of EXHIBIT X annexed hereto granting to Administrative Agent for the benefit of Lenders a purchase money first priority security interest in such Financed Aircraft, as such First Aircraft Chattel Mortgage is amended by an Aircraft Chattel Mortgage Amendment delivered with respect thereto pursuant to subsection 3.1(xii) and as such First Aircraft Chattel Mortgage may be further amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof.

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

"FITCH" means Fitch, Inc.

"FIXED CHARGE COVERAGE RATIO" means as of any date, the ratio of (i) the sum of (x) Consolidated Adjusted EBITDA for the period of twelve consecutive months ending on such date (a "TEST PERIOD") and (y) Consolidated Rental Payments for such Test Period to (ii) Consolidated Fixed Charges for such Test Period.

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

"FOREIGN LEASED AIRCRAFT" means a Leased Aircraft that is registered in a country other than the United States during the term of the applicable Approved Lease.

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

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

"GEAE" has the meaning assigned that term in Section 5.15.

"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.

"GROUNDED AIRCRAFT" has the meaning assigned to that term in subsection 6.9B.

"GSS" means Global Supply Systems, Limited, an English Company.

"GUARANTOR" means Holdings and each Subsidiary Guarantor.

"GUARANTY" means the Holdings Guaranty and the Subsidiary Guaranty.

"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, Company.

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

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

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

"INDEBTEDNESS" means, as applied to any Person, (i) all indebtedness for borrowed money, (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA), which purchase price is (a) due more than six months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument, and (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person. For purposes of this Agreement, 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 9.3.

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

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

"INITIAL CLOSING DATE" means the date on or before May 8, 1996 on which the initial Loans were made.

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

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

"INTERCOMPANY LOANS" has the meaning assigned to that term in subsection 6.3(v).

"INTEREST PAYMENT DATE" means the last Business Day of each calendar month, commencing on the first such date to occur after the Fifth Restatement Effective Date.

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

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

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

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

"INVESTMENT" means (i) any direct or indirect purchase or other acquisition by Holdings 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 Holdings from any Person other than Holdings 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 Holdings or any of its Subsidiaries to any other Person (other than a wholly owned Subsidiary of Holdings), 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.

"LEASED AIRCRAFT" means a Financed Aircraft subject to an Approved Lease.

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

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

"LOAN" or "LOANS" has the meaning provided in subsection 2.1A.

"LOAN DOCUMENTS" means this Agreement, the Notes, the Holdings Guaranty, the Subsidiaries Guaranty and the Collateral Documents.

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

"LOAN PARTIES" means Company, Holdings and each subsidiary of Holdings which becomes party to a Subsidiaries Guaranty.

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

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

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

"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the business, operations, properties, assets, condition (financial or otherwise) or prospects of Holdings and its Subsidiaries taken as a whole or (ii) the impairment of the ability of any Loan Party to perform the Obligations, or the impairment, as a result of actions or inaction by Holdings or Company, of the ability of Administrative Agent or Lenders to enforce the Obligations.

"MATERIAL AGREEMENT" means any or all of the Pass Through Trust Documents, AFL III Financing Agreement, AFL III Leases, each Lease relating to 747-200s in effect on the Fifth Restatement Effective Date and agreements in respect of Permitted Extension Indebtedness in respect of any of the foregoing.

"MATERIAL SUBSIDIARY" means any domestic Subsidiary of Holdings that at any time has a consolidated net worth as of the end of its most recent fiscal year for which financial statements are available or consolidated gross revenues for its most recent fiscal year for which financial statements are available greater than $250,000, in each case as determined in accordance with GAAP.

"MAXIMUM CAPITAL EXPENDITURE AMOUNT" means for any period, the amount set fourth opposite such period below:

  Fiscal Year         Amount
----------------   ------------

     2004          $ 20,000,000
     2005          $ 20,000,000
     2006          $ 21,300,000
     2007          $ 21,500,000
Each Fiscal Year   $ 22,000,000
    thereafter

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

"MTU" means MTU Maintenance Hanover GmbH.

"NET CASH PROCEEDS" means, with respect to any Asset Sale, Cash Proceeds of such Asset Sale net of bona fide direct costs of sale including (i) income taxes reasonably estimated to be actually payable as a result of such Asset Sale within two years of the date of such Asset Sale and (ii) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets of Holdings or a Subsidiary and that is required to be repaid under the terms thereof as a result of such Asset Sale.

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

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

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

"NOTES" means one or more Notes substantially in the form of Exhibit IIIA annexed hereto (as defined in the Existing Credit Agreement) or the Assignee Notes, as the context requires.

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

"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the form of EXHIBIT II annexed hereto delivered by Company to Administrative Agent pursuant to subsection 2.2D with respect to a proposed conversion or continuation of the applicable basis for determining the interest rate with respect to the Loans specified therein.

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

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

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

"OTHER PERMITTED INDEBTEDNESS" means Indebtedness incurred for the purpose of financing the acquisition of aircraft or aircraft engines so long as
(i) any such Indebtedness bears interest at a rate which does not exceed 15% per annum, (ii) such Indebtedness has a final stated maturity later than the Final Scheduled Maturity Date of the Notes 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 or restrictive from the perspective of Company and its Subsidiaries or any less favorable, from the perspective of Lenders, than any other Designated Indebtedness.

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

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

"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

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

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

(ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics and materialmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith by appropriate proceedings that do not involve any danger of the sale, forfeiture or loss of any Collateral, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefore;

(iii) 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) any attachment or judgment Lien not constituting an Event of Default under subsection 7.8;

(v) 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 Company or any of its Subsidiaries;

(vi) any (a) interest or title of a lessor or sublessor under any lease permitted by subsection 6.9, (b) restriction or encumbrance 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);

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

(viii) 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;

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

(x) Liens described in SCHEDULE 6.2 annexed hereto;

(xi) Liens arising pursuant to the AFL III Financing Agreement; PROVIDED that such Liens do not encumber any assets other than the AFL III Equipment and other assets of AFL III;

(xii) the rights of others under agreements or arrangements to the extent expressly permitted by the terms of Sections 4(d) and 4(e) of any Aircraft Chattel Mortgages entered into in connection with the AFL III Financing Agreement;

(xiv) Liens granted pursuant to the Collateral Documents;

(xv) extensions, modifications, replacements and refinancings of any of the foregoing, except in the case of the foregoing clause (x) as may be limited as set forth in Schedule 6.2; and

(xvi) Liens (other than Liens on the Collateral) securing the Exit Facility to the extent that the aggregate principal amount of the Indebtedness and Contingent Obligations secured thereby does not exceed the amount permitted under Section 6.1(viii).

"PERMITTED EXTENSION INDEBTEDNESS" means renewals, extensions, substitutions, refinancings or replacements (each an "EXTENSION") by Holdings or any of its Subsidiaries of any Indebtedness (other than the Exit Facility) of Holdings or such Subsidiary, including any such successive transactions thereby, so long as (i) any such Indebtedness bears interest at a rate which 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 Holdings or such Subsidiary 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 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 Final Scheduled Maturity Date of the Notes 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 Holdings and its Subsidiaries or any less favorable, from the perspective of Lenders than those contained in the Indebtedness immediately prior to such extension.

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

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

"PLAN OF REORGANIZATION" means the Joint Second Amended Plan of Reorganization of the Debtors relating to Company, Holdings and certain of its Subsidiaries, dated June 8, 2004, including the exhibits and schedules thereto, as the same may be amended,

modified or supplemented from time to time in accordance with the provisions of the Bankruptcy Code and the terms thereof and hereof.

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

"POST EFFECTIVE DATE LEASE" has the meaning assigned to that term in subsection 6.9.

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

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

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

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

"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 (including Capital Leases) or the entering into an Operating Lease by Holdings 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 Holdings or any of its Subsidiaries or any other related action which 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 with Administrative Agent using the consolidated financial statements of Holdings and its Subsidiaries which shall be reformulated as if any such incurrence of Indebtedness or entry into such Operating Lease, as the case may be, 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.

"PRO RATA SHARE " means, with respect to each Lender, the percentage obtained by DIVIDING the Loan Exposure of that Lender BY the aggregate Loan Exposure of all Lenders, as such percentage may be adjusted BY assignments permitted pursuant to subsection 9.1. The Pro Rata Share of each Lender as of the date hereof is set forth opposite the name of that Lender in SCHEDULE 1.1 annexed hereto.

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

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

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

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

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

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

"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.

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

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

"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Holdings 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 Holdings 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 Holdings 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.

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

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

"SAP" means SAP America, Inc.

"SEC" means the Securities and Exchange Commission.

"SECOND AIRCRAFT CHATTEL MORTGAGE" means with respect to each Financed Aircraft, a Second Security Agreement and Chattel Mortgage substantially in the form of EXHIBIT XI annexed hereto, granting a security interest in such Financed Aircraft and Parts securing all Obligations that are not secured by the First Chattel Mortgage entered into concurrently therewith, as such Second Aircraft Chattel Mortgage is amended by an Aircraft Chattel Mortgage Amendment delivered with respect thereto pursuant to subsection 3.1(xii) and as such Second Aircraft Chattel Mortgage may be further amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof.

"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.

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

"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.

"S-P" has the meaning assigned to that term in subsection 5.15B.

"SPARE ENGINE" means, as the context requires, a Spare Engine as defined in a particular Aircraft Chattel Mortgage or all Spare Engines as defined in all Aircraft Chattel Mortgages.

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

"SPECIFIED LEASE" has the meaning assigned to that term in subsection 6.12 hereof.

"STORAGE PROGRAM" has the meaning assigned to that term in subsection 5.16.

"STORED ENGINE" has the meaning assigned to that term in subsection 6.9B.

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

"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.

"SUBSIDIARY GUARANTOR" means each Subsidiary of Holdings which executes and delivers a counterpart to the Subsidiaries Guaranty, unless and until such time as the respective Subsidiary is released from all of its obligations under the Subsidiaries Guaranty in accordance with the terms and provisions thereof.

"TAX" or "TAXES" means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed; PROVIDED that "TAX ON THE OVERALL NET INCOME" of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person's principal office (and/or, in the case of a Lender, its lending office) is located or in which that Person is deemed to be doing business on all or part of the net income, profits or gains of that Person (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise).

"TERM SHEET" has the meaning provided in the recitals hereto.

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

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

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

"UNITED STATES CITIZEN" has the meaning assigned to that term in subsection 4.1B.

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

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

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

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

1.3 OTHER DEFINITIONAL PROVISIONS.

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

SECTION 2. AMOUNTS AND TERMS OF LOANS

2.1 LOANS; MAKING OF LOANS; NOTES; REGISTER.

A. LOANS. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Company herein set forth, the Lenders and Company each hereby agree that prior to the date hereof, the Lenders have made "Existing Aircraft Extended Loans" and "New Aircraft Term Loans" under (and as defined in) the Existing Credit Agreement in the aggregate principal amount of $41,890,494.06, the proceeds of which were used to purchase and modify the Existing Aircraft. The principal amount of all "Existing Aircraft Extended Loans" and "New Aircraft Term Loans" anticipated to be outstanding on the Fifth Restatement Effective Date is set forth on Schedule 2.1 annexed hereto and each such "Existing Aircraft Extended Loan" and "New Aircraft Term Loan," as the case may be, shall be deemed to be a "Loan" in such principal amount upon the satisfaction of the conditions set forth in subsection 3.1 and the effectiveness of this Agreement. From and after the Fifth Restatement Effective Date, each Lender severally agrees, subject to the terms and conditions of this Agreement to maintain and extend its Pro Rata Share of the Loans and such Loans shall be repaid as provided in subsection 2.4A. The Lenders shall have no obligation to lend any additional amounts to Company under this Agreement.

B. NOTES. Each of the outstanding "Existing Aircraft Extended Notes" and "New Aircraft Notes" under (and as defined in) the Existing Credit Agreement shall be deemed amended and restated on the Fifth Restatement Effective Date to reflect the extension of the maturity to the Final Scheduled Maturity Date. To the extent requested by a Lender, Company shall execute and deliver on the Fifth Restatement Effective Date to each Lender (or to Administrative Agent for that Lender) Notes to evidence the Lender's Loans.

C. THE REGISTER.

(i) Administrative Agent shall maintain, at its address referred to in subsection 9.8, a register for the recordation of the names and addresses of the Lenders and the Loans of each Lender from time to time (the "REGISTER"). The Register shall be available for inspection by Company or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(ii) Administrative Agent shall record in the Register the Loans from time to time of each Lender and each repayment or prepayment in respect of the principal amount of the Loans of each Lender. Any such recordation shall be conclusive and binding on Company and each Lender, absent manifest error; PROVIDED that failure to make any such recordation, or any error in such recordation, shall not affect Company's Obligations in respect of the applicable Loans.

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

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

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

2.2 INTEREST ON THE LOANS.

A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and 2.7, each Loan shall bear interest on the unpaid principal amount thereof from the date made through maturity (whether by acceleration or otherwise) at a rate determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the case may be. The basis for determining the interest rate with respect to any Loan may be changed from time to time pursuant to subsection 2.2D. If on any day a Loan is outstanding with respect to which notice has not been delivered to Administrative Agent in accordance with the terms of this Agreement specifying the applicable basis for determining the rate of interest, then for that day that Loan shall bear interest determined by reference to the Adjusted Eurodollar Rate.

Subject to the provisions of subsections 2.2E and 2.7, each Loan shall bear interest through maturity as follows:

(i) if a Base Rate Loan, then at the sum of the Base Rate PLUS the Applicable Margin per annum; or

(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate PLUS the Applicable Margin per annum.

The "APPLICABLE MARGIN" for (x) each Base Rate Loan shall be 3.125% and
(y) each Eurodollar Rate Loan shall be 4.125%.

B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan, Company may, pursuant to the applicable Notice of Conversion/Continuation select an interest period (each an "INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall be a one month period; PROVIDED that:

(i) the initial Interest Period for any Eurodollar Rate Loan shall commence on the date specified in the applicable Notice of Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate Loan;

(ii) in the case of immediately successive Interest Periods applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice of Conversion/Continuation, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires;

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

(iv) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar

month at the end of such Interest Period) shall, subject to clause (v) of this subsection 2.2B, end on the last Business Day of a calendar month;

(v) no Interest Period with respect to any portion of the Loans shall extend beyond the Final Scheduled Maturity Date;

(vi) no Interest Period with respect to any portion of the Loans shall extend beyond a date on which Company is required to make a scheduled payment of principal of the Loans unless the sum of (a) the aggregate principal amount of Loans that are Base Rate Loans PLUS (b) the aggregate principal amount of Loans that are Eurodollar Rate Loans with Interest Periods expiring on or before such date equals or exceeds the principal amount required to be paid on the Loans on such date; and

(vii) in the event Company fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Notice of Conversion/Continuation, Company shall be deemed to have selected an Interest Period of one month.

C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E, interest on each Loan shall be payable in arrears on and to each Interest Payment Date applicable to that Loan, upon any prepayment of that Loan (to the extent accrued on the amount being prepaid) and at maturity (including final maturity).

D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection 2.6, Company shall have the option (i) to convert at any time all or any part of its outstanding Loans equal to $3,000,000 and integral multiples of $100,000 in excess of that amount from Loans bearing interest at a rate determined by reference to one basis to Loans bearing interest at a rate determined by reference to an alternative basis or (ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $3,000,000 and integral multiples of $100,000 in excess of that amount as a Eurodollar Rate Loan; PROVIDED, HOWEVER, that a Eurodollar Rate Loan may only be converted into a Base Rate Loan on the expiration date of an Interest Period applicable thereto.

Company shall deliver a Notice of Conversion/Continuation to Administrative Agent no later than 12:00 Noon (New York time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation shall specify (i) the proposed conversion/continuation date (which shall be a Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has occurred and is continuing. In lieu of delivering the above-described Notice of Conversion/Continuation, Company may give Administrative Agent telephonic notice by the required time of any proposed conversion/continuation under this subsection 2.2D; PROVIDED that such notice shall be promptly confirmed in writing by delivery of a Notice of Conversion/Continuation to Administrative Agent on or before the proposed conversion/continuation date.

Neither Administrative Agent nor any Lender shall incur any liability to Company in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized to act on behalf of Company or for otherwise acting in good faith under this subsection 2.2D, and upon conversion or continuation of the applicable basis for determining the interest rate with respect to any Loans in accordance with this Agreement pursuant to any such telephonic notice Company shall have effected a conversion or continuation, as the case may be, hereunder.

Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to effect a conversion or continuation in accordance therewith.

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

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

2.3 FEES.

A. ADMINISTRATIVE FEE. Company agrees to pay to Administrative Agent, an Administrative Agent's fee in the amount as from time to time agreed upon by Company and Administrative Agent.

B. OTHER FEES. Company agrees to pay to Administrative Agent such other fees in the amounts and at the times separately agreed upon between Company and Administrative Agent.

2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN LOANS; GENERAL PROVISIONS REGARDING PAYMENTS.

A. SCHEDULED REPAYMENTS.

SCHEDULED REPAYMENTS OF LOANS. Company shall make principal payments of the Loans in installments on each Loan Repayment Date in an amount equal to the applicable Loan Repayment Amount for such date set forth on Schedule 2.4; PROVIDED that such scheduled installments of principal of the Loans shall be reduced in connection with voluntary or mandatory prepayments of the Loans in accordance with subsection 2.4B; and PROVIDED FURTHER that the Loans and all other amounts owed hereunder with respect to the Loans shall be paid in full no later than the Final Scheduled Maturity Date, and the final installment payable by Company in respect of the Loans on such date shall be in an amount sufficient to repay all amounts owing by Company under this Agreement with respect to the Loans.

B. PREPAYMENTS.

(i) VOLUNTARY PREPAYMENTS. Company may, upon not less than three Business Days' prior written or telephonic notice given to Administrative Agent by 12:00 Noon (New York time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each Lender), at any time and from time to time prepay, without premium or penalty (other than pursuant to subsection 2.6D), any Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000 (or such lesser amount as may be agreed to by the Administrative Agent) and integral multiples of $100,000 in excess of that amount; PROVIDED, HOWEVER, that a Eurodollar Rate Loan may only be prepaid on the expiration of the Interest Period applicable thereto. Notice of prepayment having been given as aforesaid, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in subsection 2.4B(iii).

(ii) MANDATORY PREPAYMENTS.

(a) PREPAYMENTS FROM ASSET SALES. (I) No later than the second Business Day following the date of receipt by Holdings or any of its Subsidiaries of Cash Proceeds of any Asset Sale that is not an Asset Sale of Financed Aircraft, Company shall prepay, without premium or penalty (other than pursuant to subsection 2.6D), the Loans in an amount equal to the Net Cash Proceeds of such Asset Sale; PROVIDED that, with respect to Asset Sales which do not include the sale of a Financed Aircraft, so long as no Potential Event of Default or Event of Default has occurred and is continuing, Holdings or any of its Subsidiaries shall have the option to use the Net Cash Proceeds within one hundred eighty (180)

days of receipt thereof for the purpose of making Consolidated Capital Expenditures; PROVIDED, FURTHER, that if all or any portion of such Net Cash Proceeds not required to be applied as provided in the preceding proviso are not so reinvested within such 180-day period (or such earlier date as Holdings or its respective Subsidiary determines not to reinvest the Net Cash Proceeds from such Asset Sale as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date as the case may be) as provided above without regard to the preceding proviso and (II) no later than the second Business Day following the date of receipt by Holdings or any of its Subsidiaries of Cash Proceeds of any Asset Sale of a Financed Aircraft, Company shall prepay, without premium or penalty (other than pursuant to subsection 2.6D), the Loans in an amount equal to the greater of the
(i) Assigned Value of such Financed Aircraft and (ii) the sum of (x) the Net Cash Proceeds of such Asset Sale and (y) the Value of any non-Cash Proceeds of such Asset Sale. Concurrently with any prepayment of the Loans pursuant to this subsection 2.4B(ii)(a), Company shall deliver to Administrative Agent an Officers' Certificate demonstrating the derivation of the Net Cash Proceeds of the correlative Asset Sale from the gross sales price thereof and the amount required to be prepaid pursuant to this subsection 2.4B(ii)(a). In the event that Company shall, at any time after receipt of Cash Proceeds of any Asset Sale requiring a prepayment pursuant to this subsection 2.4B(ii)(a), determine that the prepayments previously made in respect of such Asset Sale were in an aggregate amount less than that required by the terms of this subsection 2.4B(ii)(a), Company shall promptly make an additional prepayment of the Loans in the manner described above in an amount equal to the amount of any such deficit, and Company shall concurrently therewith deliver to Administrative Agent an Officers' Certificate demonstrating the derivation of the additional Net Cash Proceeds resulting in such deficit and the additional amount required to be prepaid pursuant to this subsection 2.4B(ii)(a). Any mandatory prepayments pursuant to this subsection 2.4B(ii)(a) shall be applied as specified in subsection 2.4B(iii).

(b) PREPAYMENTS DUE TO ISSUANCE OF CERTAIN INDEBTEDNESS. On the date of receipt by Holdings or any of its Subsidiaries of the cash proceeds (net of underwriting discounts and commissions and other reasonable costs associated therewith) from the issuance of
(x) any Permitted Extension Indebtedness with respect to a Financed Aircraft or (y) any other Indebtedness (other than Indebtedness permitted under Section 6.1 whether incurred on the Fifth Restatement Effective Date or thereafter), Company shall prepay, without premium or penalty (other than pursuant to subsection 2.6D), the Loans in an amount equal to such net cash proceeds. Any such mandatory prepayments shall be applied as specified in subsection 2.4B(iii). Notwithstanding the foregoing, any such cash proceeds received pursuant to the AFL III Financing Agreement shall not be subject to the provisions of this subsection 2.4(B)(ii)(b).

(c) PREPAYMENTS DUE TO INSURANCE AND CONDEMNATION PROCEEDS. No later than the second Business Day following the date of receipt by Holdings or

any of its Subsidiaries of any cash payments under any of the casualty insurance policies covering damage to or loss of property maintained pursuant to subsection 5.4 resulting from damage to or loss of all or any portion of the Collateral or any other tangible asset (net of actual and documented reasonable costs incurred by Holdings or any of its Subsidiaries in connection with adjustment and settlement thereof, "INSURANCE PROCEEDS") or any proceeds resulting from the taking of assets by the power of eminent domain, condemnation or otherwise (net of actual and documented reasonable costs incurred by Company in connection with adjustment and settlement thereof, "CONDEMNATION PROCEEDS") (other than (x) the portion of such proceeds promptly applied to repair or replace the property in respect of which such proceeds were paid, (y) the portion of such proceeds required to be paid to Lien holders on assets other than Financed Aircraft or (z) proceeds applied pursuant to subsection 2.4B(ii)(d)), Company shall prepay, without premium or penalty (other than pursuant to subsection 2.6D), the Loans in an amount equal to such proceeds. Company shall, no later than 180 days after receipt of any such Insurance Proceeds or Condemnation Proceeds that have not theretofore been applied to the Obligations, make an additional prepayment of Loans, in the manner described above, in the full amount of all such proceeds that have not then been applied to repair or replace the property in respect of which such proceeds were paid. Any such mandatory prepayments shall be applied as specified in subsection 2.4B(iii). Notwithstanding the foregoing so long as (i) the AFL III Financing remains outstanding, Insurance Proceeds and Condemnation Proceeds with respect to the AFL III Equipment shall not be subject to the provisions of this subsection 2.4(B)(ii)(c) to the extent such proceeds are applied in accordance with the terms of the AFL III Financing Agreement.

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

(iii) APPLICATION OF PREPAYMENTS.

(a) APPLICATION OF VOLUNTARY PREPAYMENTS BY TYPE OF LOANS AND ORDER OF MATURITY. Any voluntary prepayments (other than a prepayment of Loans made with respect to a specific Financed Aircraft, Airframe or Engine) of the Loans pursuant to subsection 2.4B(i) shall be applied to reduce the scheduled installments of principal of the Loans on a pro rata basis.

(b) APPLICATION OF MANDATORY PREPAYMENTS OF LOANS. Any mandatory prepayments of the Loans pursuant to subsection 2.4B(ii) shall be applied to reduce the scheduled installments of principal of the Loans in inverse order of maturity.

(c) APPLICATION OF PREPAYMENTS TO BASE RATE LOANS AND EURODOLLAR RATE LOANS. Any prepayment of Loans shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Company pursuant to subsection 2.6D.

C. GENERAL PROVISIONS REGARDING PAYMENTS.

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

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

(iii) APPORTIONMENT OF PAYMENTS. Aggregate principal and interest payments in respect of Loans shall be apportioned among all outstanding Loans to which such payments relate, in each case proportionately to Lenders' respective Pro Rata Shares. Administrative Agent shall promptly distribute to each Lender, at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request, its Pro Rata Share of all such payments received by Administrative Agent. Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if, pursuant to the provisions of subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter.

(iv) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment

shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder.

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

2.5 USE OF PROCEEDS.

A. LOANS. The proceeds of the Loans were used to finance the purchase and renovation of the Existing Aircraft as shown on SCHEDULE 2.1 annexed hereto.

B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under this Agreement shall be, or were used by Company or any of its Subsidiaries in any manner that might cause the borrowing or the application of such proceeds to violate Regulation U, Regulation T or Regulation X or any other regulation of such Board or to violate the Exchange Act, in each case as in effect on the date or dates of such borrowing and such use of proceeds.

2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.

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

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

B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the interbank Eurodollar market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Company and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Company and Lenders that the circumstances giving rise to such notice no longer exist and (ii) Notice of Conversion/Continuation given by Company with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Company.

C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Company and Administrative Agent) that the maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful) or (ii) has become impracticable, or would cause such Lender material hardship, as a result of contingencies occurring after the date of this Agreement which materially and adversely affect the interbank Eurodollar market or the position of such Lender in that market, then, and in any such event, such Lender shall be an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Company and Administrative Agent of such determination (which notice Agent shall promptly transmit to each other Lender). Thereafter (a) the obligation of the Affected Lender to convert Loans to Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender, (b) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice of Conversion/Continuation, the Affected Lender shall make such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (d) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice of Conversion/Continuation, Company shall have the option, subject to the provisions of subsection 2.6D, to rescind such Notice of Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or by telephone confirmed in writing) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this subsection 2.6C shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.

D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS. Company shall compensate each Lender, upon written request by that Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including, without limitation, any interest paid by that Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by that Lender in connection with the liquidation or re-employment of such funds) which that Lender may sustain: (i) if for any reason (other than a default by that Lender) a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefore in a Notice of Conversion/Continuation or a telephonic request for conversion or continuation, (ii) if any prepayment or other principal payment or any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date

specified in a notice of prepayment given by Company, or (iv) as a consequence of any other default by Company in the repayment of its Eurodollar Rate Loans when required by the terms of this Agreement.

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

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

G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be maintained as, or converted to, a Eurodollar Rate Loan after the expiration of any Interest Period then in effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice of Conversion/Continuation given by Company with respect to a requested conversion/continuation that has not yet occurred shall be deemed to be rescinded by Company.

2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.

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

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

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

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

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

B. WITHHOLDING OF TAXES.

(i) PAYMENTS TO BE FREE AND CLEAR. All sums payable by Company under this Agreement and the other Loan Documents shall be paid free and clear of and (except to the extent required by law) without any deduction or withholding on account of any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of Company or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment.

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

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

(b) Company shall pay any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is

imposed on Company) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender;

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

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

PROVIDED that no such additional amount shall be required to be paid to any Lender under clause (c) above except to the extent that any change after the date hereof (in the case of each Lender listed on the signature pages hereof) or after the date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the date of this Agreement or at the date of such Assignment Agreement, as the case may be, in respect of payments to such Lender.

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

(a) Each Lender that is organized under the laws of any jurisdiction other than the United States or any state or other political subdivision thereof (for purposes of this subsection 2.7B(iii), a "NON-US LENDER") shall deliver to Administrative Agent for transmission to Company, on or prior to the Fifth Restatement Effective Date (in the case of each Lender listed on the signature pages hereof) or on the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Company or Administrative Agent (each in the reasonable exercise of its discretion), (1) two original copies of Internal Revenue Service Form W-8ECI or W-8BEN (or any successor forms), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Internal Revenue Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents or (2) if such Lender is not a "bank" or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form W-8ECI or W-8BEN pursuant to

clause (1) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Internal Revenue Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Loan Documents.

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

(c) Company shall not be required to pay any additional amount to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such Lender shall have failed to satisfy the requirements of subsection 2.7B(iii)(a); PROVIDED that if such Lender shall have satisfied such requirements on the Fifth Restatement Effective Date (in the case of each Lender listed on the signature pages hereof) or on the date of the Assignment Agreement pursuant to which it became a Lender (in the case of each other Lender), nothing in this subsection 2.7B(iii)(c) shall relieve Company of its obligation to pay any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described in subsection 2.7B(iii)(a).

C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that the adoption, effectiveness, phase-in or applicability after the date hereof of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding

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

D. SUBSTITUTE LENDERS. In the event Company is required under the provisions of this subsection 2.7 to make payments in a material amount to any Lender or in the event any Lender fails to lend to Company in accordance with this Agreement, Company may, so long as no Event of Default or Potential Event of Default shall have occurred and be continuing, elect to terminate such Lender as a party to this Agreement; PROVIDED that, concurrently with such termination,
(i) Company shall pay that Lender all principal, interest and fees and other amounts (including without limitation, amounts, if any, owed under this subsection 2.7) owed to such Lender through such date of termination, (ii) another financial institution satisfactory to Company and Administrative Agent (or if Administrative Agent is also the Lender to be terminated, the successor Administrative Agent) shall agree, as of such date, to become a Lender for all purposes under this Agreement (whether by assignment or amendment) and to assume all obligations of the Lender to be terminated as of such date, and (iii) all documents and supporting materials necessary, in the judgment of Administrative Agent (or if Administrative Agent is also the Lender to be terminated, the successor Administrative Agent) to evidence the substitution of such Lender shall have been received and approved by Administrative Agent as of such date.

2.8 OBLIGATION OF LENDERS TO MITIGATE.

Each Lender agrees that, as promptly as practicable after the officer of such Lender responsible for administering the Loans of such Lender becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under subsection 2.7, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts (i) to make, issue, fund or maintain the affected Loans of such Lender through another lending office of such Lender, or
(ii) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to subsection 2.7 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Loans through such other lending office or in accordance with such other measures, as the case may be, would not otherwise materially

adversely affect such Loans or the interests of such Lender; PROVIDED that such Lender will not be obligated to utilize such other lending office pursuant to this subsection 2.8 unless Company agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other lending office as described in clause (i) above. A certificate as to the amount of any such expenses payable by Company pursuant to this subsection 2.8 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Company (with a copy to Administrative Agent) shall be conclusive absent manifest error.

2.9 RELEASE OF COLLATERAL.

Upon the prepayment of all Loans made with respect to a specific Financed Aircraft or a specific Airframe or Engine pursuant to subsection 2.4B(ii)(a) hereof, Administrative Agent, at the reasonable expense of Company, agrees to execute and deliver to Company such documents as shall be reasonably satisfactory to Company to evidence the release of the Liens granted pursuant to the Collateral Documents with respect to such Financed Aircraft or such Airframe or Engine and shall use its best efforts to (i) in the event of a prepayment of all Loans made with respect to a specific Financed Aircraft, return the originals of all Notes representing such Loans to Company, marked "Paid" or (ii) in the event of a prepayment of all Loans made with respect to a specific Airframe or Engine(s), prepare allonges to the Notes representing such Loans to Company describing the release of such Airframe or Engine(s).

SECTION 3.
CONDITIONS TO FIFTH RESTATEMENT EFFECTIVE DATE

3.1 CONDITIONS TO EFFECTIVENESS.

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

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

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

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

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

(b) copies of the bylaws of each Loan Party, certified as of the Fifth Restatement Effective Date by its corporate secretary or an assistant secretary;

(c) resolutions of the Board of Directors of each Loan Party approving and authorizing the execution, delivery and performance of this Agreement and the other documents contemplated by the Transactions certified as of the Fifth Restatement Effective Date by each Loan Party's corporate secretary or assistant secretary as being in full force and effect without modification or amendment;

(d) signature and incumbency certificate of the officer of Company and each other Loan Party executing this Agreement and any other Loan Documents;

(e) a certificate of an authorized officer of the Company, certifying that the conditions set forth in clauses (vii), (ix),
(xiv), (xv) and (xvi) of this subsection 3.1 are satisfied;

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

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

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

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

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