AIRCRAFT CHATTEL MORTGAGE

SECURITY AGREEMENT AND CHATTEL MORTGAGE
(AIRCRAFT NO. N527MC)

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

PRELIMINARY STATEMENTS

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

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

SECTION 1. Mortgage and Grant of Security.

To secure the due and punctual payment of the Notes, together with accrued interest thereon, and all other amounts from time to time payable by the Company under the Credit Agreement, this Mortgage and the other Loan Documents (as defined below) (including payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code), and to secure performance of all obligations and covenants of the Company under the Credit Agreement, this Mortgage and the other Loan Documents (all such payment and performance obligations of the Com-
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pany, the "SECURED OBLIGATIONS"), the Company hereby mortgages to the Agent, for the benefit of the Lenders, and their respective successors and assigns, and hereby grants and assigns to the Agent, for the benefit of the Lenders, and their respective successors and assigns, a first priority security interest in the Aircraft (the "AIRCRAFT COLLATERAL") and a first priority security interest in all estate, right, title and interest of the Company in, to and under, the other below described property wherever the same may be located (the "AIRCRAFT RELATED COLLATERAL"):

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

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

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

(iii) all appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment of whatever nature (other than complete
Engines or engines), that may from time to time be incorporated or
installed in or attached to the Airframe or any Engine, including all such
appliances, parts, instruments, appurtenances, accessories, furnishings
and other equipment purchased by the Company for incorporation or
installation in or attachment to the Airframe or any Engine pursuant to
the terms of any agreement whether or not identified in a Supplemental
Chattel Mortgage (collectively referred to herein as "PARTS"); and
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(iv) all records, logs and other materials required by applicable law
or regulation to be maintained and all other records, logs and materials
maintained in the ordinary course of business with respect to the
properties described in paragraphs (i), (ii) and (iii) above (together
with such Airframe and Engines, the "AIRCRAFT").

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

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

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

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

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

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

(vi) the Lease, including without limitation all Basic Rent (as defined
in the Lease), Supplemental Rent (as defined in the Lease), insurance
proceeds, requisition, indemnity and other payments of any kind
thereunder, and including all rights of the Company, as lessor, to execute
any election or option or to give any notice, consent, waiver or approval
under or in respect of the Lease or to accept any surrender of any of the
Aircraft or any part thereof, as well as any rights, powers or remedies on
the part of
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the Lessor, whether arising under the Lease or by statute or at law or in
equity, or otherwise, arising out of any Lease Event of Default (as
defined in the Lease), including, without limitation, all rights under
Section 1110 of the Bankruptcy Code; and

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

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

SECTION 2. Definitions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 3. Representations and Warranties.

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

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

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

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

(d) This Mortgage or a Supplemental Chattel Mortgage, as the case may be, is in due form for recording in accordance with the Act and has been duly filed for recording in accordance with the Act against the Aircraft or such Engine(s) as the case may be.
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(e) An airworthiness certificate has been duly issued under the Act for the Aircraft (evidence of which has been supplied to the Agent), and the airworthiness certificate for the Aircraft is in full force and effect.

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

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

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

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

SECTION 4. Covenants.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(ii) Any Part removed from the Airframe or any Engine as
provided in Section 4(e)(i) may be subjected by the Company or the
Lessee to a normal pooling arrangement of the type customary in the
airline industry entered into by the Lessee in the ordinary course of
its business and entered into with Domestic Air Carriers that are not
the subject of any bankruptcy, insolvency, or similar proceeding,
voluntary or involuntary, provided that the Part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe
or such Engine in accordance with Section 4(e)(i) as promptly as
possible after the removal of such removed part. In addition, any
...

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