<PAGE>   1
 
                                                     REGISTRATION NO. 333-
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
                                    FORM S-4
 
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------
                           CONTINENTAL AIRLINES, INC.
             (Exact name of registrant as specified in its charter)
 

<TABLE>
<C>                              <C>                              <C>
          DELAWARE                           4512                          74-2099724
(State or other jurisdiction     (Primary standard industrial           (I.R.S. employer
              of                  classification code number)        identification number)
      incorporation or
        organization)
</TABLE>

 
                         2929 ALLEN PARKWAY, SUITE 2010
                              HOUSTON, TEXAS 77019
                                 (713) 834-2950
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)
                             ---------------------
                            JEFFERY A. SMISEK, ESQ.
            EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
                           CONTINENTAL AIRLINES, INC.
                         2929 ALLEN PARKWAY, SUITE 2010
                              HOUSTON, TEXAS 77019
                                 (713) 834-2950
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
 
                          Copies of correspondence to:
 
                              JOHN K. HOYNS, ESQ.
                           HUGHES HUBBARD & REED LLP
                             ONE BATTERY PARK PLAZA
                         NEW YORK, NEW YORK 10004-1482
                             ---------------------
        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
  As soon as practicable after this Registration Statement becomes effective.
                             ---------------------
 
     If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box:     [ ]
 
                        CALCULATION OF REGISTRATION FEE
 

<TABLE>
<CAPTION>
===========================================================================================================
                                                                                  PROPOSED
                                                               PROPOSED           MAXIMUM
                                                               MAXIMUM           AGGREGATE      AMOUNT OF
    TITLE OF EACH CLASS OF SECURITIES      AMOUNT TO BE     OFFERING PRICE     OFFERING PRICE  REGISTRATION
            TO BE REGISTERED               REGISTERED(1)  PER CERTIFICATE(2)        (2)            FEE
- -----------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>                  <C>             <C>
Pass Through Certificates, Series
  1997-1A................................   $437,876,000         100%            $437,876,000
Pass Through Certificates, Series
  1997-1B................................   $148,333,000         100%            $148,333,000    $214,334
Pass Through Certificates, Series
  1997-1C-I..............................   $111,093,000         100%            $111,093,000
Pass Through Certificates, Series
  1997-1C-II.............................   $ 10,000,000         100%            $ 10,000,000
===========================================================================================================
</TABLE>

 
(1) Equals the aggregate principal amount of the securities being registered.
 
(2) Pursuant to Rule 457(f)(2), the registration fee has been calculated using
    the book value of the securities being registered.
 
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================

<PAGE>   2
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
                  SUBJECT TO COMPLETION -- DATED MAY 27, 1997
 
PROSPECTUS
 
                           CONTINENTAL AIRLINES, INC.
 
          Offer to Exchange Pass Through Certificates, Series 1997-1,
    which have been registered under the Securities Act of 1933, as amended,
      for any and all outstanding Pass Through Certificates, Series 1997-1
 
      The Exchange Offer will expire at 5:00 p.m., New York City time, on
                        [            ], unless extended.
 
     Pass Through Certificates, Series 1997-1 (the "New Certificates"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which this Prospectus
is a part, are hereby offered, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying letter of transmittal (the "Letter
of Transmittal" and, together with this Prospectus, the "Exchange Offer"), in
exchange for an equal principal amount of outstanding Pass Through Certificates,
Series 1997-1 (the "Old Certificates"), of which $707,302,000 aggregate
principal amount is outstanding as of the date hereof. The New Certificates and
the Old Certificates are collectively referred to herein as the "Certificates".
 
     Any and all Old Certificates that are validly tendered and not withdrawn on
or prior to 5:00 P.M., New York City time, on the date the Exchange Offer
expires, which will be [            ] (30 calendar days following the
commencement of the Exchange Offer) unless the Exchange Offer is extended (such
date, including as extended, the "Expiration Date") will be accepted for
exchange. Tenders of Old Certificates may be withdrawn at any time prior to 5:00
P.M., New York City time, on the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Certificates being tendered
for exchange. However, the Exchange Offer is subject to certain customary
conditions which may be waived by the Company and to the terms of the
Registration Rights Agreement (as defined herein). Old Certificates may be
tendered only in integral multiples of $1,000. See "The Exchange Offer".
 
     The New Certificates will be entitled to the benefits of the same Pass
Through Trust Agreements (as defined herein) which govern the Old Certificates
and will govern the New Certificates. The New Certificates will have terms
identical in all material respects to the Old Certificates except that the New
Certificates will not contain terms with respect to transfer restrictions or
interest rate increases as described herein and the New Certificates will be
available only in book-entry form. See "The Exchange Offer" and "Description of
New Certificates".
 
     Each Certificate represents a fractional undivided interest in one of the
four Continental Airlines 1997-1 Pass Through Trusts (the "Class A Trust", the
"Class B Trust", the "Class C-I Trust" and the "Class C-II Trust", the Class C-I
Trust and the Class C-II Trust being referred to together as the "Class C
Trusts" and all such trusts being referred to collectively as the "Trusts")
formed pursuant to four separate pass through trust agreements (the "Pass
Through Trust Agreements") between Continental Airlines, Inc. ("Continental" or
the "Company") and Wilmington Trust Company (the "Trustee"), as trustee under
each Trust. Pursuant to an intercreditor agreement, (i) the Certificates of the
Class B Trust are subordinated in right of payment to the Certificates of the
Class A Trust and (ii) the Certificates of the Class C Trusts are subordinated
in right of payment to the Certificates of the Class B Trust. Payments of
interest on the Certificates issued by each Trust are supported by two separate
liquidity facilities for the benefit of the holders of
 
                                                        (continued on next page)
                             ---------------------
 
     FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 34 OF
THIS PROSPECTUS.
 

<TABLE>
<CAPTION>
                        PASS THROUGH                                                              FINAL EXPECTED
                        CERTIFICATES                          PRINCIPAL AMOUNT   INTEREST RATE   DISTRIBUTION DATE
                        ------------                          ----------------   -------------   -----------------
<S>                                                           <C>                <C>             <C>
1997-1A.....................................................    $437,876,000         7.461%        April 1, 2015
1997-1B.....................................................    $148,333,000         7.461%        April 1, 2013
1997-1C-I...................................................    $111,093,000         7.420%        April 1, 2007
1997-1C-II..................................................    $ 10,000,000         7.420%        April 1, 2007
                                                                ------------
          Total.............................................    $707,302,000
                                                                ============
</TABLE>

 
                             ---------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
                             ---------------------
 
                  The date of this Prospectus is May   , 1997

<PAGE>   3
 
(continued from cover page)
 
such Certificates, such facilities provided initially by ABN AMRO Bank N.V., a
Dutch bank acting through its Chicago branch ("ABN AMRO"), and ING Bank N.V., a
Dutch bank ("ING" and, together with ABN AMRO, the "Liquidity Providers") in an
amount sufficient to pay interest thereon at the applicable interest rate for
such Certificates on up to three successive semiannual distribution dates
(except that the liquidity facilities will not cover interest payable on the
Deposits by the Depositary referred to below).
 
     The Trusts were established for the purpose of acquiring equipment notes
(the "Equipment Notes") expected to be issued in connection with the financing
of the purchase of eight Boeing 757-224 aircraft, eighteen Boeing 737-524
aircraft and four Boeing 737-724 aircraft (collectively, the "Aircraft"), which
are scheduled for delivery during the period March 1997 through February 1998,
with the final delivery for purposes of purchase by the Trusts no later than
March 31, 1998 (or June 30, 1998 under certain circumstances) (the "Delivery
Period"). The Equipment Notes will be issued, at Continental's election, either
(i) on a non-recourse basis by the trustees of separate owner trusts (each, an
"Owner Trustee") in connection with separate leveraged lease transactions, in
which case the applicable Aircraft will be leased to Continental (collectively,
the "Leased Aircraft"), or (ii) on a recourse basis by Continental in connection
with separate secured loan transactions, in which case the applicable Aircraft
will be owned by Continental (collectively, the "Owned Aircraft"). The Equipment
Notes in respect of each Aircraft will be issued in three series (the "Series A
Equipment Notes", the "Series B Equipment Notes" and the "Series C Equipment
Notes"). The Class A Trust, the Class B Trust and the Class C-I Trust (or, if
the Deposits relating to the Class C-I Trust have been fully withdrawn, the
Class II Trust) will purchase the series of Equipment Notes issued with respect
to each Aircraft that has an interest rate equal to the interest rate applicable
to the Certificates issued by such Trust. If any funds remain as Deposits
relating to any Trust at the end of the Delivery Period or, if earlier, upon the
acquisition by the Trusts of the Equipment Notes with respect to all of the
Aircraft (the "Delivery Period Termination Date"), such funds will be withdrawn
by the Escrow Agent and distributed, with accrued and unpaid interest thereon,
to the Certificateholders (as defined herein) of such Trust after at least 20
days' prior notice. In addition, such distribution will include a premium
payable by Continental (i) in the case of the holders of the Certificates issued
by the Class A Trust, the Class B Trust and the Class C-I Trust, equal to the
Deposit Make-Whole Premium (as defined herein) with respect to the aggregate
amount of funds so distributed (excluding accrued interest) and (ii) in the case
of the holders of the Certificates issued by the Class C-II Trust, equal to the
Class C-II Premium (as defined herein) with respect to such aggregate amount.
Since the Deposits relating to the Class C-II Trust will be the last to be
utilized with respect to the purchase of Equipment Notes and the maximum
principal amount of Equipment Notes may not be issued, there is a greater
likelihood that such a distribution will be required with respect to the
Certificates issued by the Class C-II Trust than the Certificates issued by the
other Trusts. Prior to the date of this Prospectus, Equipment Notes with respect
to two Leased Aircraft have been issued.
 
     The cash proceeds of the initial offering of Old Certificates by each Trust
were paid to First Security Bank, N.A., as escrow agent (the "Escrow Agent"),
under an Escrow and Paying Agent Agreement for the benefit of the holders of
Certificates issued by such Trust (each, an "Escrow Agreement"). The Escrow
Agent caused such cash proceeds to be deposited (each, a "Deposit") with Credit
Suisse First Boston, New York branch (the "Depositary"), in accordance with the
Deposit Agreement relating to such Trust (each, a "Deposit Agreement"). Pursuant
to each Deposit Agreement, the Depositary will pay for distribution to the
holders of Certificates issued by each Trust on each semiannual distribution
date an amount equal to interest accrued on the Deposits relating to such Trust
during the applicable interest period at a rate per annum equal to the interest
rate applicable to the Certificates issued by such Trust. Upon each delivery of
an Aircraft during the Delivery Period, the Trustee for the Class A Trust, the
Class B Trust and the Class C-I Trust (or, if the Deposits relating to the Class
C-I Trust have been fully withdrawn, the Class C-II Trust) will cause to be
withdrawn from the Deposits relating to such Trust funds sufficient to purchase
the Equipment Note of the series applicable to such Trust issued with respect to
such Aircraft.
 
     The Equipment Notes issued with respect to each Aircraft will be secured by
a security interest in such Aircraft and, in the case of each Leased Aircraft,
by an assignment of the lease relating thereto, including the right to receive
rentals payable with respect to such Leased Aircraft by Continental. Although
neither the
 
                                        2

<PAGE>   4
 
Certificates nor the Equipment Notes issued with respect to the Leased Aircraft
are direct obligations of, or guaranteed by, Continental, the amounts
unconditionally payable by Continental for lease of the Leased Aircraft will be
sufficient to pay in full when due all amounts required to be paid on the
Equipment Notes issued with respect to the Leased Aircraft held in the Trusts.
The Equipment Notes issued with respect to the Owned Aircraft will be direct
obligations of Continental.
 
     All of the Equipment Notes held in each Trust will accrue interest at the
applicable rate per annum for the Certificates issued by such Trust, payable on
April 1 and October 1 of each year, commencing on October 1, 1997 or, if later,
the first such date to occur after initial issuance thereof. The Deposits
relating to each Trust accrue interest at the applicable rate per annum for the
Certificates issued by such Trust, payable on April 1 and October 1 of each
year, commencing on October 1, 1997, until the Deposits have been fully
withdrawn. The scheduled payments of interest on the Equipment Notes and on the
Deposits with respect to each Trust, taken together, will be sufficient to pay
an amount equal to accrued interest on the outstanding Certificates issued by
such Trust at the rate per annum applicable thereto. Such interest will be
distributed to Certificateholders of such Trust on each such date, subject, in
the case of interest payments made pursuant to the Equipment Notes, to the
Intercreditor Agreement (as defined herein). See "Description of the New
Certificates -- General" and "-- Payments and Distributions". The New
Certificates will accrue interest at the applicable per annum rate for such
Trust, from the last date on which interest was paid on the Old Certificates
surrendered in exchange therefor. See "The Exchange Offer -- Interest on New
Certificates".
 
     Scheduled principal payments on the Equipment Notes held in each Trust will
be passed through to the Certificateholders of each such Trust on April 1 and
October 1 in certain years, commencing on April 1, 1998. Such Payments will be
made, subject to certain assumptions, in accordance with the principal repayment
schedule set forth below under "Description of the New Certificates -- Pool
Factors", in each case subject to the Intercreditor Agreement.
 
     On the earlier of (i) the first Business Day (as defined herein) after
March 31, 1998 or, if later, the fifth Business Day after the Delivery Period
Termination Date and (ii) the fifth Business Day after the occurrence of a
Triggering Event (as defined herein) (such Business Day, the "Transfer Date"),
each of the Trusts established at the time of the original issuance of the
Certificates (the "Original Trusts") will transfer and assign all of its assets
and rights to a newly-created successor trust with substantially identical terms
(each, a "Successor Trust"). The institution acting as Trustee of each of the
Original Trusts (each, an "Original Trustee") will also act as Trustee of the
corresponding Successor Trust (each, a "New Trustee"), and each New Trustee will
assume the obligations of the Original Trustee under each transaction document
to which such Original Trustee was a party. Upon the effectiveness of such
transfer, assignment and assumption, each of the Original Trusts will be
liquidated and each of the Certificates will represent the same percentage
interest in the Successor Trust as it represented in the Original Trust
immediately prior to such transfer, assignment and assumption. Unless the
context otherwise requires, all references in this Prospectus to the Trusts, the
Trustees, the Pass Through Trust Agreements and similar terms shall be
applicable with respect to the Original Trusts until the effectiveness of such
transfer, assignment and assumption and thereafter shall be applicable with
respect to the Successor Trusts.
 
     Each Class of New Certificates will be represented by one or more permanent
global Certificates in fully registered form, which will be deposited with the
Trustee as custodian for and registered in the name of a nominee of DTC.
Beneficial interests in the permanent global Certificates will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants.
 
     Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties, including Exxon Capital Holdings Corporation, SEC No-Action Letter
(available April 13, 1989) (the "Exxon Capital Letter"), Morgan Stanley & Co.
Incorporated, SEC No-Action Letter (available June 5, 1991) (the "Morgan Stanley
Letter") and Shearman & Sterling, SEC No-Action Letter (available July 2, 1993)
(the "Shearman & Sterling Letter") (collectively, the "Exchange Offer No-Action
Letters"), the Company believes that the New Certificates issued pursuant to the
Exchange Offer may be offered for resale, resold or otherwise transferred by
holders thereof (other than a broker-dealer who acquires such New Certificates
directly from the Trustee for resale
 
                                        3

<PAGE>   5
 
pursuant to Rule 144A under the Securities Act or any other available exemption
under the Securities Act or any holder that is an "affiliate" of the Company as
defined under Rule 405 of the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Certificates are acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do not intend to engage in, a
distribution of such New Certificates and have no arrangement with any person to
participate in a distribution of such New Certificates. By tendering the Old
Certificates in exchange for New Certificates, each holder, other than a
broker-dealer, will represent to the Company that: (i) it is not an affiliate of
the Company (as defined under Rule 405 of the Securities Act) nor a
broker-dealer tendering Old Certificates acquired directly from the Company for
its own account; (ii) any New Certificates to be received by it will be acquired
in the ordinary course of its business; and (iii) it is not engaged in, and does
not intend to engage in, a distribution of such New Certificates and has no
arrangement or understanding to participate in a distribution of the New
Certificates. If a holder of Old Certificates is engaged in or intends to engage
in a distribution of the New Certificates or has any arrangement or
understanding with respect to the distribution of the New Certificates to be
acquired pursuant to the Exchange Offer, such holder may not rely on the
applicable interpretations of the staff of the Commission and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each broker-dealer that
receives New Certificates for its own account pursuant to the Exchange Offer (a
"Participating Broker-Dealer") must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were acquired by such
Participating Broker-Dealer as a result of market-making activities or other
trading activities. Pursuant to the Registration Rights Agreement, the Company
has agreed that starting on the Expiration Date it will make this Prospectus
available to any Participating Broker-Dealer for use in connection with any such
resale. See "Plan of Distribution."
 
     The Company will not receive any proceeds from this offering. The Company
has agreed to pay the expenses of the Exchange Offer. No underwriter is being
utilized in connection with the Exchange Offer.
 
     THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD CERTIFICATES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
 
     Prior to the Exchange Offer, there has been no public market for the New
Certificates. If such market were to develop, the New Certificates could trade
at prices that may be higher or lower than their principal amount. Neither
Continental nor any Trust has applied or intends to apply for listing of the New
Certificates on any national securities exchange or otherwise. One or more of
Credit Suisse First Boston, Morgan Stanley & Co. Incorporated, Chase Securities
Inc. and Goldman, Sachs & Co. (the "Initial Purchasers") have previously made a
market in the Old Certificates and Continental has been advised that one or more
of the Initial Purchasers presently intend to make a market in the New
Certificates, as permitted by applicable laws and regulations, after
consummation of the Exchange Offer. None of the Initial Purchasers is obligated,
however, to make a market in the Certificates, and any such market making
activity by an Initial Purchaser may be discontinued at any time without notice
at the sole discretion of such Initial Purchaser. There an be no assurance as to
the liquidity of the public market for the Certificates or that any active
public market for the Certificates will develop or continue. If an active public
market does not develop or continue, the market prices and liquidity of the
Certificates may be adversely affected. See "Risk Factors -- Risk Factors
Relating to the Certificates and the Offering -- Absence of an Established
Market."
 
                                        4

<PAGE>   6
 
                             AVAILABLE INFORMATION
 
     Continental is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549; Seven World Trade Center, 13th Floor, New York, New York 10007; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of prescribed rates. Such material may also
be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. In addition, reports, proxy statements and other
information concerning Continental may be inspected and copied at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
 
     Continental is the successor to Continental Airlines Holdings, Inc.
("Holdings"), which merged with and into Continental on April 27, 1993. Holdings
had also been subject to the informational requirements of the Exchange Act.
 
     This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") filed
by Continental with the Commission, through the Electronic Data Gathering,
Analysis and Retrieval System ("EDGAR"), under the Securities Act, with respect
to the New Certificates offered hereby. This Prospectus omits certain of the
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement for further information with respect to
Continental and the securities offered hereby. Although statements concerning
and summaries of certain documents are included herein, reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. These documents may be inspected without
charge at the office of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies may be obtained at fees and charges
prescribed by the Commission.
 
                         REPORTS TO CERTIFICATEHOLDERS
 
     Wilmington Trust Company, in its capacity as Pass Through Trustee under
each of the Trusts and Paying Agent under each Escrow Agreement, will provide
the Certificateholders of each Trust certain periodic reports concerning the
distributions made from such Trust and pursuant to such Escrow Agreement. See
"Description of New Certificates -- Reports to Certificateholders".
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The following documents filed with the Commission (File No. 0-9781) are
hereby incorporated by reference in this Prospectus: (i) Continental's Annual
Report on Form 10-K for the year ended December 31, 1996, (ii) Continental's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997 and
(iii) Continental's Current Reports on Form 8-K filed on January 6, March 21 and
April 18, 1997.
 
     All reports and any definitive proxy or information statements filed by
Continental pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated herein by reference, or contained in this Prospectus, shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
 
     THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE TO
ANY PERSON TO WHOM A PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF
SUCH PERSON, FROM CONTINENTAL AIRLINES, INC., 2929 ALLEN PARKWAY, SUITE 2010,
HOUSTON, TEXAS 77019, ATTENTION: SECRETARY, TELEPHONE (713) 834-2950. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY [   ].
 
                                        5

<PAGE>   7
 
                               PROSPECTUS SUMMARY
 
     The following summary information does not purport to be complete and is
qualified in its entirety by the detailed information and financial statements
(including the notes thereto) appearing elsewhere in, or incorporated by
reference in, this Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus on the pages indicated in the "Index of Terms".
 
                                  THE COMPANY
 
     Continental Airlines, Inc. is a major United States air carrier engaged in
the business of transporting passengers, cargo and mail. Continental is the
fifth largest United States airline (as measured by revenue passenger miles in
the first four months of 1997) and, together with its wholly owned subsidiary,
Continental Express, Inc. ("Express"), and its 91%-owned subsidiary, Continental
Micronesia, Inc. ("CMI"), each a Delaware corporation, serves 188 airports
worldwide.
 
     The Company operates its route system primarily through domestic hubs at
Newark, Houston Intercontinental and Cleveland, and a Pacific hub on the island
of Guam. Each of Continental's three domestic hubs is located in a large
business and population center, contributing to a high volume of "origin and
destination" traffic. The Guam hub is strategically located to provide service
from Japanese and other Asian cities to popular resort destinations in the
western Pacific. Continental is the primary carrier at each of these hubs,
accounting for 54%, 79%, 53% and 68% of average daily jet departures,
respectively.
 
     Continental directly serves 129 U.S. cities, with additional cities
(principally in the western and southwestern United States) connected to
Continental's route system under agreements with America West Airlines, Inc.
("America West"). Internationally, Continental flies to 59 destinations and
offers additional connecting service through alliances with foreign carriers.
Continental operates 70 weekly departures to 7 European cities and markets
service to 8 other cities through code-sharing agreements. Continental commenced
service from Newark to Dusseldorf, Germany on March 19, 1997, and from Newark to
Lisbon, Portugal on May 1, 1997. Continental plans to add service from Newark to
Vancouver, British Columbia on June 12, 1997, to Birmingham, England on July 1,
1997 and to Sao Paulo and Rio de Janeiro, Brazil on July 10, 1997. In addition,
during 1996 Continental entered into agreements with Air France for a joint
marketing arrangement that will involve service from Newark and Houston to Paris
(scheduled to commence in the third quarter 1997), subject to governmental
approval, and Aeroflot Russian International Airlines ("Aeroflot") for a joint
marketing arrangement that will involve service from Newark to Moscow (scheduled
to commence in the second quarter of 1998), subject to governmental approval.
Also during 1996, Continental entered into an agreement with Alitalia Airlines
("Alitalia") to expand the companies' existing code-share relationship to
include additional flights between the United States and Italy, which is
expected to commence in the second quarter of 1997. In addition, Continental
recently announced the execution of a memorandum of understanding for a
code-share arrangement with Virgin Atlantic Airways Limited ("Virgin") involving
the carriers' Newark/New York-London routes and eight other routes flown by
Virgin between the United Kingdom and the United States. Continental is one of
the leading airlines providing service to Mexico and Central America, serving
more destinations there than any other United States airline. In addition,
Continental flies to four cities in South America. Through its Guam hub,
Continental provides extensive service in the western Pacific, including service
to more Japanese cities than any other United States carrier.
 
     The Company is a Delaware corporation. Its executive offices are located at
2929 Allen Parkway, Suite 2010, Houston, Texas 77019, and its telephone number
is (713) 834-2950.
                                        6

<PAGE>   8
 
                               THE EXCHANGE OFFER
 
Registration Rights
Agreement..................  The Old Certificates were issued on March 21, 1997
                               to the Initial Purchasers. The Initial Purchasers
                               placed the Old Certificates with institutional
                               investors. In connection therewith, the Company,
                               the Depositary, the Trustee under each of the
                               Trusts, and the Initial Purchasers entered into
                               the Registration Rights Agreement providing,
                               among other things, for the Exchange Offer. See
                               "The Exchange Offer".
 
The Exchange Offer.........  New Certificates are being offered in exchange for
                               an equal principal amount of Old Certificates. As
                               of the date hereof, $707,302,000 aggregate
                               principal amount of Old Certificates are
                               outstanding. Old Certificates may be tendered
                               only in integral multiples of $1,000.
 
Resale of New
Certificates...............  Based on interpretations by the staff of the
                               Commission, as set forth in no-action letters
                               issued to third parties, including the Exchange
                               Offer No-Action Letters, the Company believes
                               that the New Certificates issued pursuant to the
                               Exchange Offer may be offered for resale, resold
                               or otherwise transferred by holders thereof
                               (other than a broker-dealer who acquires such New
                               Certificates directly from the Trustee for resale
                               pursuant to Rule 144A under the Securities Act or
                               any other available exemption under the
                               Securities Act or any holder that is an
                               "affiliate" of the Company as defined under Rule
                               405 of the Securities Act), without compliance
                               with the registration and prospectus delivery
                               provisions of the Securities Act, provided that
                               such New Certificates are acquired in the
                               ordinary course of such holders' business and
                               such holders are not engaged in, and do not
                               intend to engage in, a distribution of such New
                               Certificates and have no arrangement with any
                               person to participate in a distribution of such
                               New Certificates. By tendering the Old
                               Certificates in exchange for New Certificates,
                               each holder, other than a broker-dealer, will
                               represent to the Company that: (i) it is not an
                               affiliate of the Company (as defined under Rule
                               405 of the Securities Act) nor a broker-dealer
                               tendering Old Certificates acquired directly from
                               the Trustee for its own account; (ii) any New
                               Certificates to be received by it were acquired
                               in the ordinary course of its business; and (iii)
                               it is not engaged in, and does not intend to
                               engage in, a distribution of such New
                               Certificates and has no arrangement or
                               understanding to participate in a distribution of
                               the New Certificates. If a holder of Old
                               Certificates is engaged in or intends to engage
                               in a distribution of the New Certificates or has
                               any arrangement or understanding with respect to
                               the distribution of the New Certificates to be
                               acquired pursuant to the Exchange Offer, such
                               holder may not rely on the applicable
                               interpretations of the staff of the Commission
                               and must comply with the registration and
                               prospectus delivery requirements of the
                               Securities Act in connection with any secondary
                               resale transaction. Each Participating
                               Broker-Dealer that receives New Certificates for
                               its own account pursuant to the Exchange Offer
                               must acknowledge that it will deliver a
                               prospectus in connection with any resale of such
                               New Certificates. The Letter of Transmittal
                               states that by so acknowledging and by delivering
                               a prospectus, a Participating Broker-Dealer will
                               not be deemed to admit that it is an
                               "underwriter" within the meaning of the
                               Securities Act. This Prospectus, as it may be
                               amended
                                        7

<PAGE>   9
 
                               or supplemented from time to time, may be used by
                               a Participating Broker-Dealer in connection with
                               resales of New Certificates received in exchange
                               for Old Certificates where such Old Certificates
                               were acquired by such Participating Broker-Dealer
                               as a result of market-making activities or other
                               trading activities. The Company has agreed that,
                               starting on the Expiration Date and ending on the
                               close of business 180 days after the Expiration
                               Date, it will make this Prospectus available to
                               any Participating Broker-Dealer for use in
                               connection with any such resale. See "Plan of
                               Distribution." To comply with the securities laws
                               of certain jurisdictions, it may be necessary to
                               qualify for sale or register the New Certificates
                               prior to offering or selling such New
                               Certificates. The Company has agreed, pursuant to
                               the Registration Rights Agreement and subject to
                               certain specified limitations therein, to
                               register or qualify the New Certificates for
                               offer or sale under the securities or "blue sky"
                               laws of such jurisdictions as may be necessary to
                               permit the holders of New Certificates to trade
                               the New Certificates without any restrictions or
                               limitations under the securities laws of the
                               several states of the United States.
 
Consequences of Failure to
  Exchange Old
  Certificates.............  Upon consummation of the Exchange Offer, subject to
                               certain exceptions, holders of Old Certificates
                               who do not exchange their Old Certificates for
                               New Certificates in the Exchange Offer will no
                               longer be entitled to registration rights and
                               will not be able to offer or sell their Old
                               Certificates, unless such Old Certificates are
                               subsequently registered under the Securities Act
                               (which, subject to certain limited exceptions,
                               the Company will have no obligation to do),
                               except pursuant to an exemption from, or in a
                               transaction not subject to, the Securities Act
                               and applicable state securities laws. See "Risk
                               Factors -- Risk Factors Relating to the
                               Certificates and the Offering -- Consequences of
                               Failure to Exchange" and "The Exchange Offer --
                               Terms of the Exchange Offer".
 
Expiration Date............  5:00 p.m., New York City time, on [     ] (30
                               calendar days following the commencement of the
                               Exchange Offer), unless the Exchange Offer is
                               extended, in which case the term "Expiration
                               Date" means the latest date and time to which the
                               Exchange Offer is extended.
 
Interest on the New
  Certificates.............  The New Certificates will accrue interest at the
                               applicable per annum rate for such New
                               Certificates set forth on the cover page of this
                               Prospectus, from the date on which the Old
                               Certificates were originally issued.
 
Conditions to the Exchange
  Offer....................  The Exchange Offer is not conditioned upon any
                               minimum principal amount of Old Certificates
                               being tendered for exchange. However, the
                               Exchange Offer is subject to certain customary
                               conditions, which may be waived by the Company.
                               See "The Exchange Offer -- Conditions". Except
                               for the requirements of applicable federal and
                               state securities laws, there are no federal or
                               state regulatory requirements to be complied with
                               or obtained by the Company in connection with the
                               Exchange Offer.
                                        8

<PAGE>   10
 
Procedures for Tendering
Old Certificates...........  Each holder of Old Certificates wishing to accept
                               the Exchange Offer must complete, sign and date
                               the Letter of Transmittal, or a facsimile
                               thereof, in accordance with the instructions
                               contained herein and therein, and mail or
                               otherwise deliver such Letter of Transmittal, or
                               such facsimile, together with the Old
                               Certificates to be exchanged and any other
                               required documentation to the Exchange Agent (as
                               defined herein) at the address set forth herein
                               or effect a tender of Old Certificates pursuant
                               to the procedures for book-entry transfer as
                               provided for herein. See "The Exchange
                               Offer -- Procedures for Tendering" and "-- Book
                               Entry Transfer".
 
Guaranteed Delivery
  Procedures...............  Holders of Old Certificates who wish to tender
                               their Old Certificates and whose Old Certificates
                               are not immediately available or who cannot
                               deliver their Old Certificates and a properly
                               completed Letter of Transmittal or any other
                               documents required by the Letter of Transmittal
                               to the Exchange Agent prior to the Expiration
                               Date may tender their Old Certificates according
                               to the guaranteed delivery procedures set forth
                               in "The Exchange Offer -- Guaranteed Delivery
                               Procedures".
 
Withdrawal Rights..........  Tenders of Old Certificates may be withdrawn at any
                               time prior to 5:00 p.m., New York City time, on
                               the Expiration Date. To withdraw a tender of Old
                               Certificates, a written or facsimile transmission
                               notice of withdrawal must be received by the
                               Exchange Agent at its address set forth herein
                               under "The Exchange Offer -- Exchange Agent"
                               prior to 5:00 p.m., New York City time, on the
                               Expiration Date.
 
Acceptance of Old
Certificates and Delivery
  of New Certificates......  Subject to certain conditions, any and all Old
                               Certificates which are properly tendered in the
                               Exchange Offer prior to 5:00 p.m., New York City
                               time, on the Expiration Date will be accepted for
                               exchange. The New Certificates issued pursuant to
                               the Exchange Offer will be delivered promptly
                               following the Expiration Date. See "The Exchange
                               Offer -- Terms of the Exchange Offer".
 
Certain Tax
Considerations.............  The exchange of New Certificates for Old
                               Certificates will not be a sale or exchange or
                               otherwise a taxable event for Federal income tax
                               purposes. See "Certain Federal Income Tax
                               Considerations".
 
Exchange Agent.............  Wilmington Trust Company is serving as exchange
                               agent (the "Exchange Agent") in connection with
                               the Exchange Offer.
 
Fees and Expenses..........  All expenses incident to the Company's consummation
                               of the Exchange Offer and compliance with the
                               Registration Rights Agreement will be borne by
                               the Company. See "The Exchange Offer -- Fees and
                               Expenses".
 
Use of Proceeds............  There will be no cash proceeds payable to
                               Continental from the issuance of the New
                               Certificates pursuant to the Exchange Offer. The
                               proceeds from the sale of the Old Certificates
                               issued by each Trust were deposited with the
                               Depositary on behalf of the Escrow Agent for the
                               benefit of the Certificateholders of such Trust.
                               Such proceeds will be used to purchase Equipment
                               Notes during the Delivery Period issued,
                                        9

<PAGE>   11
 
                               at Continental's election, either (i) by the
                               Owner Trustees to finance the purchase of the
                               Leased Aircraft or (ii) by Continental to finance
                               the purchase of the Owned Aircraft. Prior to the
                               date of this Prospectus, two Boeing 757-224
                               Aircraft have been delivered, and funds were
                               withdrawn from the Deposits to purchase Equipment
                               Notes in respect of such Aircraft in the
                               aggregate principal amount of $74.4 million. See
                               "Use of Proceeds".
 
                             TERMS OF CERTIFICATES
 
     The Exchange Offer relates to the exchange of up to $707,302,000 aggregate
principal amount of Old Certificates for up to an equal aggregate principal
amount of New Certificates. The New Certificates will be entitled to the
benefits of and will be governed by the same Pass Through Trust Agreements that
govern the Old Certificates. The form and terms of the New Certificates are the
same in all material respects as the form and terms of the Old Certificates,
except that the New Certificates do not provide for interest rate increases
relating to failure to implement the Exchange Offer and will not bear legends
restricting transfer. See "Description of New Certificates".
 
Trusts.....................  Each of the Continental Airlines 1997-1A Pass
                               Through Trust, the Continental Airlines 1997-1B
                               Pass Through Trust, the Continental Airlines
                               1997-1C-I Pass Through Trust and the Continental
                               Airlines 1997-1C-II Pass Through Trust has been
                               formed pursuant to one of the four separate Pass
                               Through Trust Agreements that were entered into
                               between the Company and Wilmington Trust Company,
                               as trustee under each Trust. Each Trust is a
                               separate entity. On the Transfer Date, each of
                               the Original Trusts will transfer and assign all
                               of its assets and rights to a substantially
                               identical Successor Trust, and the New Trustee
                               thereof will assume the obligations of the
                               related Original Trustee under each transaction
                               document to which such Original Trustee was a
                               party. Upon effectiveness of such transfer,
                               assignment and assumption, each of the Original
                               Trusts will be liquidated and each of the New
                               Certificates will represent the same interest in
                               the Successor Trust as it represented in the
                               Original Trust immediately prior to such transfer
                               and assignment.
 
Certificates Offered.......  Pass Through Certificates issued by each Trust,
                               representing fractional undivided interests in
                               such Trust. The New Certificates issued by the
                               Class A Trust, the Class B Trust, the Class C-I
                               Trust and the Class C-II Trust are referred to
                               herein as the "Class A Certificates", the "Class
                               B Certificates", the "Class C-I Certificates",
                               and the "Class C-II Certificates", respectively,
                               and the Class C-I Certificates and the Class C-II
                               Certificates, which are of equal rank under the
                               Intercreditor Agreement, are referred to herein
                               collectively as the "Class C Certificates". The
                               Class C-I Trust and Class C-II Trust will each
                               acquire Series C Equipment Notes, although the
                               Deposits relating to the Class C-I Trust will be
                               utilized for such purpose prior to the Deposits
                               relating to the Class C-II Trust. Accordingly,
                               there is a greater likelihood that a special
                               distribution that will reduce the Pool Balance
                               for the Class C-II Certificates will be required
                               than with respect to the Certificates issued by
                               the other Trusts. See "Description of the Deposit
                               Agreements -- Unused Deposits".
                                       10

<PAGE>   12
 
Escrow Receipts............  The holders of the Certificates are entitled to
                               certain rights with respect to the Deposits. Such
                               rights are evidenced by escrow receipts ("Escrow
                               Receipts") which are affixed to each Certificate.
                               Any transfer of a Certificate will have the
                               effect of transferring the corresponding rights
                               in the affixed Escrow Receipt. All payments to
                               the holders of Certificates in respect of the
                               Deposits and the Escrow Receipts relating to a
                               Trust (i) will not constitute Trust Property of
                               such Trust and (ii) will be deemed for all
                               purposes of this Prospectus to be payments to
                               such holders of Certificates in their capacity as
                               holders of Escrow Receipts.
 
Subordination Agent,
Trustee, Paying Agent and
  Loan Trustee.............  Wilmington Trust Company acts (i) as subordination
                               agent under the Intercreditor Agreement (the
                               "Subordination Agent"), (ii) as Trustee, paying
                               agent and registrar for the Certificates of each
                               Trust, (iii) as paying agent on behalf of the
                               Escrow Agent in respect of each Trust (the
                               "Paying Agent") and (iv) as Loan Trustee, paying
                               agent and registrar for each series of Equipment
                               Notes.
 
Escrow Agent...............  First Security Bank, National Association, acts as
                               Escrow Agent under each Escrow Agreement.
 
Depositary.................  Credit Suisse First Boston, a bank organized under
                               the laws of Switzerland, acting through its New
                               York branch, acts as Depositary under each
                               Deposit Agreement.
 
Liquidity Providers........  ABN AMRO Bank N.V., a Dutch bank acting through its
                               Chicago branch ("ABN AMRO"), and ING Bank N.V., a
                               Dutch bank ("ING" and, together with ABN AMRO,
                               the "Liquidity Providers"), have each provided a
                               separate liquidity facility for the benefit of
                               the holders of each Class of Certificates.
 
Trust Property.............  The property of each Trust (the "Trust Property")
                               consists of (i) the rights of such Trust to
                               acquire Equipment Notes under the Note Purchase
                               Agreement issued, at Continental's election in
                               connection with the delivery of each Aircraft
                               during the Delivery Period, either (a) on a
                               nonrecourse basis by an Owner Trustee in each
                               separate leveraged lease transaction with respect
                               to each Leased Aircraft to finance the purchase
                               of such Leased Aircraft by the Owner Trustee, in
                               which case the applicable Leased Aircraft will be
                               leased to Continental, or (b) on a recourse basis
                               by Continental in connection with each separate
                               secured loan transaction with respect to each
                               Owned Aircraft, if any, to finance the purchase
                               of such Owned Aircraft by Continental, (ii)
                               Equipment Notes acquired under the Note Purchase
                               Agreement (consisting, as of the date of this
                               Prospectus, of $74.4 million principal amount
                               issued with respect to two Boeing 757-224
                               Aircraft in leveraged lease transactions), (iii)
                               the rights of such Trust under the related Escrow
                               Agreement (including the right to request the
                               Escrow Agent to withdraw from the Depositary
                               funds sufficient to enable such Trust to purchase
                               Equipment Notes on the delivery of each Aircraft
                               during the Delivery Period), (iv) the rights of
                               such Trust under the Intercreditor Agreement
                               (including all monies receivable in respect of
                               such rights), (v) all monies receivable under the
                               Liquidity Facility for such Trust and (vi) funds
                               from time to time deposited with the
                                       11

<PAGE>   13
 
                               Trustee in accounts relating to such Trust.
                               Rights with respect to Deposits or under the
                               Escrow Agreement relating to a Trust, except for
                               the right to request withdrawals for the purchase
                               of Equipment Notes, will not constitute Trust
                               Property of such Trust. The Equipment Notes with
                               respect to each Leased Aircraft will be issued in
                               three series under an Indenture (each, a "Leased
                               Aircraft Indenture") between the applicable Owner
                               Trustee and the indenture trustee thereunder (the
                               "Leased Aircraft Trustee"). The Equipment Notes
                               with respect to each Owned Aircraft will be
                               issued in three series under an Indenture (the
                               "Owned Aircraft Indenture" and, together with the
                               other Owned Aircraft Indentures and the Leased
                               Aircraft Indentures, the "Indentures") between
                               Continental and the indenture trustee thereunder
                               (the "Owned Aircraft Trustee" and, together with
                               the other Owned Aircraft Trustees and the Leased
                               Aircraft Trustees, the "Loan Trustees"). The
                               Class A Trust, the Class B Trust and the Class
                               C-I Trust (or, if the Deposits relating to the
                               Class C-I Trust have been fully withdrawn, the
                               Class C-II Trust) each will acquire, pursuant to
                               a certain Note Purchase Agreement (the "Note
                               Purchase Agreement"), the series of Equipment
                               Notes issued with respect to each of the Aircraft
                               having an interest rate equal to the interest
                               rate applicable to the Certificates issued by
                               such Trust. The maturity dates of the Equipment
                               Notes acquired by each Trust will occur on or
                               before the final expected Regular Distribution
                               Date applicable to the Certificates issued by
                               such Trust. Any Deposits relating to a Trust not
                               used to acquire Equipment Notes by the Delivery
                               Period Termination Date will be distributed to
                               the holders of Certificates issued by such Trust,
                               together with accrued and unpaid interest thereon
                               and a premium, as a special distribution. See
                               "Description of the Deposit Agreements -- Unused
                               Deposits".
                                       12

<PAGE>   14
 
SUMMARY OF TERMS OF CERTIFICATES
 

<TABLE>
<CAPTION>
                                          CLASS A               CLASS B              CLASS C-I            CLASS C-II
                                       CERTIFICATES          CERTIFICATES          CERTIFICATES          CERTIFICATES
                                       ------------          ------------          ------------          ------------
<S>                                 <C>                   <C>                   <C>                   <C>
Aggregate Face Amount.............     $437,876,000          $148,333,000          $111,093,000           $10,000,000
Loan to Aircraft Value
  (cumulative)(1).................        40.29%                53.93%                64.93%                64.93%
Expected Principal Distribution
  Window (in years)...............     1.027-18.027          1.027-16.027          1.027-10.027          1.027-10.027
Expected Initial Average Life (in
  years)..........................         12.86                 10.03                 5.82                  5.82
Regular Distribution Dates........  April 1 & October 1   April 1 & October 1   April 1 & October 1   April 1 & October 1
Final Expected Regular
  Distribution Date...............     April 1, 2015         April 1, 2013         April 1, 2007         April 1, 2007
Final Maturity Date...............    October 1, 2016       October 1, 2014       October 1, 2008       October 1, 2008
Minimum Denomination..............        $1,000                $1,000                $1,000                $1,000
Section 1110 Protection(2)........          Yes                   Yes                   Yes                   Yes
Liquidity Facility Coverage(3)....     3 semiannual          3 semiannual          3 semiannual          3 semiannual
                                         interest              interest              interest              interest
                                         payments              payments              payments              payments
Liquidity Facility Amount at April
  1, 1998(3)......................      $48,564,521           $16,426,917           $12,155,173           $1,094,144
</TABLE>

 
- ---------------
 
(1) Determined as of April 1, 1998, the first Regular Distribution Date after
    the scheduled Delivery Period Termination Date, assuming that all Aircraft
    are delivered prior to such date, that the maximum principal amount of
    Equipment Notes is issued with respect to all Aircraft and that the
    aggregate appraised Aircraft value is $1,081,740,200 (which assumes
    depreciation of 2% of the initial appraised value for Aircraft delivered
    before April 1, 1997, although actual depreciation may differ). The
    appraised value is only an estimate and reflects certain assumptions. See
    "Description of the Aircraft and the Appraisals -- The Appraisals". The
    Mandatory Economic Terms require that the initial loan to aircraft value,
    based on the foregoing appraisals, for each Aircraft as of its delivery date
    be not in excess of 41% in the case of the Series A Equipment Notes, 55% in
    the case of Series B Equipment Notes and 69.99%, 66.19% and 66.25% in the
    case of the Series C Equipment Notes with respect to the Boeing 757-224
    Aircraft, the Boeing 737-524 Aircraft and the Boeing 737-724 Aircraft,
    respectively. Because the aggregate principal amount of all of the Equipment
    Notes will not exceed the aggregate face amount of the Certificates, the
    maximum initial loan to aircraft value for all of the Series C Equipment
    Notes will be less than the foregoing maximums, which are applicable to the
    Series C Equipment Note or Notes issued with respect to each Aircraft.
 
(2) The benefits of Section 1110 of the U.S. Bankruptcy Code are available to
    the Loan Trustees.
 
(3) For each Class of Certificates, the initial amount of the Liquidity
    Facilities, taken together, will cover three consecutive semiannual interest
    payments (without regard to any future payments of principal on such
    Certificates), except that the Liquidity Facilities with respect to each
    Trust will not cover interest payable by the Depositary on the Deposits
    relating to such Trust. The scheduled payments of interest on the Equipment
    Notes and on the Deposits relating to a Trust, taken together, will be
    sufficient to pay accrued interest on the outstanding Certificates issued by
    such Trust at the rates per annum applicable thereto. In aggregate for Class
    A, B, C-I and C-II Certificates, the amount of the Liquidity Facilities at
    April 1, 1998, the first Regular Distribution Date after the scheduled
    Delivery Period Termination Date, assuming that Equipment Notes in the
    maximum principal amount with respect to all Aircraft are acquired by the
    Trusts and that all interest and principal due on or prior to April 1, 1998
    is paid, will be $78,240,755.
                                       13

<PAGE>   15
 
EQUIPMENT NOTES AND THE AIRCRAFT
 
     Set forth below is certain information about the Equipment Notes expected
to be held in the Trusts and the Aircraft expected to secure such Equipment
Notes (except in the case of Aircraft 118 and 119, which reflects actual
information about the financings completed in March and May, 1997,
respectively):
 

<TABLE>
<CAPTION>
                                                                               MAXIMUM
                                                                              PRINCIPAL
                              MANU-                                           AMOUNT OF
                 AIRCRAFT   FACTURER'S     AIRCRAFT          LATEST           EQUIPMENT          APPRAISED
                   TAIL       SERIAL       DELIVERY      EQUIPMENT NOTE         NOTES              VALUE
AIRCRAFT TYPE     NUMBER      NUMBER       MONTH(1)       MATURITY DATE    (IN MILLIONS)(2)   (IN MILLIONS)(3)
- --------------   --------   ----------   -------------   ---------------   ----------------   ----------------
<S>              <C>        <C>          <C>             <C>               <C>                <C>
Boeing 757-224     118        27560       March 1997     April 1, 2013          $37.20             $53.72
Boeing 757-224     119        27561        May 1997      April 1, 2013           37.20              53.80
Boeing 757-224     120        27562        June 1997     April 1, 2013           37.60              53.97
Boeing 757-224     121        27563        July 1997     April 1, 2013           37.60              54.05
Boeing 757-224     122        27564       August 1997    April 1, 2013           37.60              54.13
Boeing 757-224     126        28966      December 1997   April 1, 2013           37.60              54.47
Boeing 757-224     123        27565      January 1998    April 1, 2014           37.60              54.55
Boeing 757-224     127        28967      January 1998    April 1, 2014           37.60              54.55
Boeing 737-524     638        28899        July 1997     October 1, 2014         18.40              27.80
Boeing 737-524     639        28900        July 1997     October 1, 2014         18.40              27.80
Boeing 737-524     640        28901       August 1997    October 1, 2014         18.40              27.80
Boeing 737-524     641        28902       August 1997    October 1, 2014         18.40              27.80
Boeing 737-524     642        28903       August 1997    October 1, 2014         18.40              27.80
                                           September
Boeing 737-524     643        28904          1997        October 1, 2014         18.40              27.83
                                           September
Boeing 737-524     644        28905          1997        October 1, 2014         18.40              27.83
Boeing 737-524     645        28906      October 1997    April 1, 2015           18.40              27.93
Boeing 737-524     646        28907      October 1997    April 1, 2015           18.40              27.93
Boeing 737-524     647        28908      November 1997   April 1, 2015           18.40              28.04
Boeing 737-524     648        28909      November 1997   April 1, 2015           18.40              28.04
Boeing 737-524     649        28910      December 1997   April 1, 2015           18.40              28.15
Boeing 737-524     650        28911      December 1997   April 1, 2015           18.40              28.15
Boeing 737-524     651        28912      December 1997   April 1, 2015           18.40              28.15
Boeing 737-524     652        28913      January 1998    April 1, 2015           18.40              28.26
Boeing 737-524     653        28914      January 1998    April 1, 2015           18.40              28.26
Boeing 737-524     654        28915      February 1998   April 1, 2015           18.40              28.36
Boeing 737-524     655        28916      February 1998   April 1, 2015           18.40              28.36
Boeing 737-724     701        28762      January 1998    April 1, 2015           24.40              36.83
Boeing 737-724     702        28763      January 1998    April 1, 2015           24.40              36.83
Boeing 737-724     703        28764      February 1998   April 1, 2015           24.40              36.89
Boeing 737-724     704        28765      February 1998   April 1, 2015           24.40              36.89
</TABLE>

 
- ---------------
 
(1) Reflects the scheduled delivery months under Continental's purchase
    agreement with the manufacturer. Aircraft 118 and 119 have been delivered.
    The actual delivery date for the other Aircraft may be subject to delay. See
    "Description of the Aircraft and the Appraisals -- Deliveries of Aircraft".
    Continental has the option to substitute other Boeing 757-224, 737-524 or
    737-724 aircraft in the event that the delivery of any Aircraft is expected
    to be delayed for more than 30 days after the month scheduled for delivery
    or beyond the Delivery Period Termination Date. See "Description of the
    Aircraft and the Appraisals -- Substitute Aircraft".
 
(2) Except in the case of Aircraft 118 and 119 (which have been delivered),
    reflects the initial maximum principal amount as of the date of original
    issuance, which principal amount may be less with respect to an Aircraft
    depending on the circumstances of the financing of such Aircraft. The
    Mandatory Economic Terms require that the maximum aggregate principal amount
    of the Equipment Notes issued with respect to all Boeing 757-224 Aircraft
    not exceed $300,800,000, all Boeing 737-524 not exceed $331,200,000 and all
    Boeing 737-724 Aircraft not exceed $97,600,000. The aggregate principal
    amount of all Equipment Notes will not exceed the aggregate face amount of
    the Certificates.
 
(3) The appraised value of each Aircraft set forth above is based upon varying
    assumptions and methodologies and reflects the lesser of the average and
    median values of such Aircraft as appraised by three independent appraisal
    and consulting firms: Aircraft Information Services, Inc. ("AISI" ), BK
    Associates, Inc. ("BK") and Morten Beyer and Associates, Inc. ("MBA")
    (collectively, the "Appraisers"), determined as of February 25, 1997,
    January 8, 1997 and February 21, 1997, respectively, and projected as of the
    scheduled delivery month of each Aircraft. An appraisal is only an estimate
    of value and should not be relied upon as a measure of realizable value. See
    "Risk Factors -- Appraisals and Realizable Value of Aircraft" and
    "Description of the Aircraft and the Appraisals".
                                       14

<PAGE>   16
 
LOAN TO AIRCRAFT VALUE RATIOS
 
     The following table sets forth loan to Aircraft value ratios ("LTVs") for
each Class of Certificates as of the April 1 Regular Distribution Dates that
occur after the scheduled Delivery Period Termination Date, assuming that
Equipment Notes of each series in the maximum principal amount for all of the
Aircraft are acquired by the Trusts prior to the Delivery Period Termination
Date. The LTVs for any Class of Certificates as of dates prior to the Delivery
Period Termination Date are not meaningful, since the Trust Property will not
include during such period all of the Equipment Notes expected to be acquired by
the Trusts. See "Description of the New Certificates -- General". The LTVs for
each Class of Certificates were obtained for each such Regular Distribution Date
by dividing (i) the expected Pool Balance of such Class of Certificates together
in each case with the expected Pool Balance of all other Classes of Certificates
senior or equal in right of payment to such Class of Certificates under the
Intercreditor Agreement determined immediately after giving effect to the
distributions expected to be made on such Regular Distribution Date, by (ii) the
assumed value of all of the Aircraft (the "Assumed Aggregate Aircraft Value") on
such Regular Distribution Date based on the assumptions set forth below. The
Pool Balances and resulting LTVs are subject to change if, among other things,
the aggregate principal amount of the Equipment Notes acquired by the Trusts is
less than the maximum permitted by the Mandatory Economic Terms or Equipment
Notes with respect to any Aircraft are purchased by the Trusts in other than the
month currently scheduled for delivery of such Aircraft. See "Description of the
New Certificates -- Pool Factors".
 
     The following table is based on the assumption that the value of each
Aircraft included in the Assumed Aggregate Aircraft Value opposite the initial
Regular Distribution Date included in the table depreciates by approximately 2%
of the initial appraised value per year until the fifteenth year after the year
of delivery of such Aircraft and by approximately 4% of the initial appraised
value per year thereafter. Other rates or methods of depreciation would result
in materially different LTVs and no assurance can be given (i) that the
depreciation rates and method assumed for the purpose of the table are the ones
most likely to occur or (ii) as to the actual future value of any Aircraft.
Although the table is compiled on an aggregate basis, it should be noted that,
since the Equipment Notes are not cross-collateralized with respect to the
Aircraft, the excess proceeds realized from the disposition of any particular
Aircraft would not be available to offset shortfalls on the Equipment Notes
relating to any other Aircraft. Therefore, upon the occurrence of an Indenture
Default, even if the Aircraft as a group could be sold for more than the total
amounts payable in respect of all of the outstanding Equipment Notes, if certain
Aircraft were sold for less than the total amount payable in respect of the
related Equipment Notes, there would not be sufficient proceeds to pay all
Classes of Certificates in full. See "Description of the Equipment Notes -- Loan
to Value Ratios of Equipment Notes" for examples of LTVs for the Equipment Notes
issued in respect of individual Aircraft, which may be more relevant in a
default situation than the aggregate values shown in the following table. Thus,
the table should not be considered a forecast or prediction of expected or
likely LTVs but simply a mathematical calculation based on one set of
assumptions. In addition, the initial appraised value of each Aircraft was based
upon the lesser of the average and the median value of each Aircraft as
appraised by the Appraisers, as of the respective date of their appraisals and
projected as of the scheduled delivery month of each such Aircraft. No assurance
can be given that such value represents the realizable value of any Aircraft.
See "Risk Factors -- Risk Factors Relating to the Certificates and the
Offering -- Appraisal and Realizable Value of Aircraft" and "Description of the
Aircraft and the Appraisals -- The Appraisals".

<TABLE>
<CAPTION>
                   ASSUMED         CLASS A                       CLASS B                      CLASS C-I
                  AGGREGATE      CERTIFICATES     CLASS A      CERTIFICATES     CLASS B      CERTIFICATES    CLASS C-I
                   AIRCRAFT          POOL       CERTIFICATES       POOL       CERTIFICATES       POOL       CERTIFICATES
    DATE            VALUE          BALANCE          LTV          BALANCE          LTV          BALANCE          LTV
- -------------   --------------   ------------   ------------   ------------   ------------   ------------   ------------
<S>             <C>              <C>            <C>            <C>            <C>            <C>            <C>
April 1, 1998   $1,081,740,200   $433,941,121      40.12%      $146,780,295      53.68%      $109,210,897      64.69%
April 1, 1999    1,060,040,800    427,036,568      40.28        145,584,404      54.02        108,072,170      65.13
April 1, 2000    1,038,341,400    416,653,383      40.13        143,527,813      53.95        102,514,584      64.71
April 1, 2001    1,016,642,000    402,886,044      39.63        141,289,084      53.53         90,828,747      63.27
April 1, 2002      994,942,600    384,428,108      38.64        138,464,875      52.56         68,140,359      60.02
April 1, 2003      973,243,200    374,329,700      38.46        133,628,084      52.19         39,836,687      56.65
April 1, 2004      951,543,800    364,988,151      38.36        123,579,583      51.34         18,573,888      53.47
April 1, 2005      929,844,400    359,033,292      38.61        105,095,450      49.91          3,259,763      50.30
April 1, 2006      908,145,000    353,166,186      38.89         92,337,736      49.06            889,515      49.16
April 1, 2007      886,445,600    337,263,875      38.05         71,117,103      46.07                  0      46.07
April 1, 2008      864,746,200    319,150,659      36.91         46,995,379      42.34                  0       0.00
April 1, 2009      843,046,800    299,160,594      35.49         27,964,589      38.80                  0       0.00
April 1, 2010      821,347,400    253,263,778      30.84         16,086,768      32.79                  0       0.00
April 1, 2011      799,648,000    216,030,916      27.02          8,088,596      28.03                  0       0.00
April 1, 2012      777,948,600    153,308,257      19.71            336,950      19.75                  0       0.00
April 1, 2013      753,019,400     76,215,673      10.12                  0      10.12                  0       0.00
April 1, 2014      709,620,600     31,167,389       4.39                  0       4.39                  0       0.00
 
<CAPTION>
                CLASS C-II
               CERTIFICATES    CLASS C-II
                   POOL       CERTIFICATES
    DATE         BALANCE          LTV
- -------------  ------------   ------------
<S>            <C>            <C>
April 1, 1998   $9,830,583       64.69%
April 1, 1999    9,728,081       65.13
April 1, 2000    9,227,817       64.71
April 1, 2001    8,175,920       63.27
April 1, 2002    6,133,632       60.02
April 1, 2003    3,585,886       56.65
April 1, 2004    1,671,922       53.47
April 1, 2005      293,426       50.30
April 1, 2006       80,069       49.16
April 1, 2007            0       46.07
April 1, 2008            0        0.00
April 1, 2009            0        0.00
April 1, 2010            0        0.00
April 1, 2011            0        0.00
April 1, 2012            0        0.00
April 1, 2013            0        0.00
April 1, 2014            0        0.00
</TABLE>

 
                                       15

<PAGE>   17
 
CASH FLOW STRUCTURE
 
     Set forth below is a diagram illustrating the structure for the offering of
the Certificates and certain cash flows.
 
                                  [FLOW CHART]
 
(1) Each Leased Aircraft will be subject to a separate Lease and the related
    Indenture; each Owned Aircraft will be subject to a separate Indenture.
 
(2) Funds held as Deposits relating to each Trust will be withdrawn to purchase
    Equipment Notes on behalf of such Trust from time to time during the
    Delivery Period. If any funds remain as Deposits with respect to any Trust
    at the Delivery Period Termination Date, such funds will be withdrawn by the
    Escrow Agent and distributed to the holders of the Certificates issued by
    such Trust, together with accrued and unpaid interest thereon and a premium.
    No interest will accrue with respect to the Deposits after they have been
    fully withdrawn.
 
(3) The initial amount of the Liquidity Facilities for each Trust, taken
    together, will cover three consecutive semiannual interest payments with
    respect to each Trust, except that the Liquidity Facilities will not cover
    interest payable by the Depositary on the Deposits relating to such Trust.
    The scheduled payments of interest on the Equipment Notes and on the
    Deposits relating to a Trust, taken together, will be sufficient to pay an
    amount equal to accrued interest on the outstanding Certificates issued by
    such Trust at the rate per annum applicable thereto.
                                       16

<PAGE>   18
 
THE NEW CERTIFICATES
 
Certificates;
Denominations..............  The New Certificates of each Trust will be issued
                               in a minimum denomination of $1,000 and in
                               integral multiples thereof. See "Description of
                               the New Certificates -- General".
 
Regular Distribution
Dates......................  April 1 and October 1, commencing October 1, 1997.
 
Special Distribution
Dates......................  Any Business Day on which a Special Payment is to
                               be distributed.
 
Record Dates...............  The fifteenth day preceding a Regular Distribution
                               Date or a Special Distribution Date.
 
Distributions..............  All payments of principal, premium (if any) and
                               interest received by the Trustee on the Equipment
                               Notes held in each Trust and all payments of
                               interest on the Deposits relating to each Trust
                               will be distributed by the Trustee (in the case
                               of the Equipment Notes) or by the Paying Agent
                               (in the case of the Deposits) to the holders of
                               the Certificates (the "Certificateholders") of
                               such Trust, subject in the case of payments on
                               the Equipment Notes to the provisions of the
                               Intercreditor Agreement. Such payments of
                               interest are scheduled to be received by the
                               Trustee of each Trust on April 1 and October 1,
                               commencing on October 1, 1997. Payments of
                               principal of the Equipment Notes are scheduled to
                               be received on April 1 and October 1 in certain
                               years, commencing April 1, 1998. Payments of
                               principal, premium (if any) and interest
                               resulting from the early redemption or purchase
                               (if any) of the Equipment Notes held in any Trust
                               will be distributed to the Certificateholders of
                               such Trust on a Special Distribution Date after
                               not less than 20 days' notice to such
                               Certificateholders of such Trust, subject to the
                               provisions of the Intercreditor Agreement. If any
                               funds remain as Deposits with respect to any
                               Trust at the Delivery Period Termination Date,
                               they will be withdrawn by the Escrow Agent for
                               such Trust and distributed, with accrued and
                               unpaid interest thereon, plus a premium payable
                               by Continental (i) in the case of the holders of
                               Certificates issued by the Class A Trust, the
                               Class B Trust and the Class C-I Trust, equal to
                               the Deposit Make-Whole Premium with respect to
                               the aggregate amount of funds so distributed
                               (excluding accrued interest) and (ii) in the case
                               of the holders of Certificates issued by the
                               Class C-II Trust, equal to the Class C-II Premium
                               with respect to such aggregate amount, to the
                               Certificateholders of such Trust on a Special
                               Distribution Date after not less than 20 days'
                               notice to such Certificateholders. Payments in
                               respect of Deposits will not be subject to the
                               Intercreditor Agreement. For a discussion of
                               distributions with respect to unused Deposits
                               upon the occurrence of a Triggering Event, see
                               "Description of the Deposit
                               Agreements -- Distribution Upon Occurrence of
                               Triggering Event", and for a discussion of
                               distributions by the Trusts upon an Indenture
                               Default, see "Description of the New
                               Certificates -- Indenture Defaults and Certain
                               Rights Upon an Indenture Default".
 
Events of Default..........  Events of default under each Pass Through Trust
                               Agreement (each, a "PTC Event of Default") are
                               the failure to pay within 10 Business Days of the
                               due date thereof: (i) the outstanding Pool
                               Balance of the applicable Class of Certificates
                               on the Final Maturity Date for such Class or (ii)
                               interest due on such Certificates on any
                               distribution date (unless the Subordination Agent
                               shall have made Interest Drawings
                                       17

<PAGE>   19
 
                               with respect to the applicable Class of
                               Certificates, or drawings on the Cash Collateral
                               Account for such Class of Certificates, in an
                               aggregate amount sufficient to pay such interest
                               and shall have distributed such amount to the
                               Trustee entitled thereto). The Final Maturity
                               Date for the Class A Certificates is October 1,
                               2016, for the Class B Certificates is October 1,
                               2014, for the Class C-I Certificates is October
                               1, 2008 and for the Class C-II Certificates is
                               October 1, 2008. Any failure to make expected
                               principal distributions on any Class of
                               Certificates on any Regular Distribution Date
                               (other than the Final Maturity Date) will not
                               constitute a PTC Event of Default with respect to
                               such Certificates.
 
Purchase Rights of
  Certificateholders.......  Upon the occurrence and during the continuation of
                               a Triggering Event, (i) the Class B
                               Certificateholders shall have the right to
                               purchase all, but not less than all, of the Class
                               A Certificates and (ii) the Class C
                               Certificateholders shall have the right to
                               purchase all, but not less than all, of the Class
                               A Certificates and the Class B Certificates, in
                               each case at a purchase price equal to the Pool
                               Balance of the relevant Class or Classes of
                               Certificates plus accrued and unpaid interest
                               thereon to the date of purchase without premium
                               but including any other amounts due to the
                               Certificateholders of such Class or Classes.
 
                             "Triggering Event" means (x) the occurrence of an
                               Indenture Default under all Indentures resulting
                               in a PTC Event of Default with respect to the
                               most senior Class of Certificates then
                               outstanding, (y) the acceleration of all of the
                               outstanding Equipment Notes (provided that during
                               the Delivery Period the aggregate principal
                               amount thereof exceeds $280 million) or (z)
                               certain bankruptcy or insolvency events involving
                               Continental.
 
Successor Trusts...........  On the Transfer Date, each of the Original Trusts
                               will transfer and assign all of its assets and
                               rights to a newly-created, substantially
                               identical Successor Trust, except that (i) the
                               Successor Trusts will not have the right to
                               purchase new Equipment Notes and (ii) Delaware
                               law will govern the Original Trusts and New York
                               law will govern the Successor Trusts. The
                               institution acting as Original Trustee for an
                               Original Trust will also act as the New Trustee
                               of the corresponding Successor Trust, and the New
                               Trustee of each Successor Trust will assume the
                               obligations of the related Original Trustee under
                               each transaction document to which such Original
                               Trustee was a party. Upon effectiveness of such
                               transfer, assignment and assumption, each of the
                               Original Trusts will be liquidated and each of
                               the Certificates will represent the same interest
                               in the Successor Trust as it represented in the
                               Original Trust immediately prior to such transfer
                               and assignment.
 
Escrow Agreements..........  Each Escrow Agent, each Paying Agent, each Trustee
                               and the Initial Purchasers have entered into a
                               separate Escrow Agreement for the benefit of the
                               Certificateholders of each Trust. Pursuant to
                               each Escrow Agreement, on the initial issuance
                               date of the Old Certificates (the "Issuance
                               Date"), the cash proceeds of the offering of Old
                               Certificates of each Trust were deposited on
                               behalf of the Escrow Agent for the benefit of the
                               holders of such Certificates with the Depositary
                               as Deposits relating to such Trust. The Escrow
                               Agent of each Trust has been given irrevocable
                               instructions (i) to permit the
                                       18

<PAGE>   20
 
                               Trustee of such Trust to cause funds to be
                               withdrawn from such Deposits on or prior to the
                               Delivery Period Termination Date for the purpose
                               of enabling such Trustee to purchase Equipment
                               Notes on and subject to the terms and conditions
                               of the Note Purchase Agreement and (ii) to direct
                               the Depositary to pay interest on the Deposits
                               accrued in accordance with the Deposit Agreement
                               to the Paying Agent for distribution to the
                               Certificateholders of such Trust. See
                               "Description of the Escrow Agreements".
 
Deposit Agreements and the
  Depositary...............  The Escrow Agent with respect to each Trust has
                               entered into a separate Deposit Agreement with
                               the Depositary relating to such Trust pursuant to
                               which the Depositary established separate
                               accounts into which the proceeds of the sale of
                               the Old Certificates of such Trust were
                               deposited, from which the Escrow Agent, upon
                               request from the Trustee of such Trust, will make
                               withdrawals and into which such Trustee will make
                               re-deposits during the Delivery Period. Pursuant
                               to the Deposit Agreement with respect to each
                               Trust, on each Regular Distribution Date the
                               Depositary will pay to the Paying Agent on behalf
                               of the applicable Escrow Agent, for distribution
                               to the Certificateholders of such Trust, an
                               amount equal to interest accrued on the Deposits
                               relating to such Trust during the relevant
                               interest period at a rate per annum equal to the
                               interest rate applicable to the Certificates
                               issued by such Trust. The interest rates payable
                               on the Deposits are subject to change under
                               certain circumstances described in "The Exchange
                               Offer -- Terms of the Exchange Offer -- General"
                               to the same extent as the interest rates for the
                               Equipment Notes. Upon each delivery of an
                               Aircraft during the Delivery Period, the Trustees
                               for the Class A Trust, the Class B Trust and the
                               Class C-I Trust (or, if the Deposits relating to
                               the Class C-I Trust have been fully withdrawn,
                               the Class C-II Trust) will request the Escrow
                               Agent relating to such Trust to withdraw from the
                               Deposits relating to such Trust funds sufficient
                               to enable the Trustee of such Trust to purchase
                               the Equipment Note of the series applicable to
                               such Trust issued with respect to such Aircraft.
                               Accrued but unpaid interest on all such Deposits
                               withdrawn to purchase Equipment Notes will be
                               paid on the next Regular Distribution Date. Any
                               portion of any withdrawn Deposit which is not
                               used to purchase such Equipment Note will be re-
                               deposited with the Depositary. If any funds
                               remain as Deposits with respect to any Trust at
                               the Delivery Period Termination Date, they will
                               be withdrawn by the Escrow Agent and distributed,
                               together with accrued and unpaid interest thereon
                               and a premium payable by Continental, to the
                               Certificateholders of such Trust. The Deposits
                               relating to each Trust and interest paid thereon
                               are not subject to the subordination provisions
                               of the Intercreditor Agreement and are not
                               available to pay any other amount in respect of
                               the Certificates.
 
                             Credit Suisse First Boston, New York Branch acts as
                               the Depositary. Credit Suisse First Boston is a
                               Swiss bank and is one of the largest banking
                               institutions in the world, with total
                               consolidated assets of approximately Sfr 412
                               billion ($307 billion) and total consolidated
                               shareholders' equity of approximately Sfr 9.7
                               billion (U.S. $7.2 billion) in each case as of
                               December 31, 1996, on a pro forma basis. Credit
                               Suisse First Boston has long-term unsecured debt
                               ratings of
                                       19

<PAGE>   21
 
                               Aa3 from Moody's and AA from Standard & Poor's
                               and short-term unsecured debt ratings of P-1 from
                               Moody's and A-1+ from Standard & Poor's. See
                               "Description of the Deposit Agreements --
                               Depositary".
 
Unused Deposits............  The Trustees' obligations to purchase the Equipment
                               Notes issued with respect to each Aircraft are
                               subject to satisfaction of certain conditions,
                               and no assurance can be given that all such
                               conditions will be satisfied. See "Description of
                               the New Certificates -- Obligation to Purchase
                               Equipment Notes". All of the Aircraft are
                               scheduled to be delivered by February 1998,
                               although the delivery of any Aircraft may be
                               subject to delay. See "Description of the
                               Aircraft and the Appraisals -- Deliveries of
                               Aircraft". The Delivery Period expires on March
                               31, 1998 (or June 30, 1998 under certain
                               circumstances discussed in "Description of the
                               Aircraft and the Appraisals -- Deliveries of
                               Aircraft"). In addition, depending on the
                               circumstances of the financing of each Aircraft,
                               the maximum aggregate principal amount of
                               Equipment Notes may not be issued. If any funds
                               remain as Deposits with respect to any Trust at
                               the Delivery Period Termination Date, they will
                               be withdrawn by the Escrow Agent for such Trust
                               and distributed, with accrued and unpaid interest
                               thereon, plus a premium payable by Continental
                               (i) in the case of the holders of Certificates
                               issued by the Class A Trust, the Class B Trust
                               and the Class C-I Trust, equal to the Deposit
                               Make-Whole Premium with respect to the aggregate
                               amount of funds so distributed (excluding accrued
                               interest) and (ii) in the case of the holders of
                               Certificates issued by the Class C-II Trust,
                               equal to the Class C-II Premium with respect to
                               such aggregate amount, to the Certificateholders
                               of such Trust after at least 20 days' prior
                               written notice. See "Description of the Deposit
                               Agreements -- Unused Deposits".
 
Obligation to Purchase
  Equipment Notes..........  The Trustees are obligated to purchase the
                               Equipment Notes issued with respect to each
                               Aircraft during the Delivery Period, subject to
                               the terms and conditions of the Note Purchase
                               Agreement. Under the Note Purchase Agreement,
                               Continental has the option of entering into a
                               leveraged lease financing or a secured debt
                               financing with respect to each Aircraft. The Note
                               Purchase Agreement provides for the relevant
                               parties to enter into (i) with respect to each
                               Leased Aircraft, a Participation Agreement, a
                               Lease and a Leased Aircraft Indenture relating to
                               the financing of such Leased Aircraft and (ii)
                               with respect to each Owned Aircraft, a
                               Participation Agreement and an Owned Aircraft
                               Indenture relating to the financing of such Owned
                               Aircraft (any such Participation Agreement, a
                               "Participation Agreement"). The description of
                               such agreements in this Prospectus is based on
                               the forms of such agreements contemplated by the
                               Note Purchase Agreement. In the case of a Leased
                               Aircraft, the terms of the agreements actually
                               entered into may differ from the forms of such
                               agreements and, consequently, may differ from the
                               description of such agreements contained in this
                               Prospectus. However, under the Note Purchase
                               Agreement, the terms of such agreements are
                               required to (i) contain the Mandatory Document
                               Terms and (ii) not vary the Mandatory Economic
                               Terms. In addition, Continental is obligated (i)
                               to certify to the Trustees that any such
                               modifications do not materially and
                                       20

<PAGE>   22
 
                               adversely affect the Certificateholders and (ii)
                               to obtain written confirmation from each Rating
                               Agency that the use of versions of such
                               agreements modified in any material respect will
                               not result in a withdrawal, suspension or
                               downgrading of the rating of any Class of
                               Certificates. Further, under the Note Purchase
                               Agreement, it is a condition precedent to the
                               obligation of each Trustee to purchase the
                               Equipment Notes related to the financing of an
                               Aircraft that no Triggering Event shall have
                               occurred. The Trustees will have no right or
                               obligation to purchase Equipment Notes after the
                               Delivery Period Termination Date. See
                               "Description of the New
                               Certificates -- Obligation to Purchase Equipment
                               Notes".
 
Equipment Notes
  (a) Interest.............  The Equipment Notes held in each Trust will accrue
                               interest at the applicable rate per annum for the
                               Certificates issued by such Trust set forth on
                               the cover page of this Prospectus, payable on
                               April 1 and October 1 of each year, commencing on
                               October 1, 1997, or, if later, the first such
                               date to occur after initial issuance thereof, and
                               such interest payments will be passed through to
                               Certificateholders of such Trust on each such
                               date until the final distribution date for such
                               Certificates, in each case, subject to the
                               Intercreditor Agreement. Interest is calculated
                               on the basis of a 360-day year consisting of
                               twelve 30-day months. See "Description of the
                               Equipment Notes -- Principal and Interest
                               Payments". The interest rates for the Equipment
                               Notes are subject to change under certain
                               circumstances described in "The Exchange
                               Offer -- Terms of the Exchange Offer -- General".
 
  (b) Principal............  Scheduled principal payments on the Equipment Notes
                               held in each Trust will be passed through to the
                               Certificateholders of each such Trust on April 1
                               and October 1 in certain years, commencing on
                               October 1, 1997, in each case, subject to the
                               Intercreditor Agreement. See "Description of the
                               New Certificates -- Pool Factors" and
                               "Description of the Equipment Notes -- Principal
                               and Interest Payments".
 
  (c) Redemption and
  Purchase.................  (i) The Equipment Notes issued with respect to an
                               Aircraft will be redeemed in whole upon the
                               occurrence of an Event of Loss with respect to
                               such Aircraft if such Aircraft is not replaced by
                               Continental under the related Lease (in the case
                               of a Leased Aircraft) or under the related Owned
                               Aircraft Indenture (in the case of an Owned
                               Aircraft), in each case at a price equal to the
                               aggregate unpaid principal thereof, together with
                               accrued interest thereon to, but not including,
                               the date of redemption, but without any premium.
 
                             (ii) All of the Equipment Notes issued with respect
                               to any Aircraft may be redeemed prior to maturity
                               at a price equal to the aggregate unpaid
                               principal thereof, together with accrued interest
                               thereon to, but not including, the date of
                               redemption, plus, if such redemption is made
                               prior to April 1, 2010 in the case of the Series
                               A Equipment Notes, April 1, 2007 in the case of
                               the Series B Equipment Notes and April 1, 2003 in
                               the case of the Series C Equipment Notes (with
                               respect to any such Series, its "Premium
                               Termination Date"), a Make-Whole Premium. See
                               "Description of the Equipment
                               Notes -- Redemption" for
                                       21

<PAGE>   23
 
                               a description of the manner of computing such
                               Make-Whole Premium and the circumstances under
                               which the Equipment Notes may be so redeemed.
 
                             (iii) If, with respect to a Leased Aircraft, (x)
                               one or more Lease Events of Default shall have
                               occurred and be continuing, (y) in the event of a
                               bankruptcy proceeding involving Continental, (A)
                               during the Section 1110 Period, the trustee in
                               such proceeding or Continental refuses to assume
                               or agree to perform its obligations under the
                               related Lease or (B) at any time after assuming
                               or agreeing to perform such obligations, such
                               trustee or Continental ceases to perform such
                               obligations such that the stay period applicable
                               under the U.S. Bankruptcy Code comes to an end or
                               (z) the Equipment Notes with respect to such
                               Aircraft have been accelerated or the Leased
                               Aircraft Trustee with respect to such Equipment
                               Notes takes action or notifies the applicable
                               Owner Trustee that it intends to take action to
                               foreclose the lien of the related Leased Aircraft
                               Indenture or otherwise commence the exercise of
                               any significant remedy under such Indenture or
                               the related Lease, then in each case all, but not
                               less than all, of the Equipment Notes issued with
                               respect to such Leased Aircraft may be purchased
                               by the Owner Trustee or Owner Participant on the
                               applicable purchase date at a price equal to the
                               aggregate unpaid principal thereof, together with
                               accrued interest thereon to, but not including,
                               the purchase date, but without any premium
                               (provided that a Make-Whole Premium shall be
                               payable if such Equipment Notes are to be
                               purchased pursuant to clause (x) above when a
                               Lease Event of Default shall have occurred and be
                               continuing for less than 120 days). Continental,
                               as owner of the Owned Aircraft, will have no
                               comparable right under any Owned Aircraft
                               Indenture to purchase the Equipment Notes under
                               such circumstances.
 
  (d) Security.............  The Equipment Notes issued with respect to each
                               Aircraft will be secured by a security interest
                               in such Aircraft and, in the case of each Leased
                               Aircraft, by an assignment to the related Leased
                               Aircraft Trustee of certain of the related Owner
                               Trustee's rights under the Lease with respect to
                               such Aircraft, including the right to receive
                               payments of rent thereunder, with certain
                               exceptions. The Equipment Notes will not be
                               cross-collateralized and, consequently, the
                               Equipment Notes issued in respect of any one
                               Aircraft are not secured by any of the other
                               Aircraft or the Leases related thereto. There
                               will not be cross-default provisions in the
                               Indentures or in the Leases (unless, in the case
                               of a Lease, otherwise agreed between an Owner
                               Participant and Continental). Consequently,
                               events resulting in an Indenture Default under
                               any particular Indenture may or may not result in
                               an Indenture Default occurring under any other
                               Indenture, and a Lease Event of Default under any
                               particular Lease may or may not constitute a
                               Lease Event of Default under any other Lease. If
                               the Equipment Notes issued with respect to one or
                               more Aircraft are in default and the Equipment
                               Notes issued with respect to the remaining
                               Aircraft are not in default, no remedies will be
                               exercisable under the Indentures with respect to
                               such remaining Aircraft. See "Description of the
                               Equipment Notes -- Security" and "-- Indenture
                               Defaults, Notice and Waiver".
                                       22

<PAGE>   24
 
                             Although the Equipment Notes issued in respect of
                               the Leased Aircraft are not obligations of, or
                               guaranteed by, Continental, the amounts
                               unconditionally payable by Continental for lease
                               of the Leased Aircraft will be sufficient to pay
                               in full when due all scheduled amounts required
                               to be paid on the Equipment Notes issued in
                               respect of the Leased Aircraft. The Equipment
                               Notes issued in respect of the Owned Aircraft
                               will be direct obligations of Continental. See
                               "Description of the Equipment Notes -- General".
 
  (e) Section 1110
Protection.................  It is a condition to the Trustees' obligation to
                               purchase Equipment Notes with respect to each
                               Aircraft that outside counsel to Continental,
                               which is expected to be Hughes Hubbard & Reed
                               LLP, provide its opinion to the Trustees that (i)
                               if such Aircraft is a Leased Aircraft, the Owner
                               Trustee, as lessor under the Lease for such
                               Aircraft, and the related Leased Aircraft
                               Trustee, as assignee of such Owner Trustee's
                               rights under such Lease pursuant to the related
                               Leased Aircraft Indenture, will be entitled to
                               the benefits of Section 1110 of the U.S.
                               Bankruptcy Code with respect to the airframe and
                               engines comprising such Aircraft or (ii) if such
                               Aircraft is an Owned Aircraft, the Owned Aircraft
                               Trustee will be entitled to the benefits of
                               Section 1110 of the U.S. Bankruptcy Code with
                               respect to the airframe and engines comprising
                               such Aircraft. See "Description of the Equipment
                               Notes -- Remedies" for a description of such
                               required opinion and certain assumptions
                               permitted to be contained therein.
 
  (f) Ranking..............  Series B Equipment Notes issued in respect of any
                               Aircraft will be subordinated in right of payment
                               to Series A Equipment Notes issued in respect of
                               such Aircraft, and Series C Equipment Notes
                               issued in respect of such Aircraft will be
                               subordinated in right of payment to such Series B
                               Equipment Notes. On each Distribution Date, (i)
                               payments of interest and principal due on Series
                               A Equipment Notes issued in respect of any
                               Aircraft will be made prior to payments of
                               interest and principal due on Series B Equipment
                               Notes issued in respect of such Aircraft and (ii)
                               payments of interest and principal due on such
                               Series B Equipment Notes will be made prior to
                               payments of interest and principal due on Series
                               C Equipment Notes issued in respect of such
                               Aircraft.
 
  (g) Owner Participant....  Continental currently intends to lease all of the
                               Aircraft. Continental has obtained commitments of
                               certain companies to act as the owner participant
                               ("Owner Participant") with respect to the
                               leveraged leases for all of the Aircraft and, in
                               certain cases, is seeking alternative commitments
                               on more favorable terms. The existing commitments
                               are subject to satisfaction of certain conditions
                               with respect to each Aircraft and, in certain
                               cases, Continental may elect to terminate such
                               commitments with respect to certain Aircraft.
                               Accordingly, Continental may select one or more
                               other Owner Participants for some or all of such
                               Aircraft or finance such Aircraft as Owned
                               Aircraft rather than Leased Aircraft. Each Owner
                               Participant will have the right to sell, assign
                               or otherwise transfer its interests as Owner
                               Participant in any of such leveraged leases,
                               subject to the terms and conditions of the
                               relevant Participation Agreement and related
                               documents. See "Risk Factors -- Risk Factors
                               Relating to the Certificates and the
                               Offering -- Owner Participant; Revisions to
                               Agreements".
                                       23

<PAGE>   25
 
Liquidity Facilities.......  Each Liquidity Provider and the Subordination Agent
                               have entered into a separate revolving credit
                               agreement (each, a "Liquidity Facility") with
                               respect to each of the Trusts. Under the
                               Liquidity Facilities with respect to any Trust,
                               the Liquidity Providers will, if necessary, make
                               advances ("Interest Drawings") in an aggregate
                               amount (the "Required Amount") sufficient to pay
                               interest on the Certificates of such Trust on up
                               to three successive semiannual Regular
                               Distribution Dates (without regard to any future
                               payments of principal on such Certificates) at
                               the respective interest rates shown on the cover
                               page of this Prospectus (plus an additional
                               margin specified by the Registration Rights
                               Agreement, if applicable) for such Certificates
                               (the "Stated Interest Rates"), except that the
                               Liquidity Facilities with respect to each Trust
                               will not cover interest payable by the Depositary
                               on the Deposits relating to such Trust. Each of
                               the two Liquidity Facilities with respect to each
                               Trust cover 50% (the "Stated Portion") of the
                               Required Amount for such Trust. The initial
                               Required Amount under the Liquidity Facilities on
                               April 1, 1998, the first Regular Distribution
                               Date after the scheduled Delivery Period
                               Termination Date, for the Class A Certificates,
                               the Class B Certificates, the Class C-I
                               Certificates and the Class C-II Certificates,
                               assuming that Equipment Notes in the maximum
                               principal amount with respect to all of the
                               Aircraft are acquired by the Trusts and that all
                               interest and principal due on or prior to April
                               1, 1998 is paid, will be $48,564,521,
                               $16,426,917, $12,155,173 and $1,094,144,
                               respectively. Interest Drawings under the
                               relevant Liquidity Facilities will be made
                               promptly after any Regular Distribution Date if,
                               after giving effect to the subordination
                               provisions of the Intercreditor Agreement, there
                               are insufficient funds available to the
                               Subordination Agent to pay interest on any Class
                               A, B, C-I or C-II Certificates; provided,
                               however, that on any date the maximum amount
                               available under a Liquidity Facility with respect
                               to any Trust to fund any shortfall in interest
                               due on the Certificates of such Trust will not
                               exceed an amount equal to the Stated Portion of
                               the then Required Amount of such Liquidity
                               Facility less the aggregate amount of each
                               Interest Drawing outstanding under such Liquidity
                               Facility at such time (the "Maximum Available
                               Commitment"). The Liquidity Facilities for any
                               Class of Certificates do not provide for drawings
                               thereunder to pay for principal of or premium on
                               the Certificates of such Class, any interest on
                               the Certificates of such Class in excess of the
                               Stated Interest Rates, or principal of or
                               interest or premium on the Certificates of any
                               other Class.
 
                             Upon each Interest Drawing under any Liquidity
                               Facility, the Subordination Agent is obligated to
                               reimburse (to the extent that the Subordination
                               Agent has available funds therefor) the Liquidity
                               Provider for the amount of such drawing. Such
                               reimbursement obligation and any other amounts
                               owing to the Liquidity Provider under each
                               Liquidity Facility or certain other agreements
                               (the "Liquidity Obligations") ranks pari passu
                               with the Liquidity Obligations relating to all
                               other Liquidity Facilities and ranks senior to
                               the Certificates in right of payment. Upon
                               reimbursement in full of the Interest Drawings,
                               together with any accrued interest thereon, under
                               any Liquidity Facility, the Maximum Available
                               Commitment under such Liquidity Facility will be
                               reinstated to the Stated Portion of the then
                               Required
                                       24

<PAGE>   26
 
                               Amount of such Liquidity Facility; provided that
                               the amount will not be so reinstated if (i) a
                               Liquidity Event of Default shall have occurred
                               and be continuing and (ii) less than 65% of the
                               aggregate outstanding principal amount of all
                               Equipment Notes are Performing Equipment Notes.
 
                             "Performing Equipment Note" means an Equipment Note
                               with respect to which no payment default has
                               occurred and is continuing; provided that in the
                               event of a bankruptcy proceeding involving
                               Continental under the U.S. Bankruptcy Code, (i)
                               any payment default existing during the 60-day
                               period under Section 1110(a)(1)(A) of the U.S.
                               Bankruptcy Code (or such longer period as may
                               apply under Section 1110(b) of the U.S.
                               Bankruptcy Code) (the "Section 1110 Period")
                               shall not be taken into consideration, unless
                               during the Section 1110 Period the trustee in
                               such proceeding or Continental refuses to assume
                               or agree to perform its obligations under the
                               Lease related to such Equipment Note (in the case
                               of a Leased Aircraft) or under the Owned Aircraft
                               Indenture related to such Equipment Note (in the
                               case of an Owned Aircraft), and (ii) any payment
                               default occurring after the date of the order of
                               relief in such proceeding shall not be taken into
                               consideration if such payment default is cured
                               under Section 1110(a)(1)(B) of the U.S.
                               Bankruptcy Code before the later of 30 days after
                               the date of such default or the expiration of the
                               Section 1110 Period.
 
                             If at any time the short-term unsecured debt rating
                               of any Liquidity Provider issued by either Rating
                               Agency is lower than the Threshold Rating, each
                               Liquidity Facility provided by such Liquidity
                               Provider will be required to be replaced by a
                               financial institution having such unsecured debt
                               ratings issued by both Rating Agencies that are
                               equal to or higher than the Threshold Rating. If
                               any such Liquidity Facility is not replaced
                               within 10 days after notice of the downgrading,
                               such Liquidity Facility will be drawn in full up
                               to the then Maximum Available Commitment (the
                               "Downgrade Drawing") and the proceeds will be
                               deposited into a cash collateral account (the
                               "Cash Collateral Account") for the related Class
                               of Certificates and used for the same purposes
                               and under the same circumstances and subject to
                               the same conditions as cash payments of Interest
                               Drawings under such Liquidity Facility would be
                               used. In addition, the Intercreditor Agreement
                               provides for the replacement or extension of
                               either Liquidity Facility for any Class of
                               Certificates which is scheduled to expire prior
                               to the date that is fifteen days after the Final
                               Maturity Date for such Class. If such Liquidity
                               Facility cannot be so replaced or extended by the
                               date that is 25 days prior to the then scheduled
                               expiration date of such Liquidity Facility, such
                               Liquidity Facility will be drawn in full up to
                               the then Maximum Available Commitment (the
                               "Non-Extension Drawing") and the proceeds will be
                               deposited in the Cash Collateral Account for the
                               related Class of Certificates and used for the
                               same purposes and under the same circumstances
                               and subject to the same conditions as cash
                               payments of Interest Drawings under such
                               Liquidity Facility would be used. Each initial
                               Liquidity Facility is scheduled to expire on the
                               364th day after the Issuance Date, subject to
                               annual extensions by mutual agreement.
                                       25

<PAGE>   27
 
                             Upon receipt by the Subordination Agent of a
                               Termination Notice with respect to any Liquidity
                               Facility from the applicable Liquidity Provider
                               (given as described in "Description of the
                               Liquidity Facilities -- Liquidity Events of
                               Default"), the Subordination Agent shall request
                               a final drawing (the "Final Drawing") under such
                               Liquidity Facility in an amount equal to the then
                               Maximum Available Commitment thereunder and shall
                               hold the proceeds thereof in the Cash Collateral
                               Account for the related Trust to be used for the
                               same purposes and under the same circumstances,
                               and subject to the same conditions, as cash
                               payments of Interest Drawings under such
                               Liquidity Facility would be used. All amounts on
                               deposit in the Cash Collateral Account for any
                               Trust that are in excess of the Required Amount
                               will be paid to the Liquidity Providers.
 
                             Continental may, at its option, with or without
                               cause, arrange for a replacement facility to
                               replace either Liquidity Facility for any Trust,
                               subject to certain conditions. If such
                               replacement facility is provided at any time
                               after a Downgrade Drawing or Non-Extension
                               Drawing under such Liquidity Facility, the funds
                               on deposit with respect to such Liquidity
                               Facility in the Cash Collateral Account for such
                               Trust will be returned to the Liquidity Provider
                               being replaced.
 
                             Notwithstanding the subordination provisions of the
                               Intercreditor Agreement, the holders of the
                               Certificates issued by each Trust will be
                               entitled to receive and retain the proceeds of
                               drawings under the Liquidity Facilities for such
                               Trust. See "Description of the Liquidity
                               Facilities".
 
Intercreditor Agreement
  (a) Subordination........  The Trustees, the Liquidity Providers and the
                               Subordination Agent have entered into an
                               agreement (the "Intercreditor Agreement") which
                               provides as follows:
 
                             (i) All payments made in respect of the Equipment
                               Notes and certain other payments will be made to
                               the Subordination Agent, which will distribute
                               such payments in accordance with the provisions
                               of paragraphs (ii) and (iii) below.
 
                             (ii) On any Regular Distribution Date or Special
                               Distribution Date (each, a "Distribution Date"),
                               so long as no Triggering Event shall have
                               occurred (whether or not continuing), all
                               payments received by the Subordination Agent in
                               respect of the Equipment Notes and certain other
                               payments shall be distributed in the following
                               order: (1) payment of certain Liquidity
                               Obligations; (2) payment of Expected
                               Distributions to the holders of Class A
                               Certificates; (3) payment of Expected
                               Distributions to the holders of Class B
                               Certificates; (4) payment of Expected
                               Distributions to the holders of Class C
                               Certificates; and (5) payment of certain fees and
                               expenses of the Subordination Agent and the
                               Trustees.
 
                             "Expected Distributions" means, with respect to the
                               Certificates of any Trust on any Distribution
                               Date (the "Current Distribution Date"), the sum
                               of (x) accrued and unpaid interest on such
                               Certificates (excluding interest, if any, payable
                               with respect to the Deposits relating to such
                               Trust) and (y) the difference between (A) the
                               Pool Balance of such Certificates as of the
                               immediately preceding Distribution Date
                                       26

<PAGE>   28
 
                               and (B) the Pool Balance of such Certificates as
                               of the Current Distribution Date calculated on
                               the basis that (i) the principal of the Equipment
                               Notes held in such Trust has been paid when due
                               (whether at stated maturity, upon redemption,
                               prepayment or acceleration or otherwise) and such
                               payments have been distributed to the holders of
                               such Certificates and (ii) the principal of any
                               Equipment Notes formerly held in such Trust that
                               have been sold pursuant to the Intercreditor
                               Agreement has been paid in full and such payments
                               have been distributed to the holders of such
                               Certificates, but without giving effect to any
                               reduction in the Pool Balance as a result of any
                               distribution attributable to Deposits.
 
                             (iii) Upon the occurrence of a Triggering Event and
                               at all times thereafter, all payments received by
                               the Subordination Agent in respect of the
                               Equipment Notes and certain other payments shall
                               be distributed in the following order: (1) to the
                               Subordination Agent, the Trustees and certain
                               other parties in payment of the Administration
                               Expenses and to the Liquidity Providers in
                               payment of the Liquidity Obligations; (2) to the
                               holders of Class A Certificates in payment of
                               Adjusted Expected Distributions; (3) to the
                               holders of Class B Certificates in payment of
                               Adjusted Expected Distributions; and (4) to the
                               holders of Class C Certificates in payment of
                               Adjusted Expected Distributions.
 
                             "Adjusted Expected Distributions" means, with
                               respect to the Certificates of any Trust on any
                               Distribution Date, the sum of (x) accrued and
                               unpaid interest on such Certificates (excluding
                               interest, if any, payable with respect to the
                               Deposits relating to such Trust) and (y) the
                               greater of:
 
                             (A) the difference between (x) the Pool Balance of
                                 such Certificates as of the immediately
                                 preceding Distribution Date and (y) the Pool
                                 Balance of such Certificates as of the Current
                                 Distribution Date calculated on the basis that
                                 (i) the principal of the Equipment Notes other
                                 than Performing Equipment Notes (the
                                 "Non-Performing Equipment Notes") held in such
                                 Trust has been paid in full and such payments
                                 have been distributed to the holders of such
                                 Certificates, (ii) the principal of the
                                 Performing Equipment Notes held in such Trust
                                 has been paid when due (but without giving
                                 effect to any acceleration of Performing
                                 Equipment Notes) and such payments have been
                                 distributed to the holders of such Certificates
                                 and (iii) the principal of any Equipment Notes
                                 formerly held in such Trust that have been sold
                                 pursuant to the Intercreditor Agreement has
                                 been paid in full and such payments have been
                                 distributed to the holders of such
                                 Certificates, but without giving effect to any
                                 reduction in the Pool Balance as a result of
                                 any distribution attributable to Deposits, and
 
                             (B) the amount of the excess, if any, of (i) the
                                 Pool Balance of such Class of Certificates as
                                 of the immediately preceding Distribution Date
                                 (less the amount of the Deposits for such Class
                                 of Certificates as of such preceding
                                 Distribution Date other than any portion of
                                 such Deposits thereafter used to acquire
                                 Equipment Notes pursuant to the Note Purchase
                                 Agreement), over (ii) the Aggregate LTV
                                       27

<PAGE>   29
 
                                 Collateral Amount for such Class of
                                 Certificates for the Current Distribution Date;
 
                             provided that, until the date of the initial LTV
                               Appraisals, clause (B) shall not apply.
 
                             For purposes of calculating Expected Distributions
                               or Adjusted Expected Distributions with respect
                               to the Certificates of any Trust, any premium
                               paid on the Equipment Notes held in such Trust
                               that has not been distributed to the
                               Certificateholders of such Trust (other than such
                               premium or a portion thereof applied to the
                               payment of interest on the Certificates of such
                               Trust or the reduction of the Pool Balance of
                               such Trust) shall be added to the amount of
                               Expected Distributions or Adjusted Expected
                               Distributions.
 
                             "Aggregate LTV Collateral Amount" for any Class of
                               Certificates for any Distribution Date means the
                               sum of the applicable LTV Collateral Amounts for
                               each Aircraft, minus the Pool Balance for each
                               Class of Certificates, if any, senior to such
                               Class, after giving effect to any distribution on
                               such Distribution Date of principal of the
                               Equipment Notes held by the Trust or Trusts of
                               such senior Class or Classes.
 
                             "LTV Collateral Amount" of any Aircraft for any
                               Class of Certificates means, as of any
                               Distribution Date, the lesser of (i) the LTV
                               Ratio for such Class of Certificates multiplied
                               by the Appraised Current Market Value of such
                               Aircraft (or with respect to any such Aircraft
                               which has suffered an Event of Loss under and as
                               defined in the relevant Lease, in the case of a
                               Leased Aircraft, or Indenture, in the case of an
                               Owned Aircraft, the amount of the insurance
                               proceeds paid to the related Loan Trustee in
                               respect thereof to the extent then held by such
                               Loan Trustee in respect thereof) and (ii) the
                               outstanding principal amount of the Equipment
                               Notes secured by such Aircraft after giving
                               effect to any principal payments of such
                               Equipment Notes on or before such Distribution
                               Date.
 
                             "LTV Ratio" means for the Class A Certificates
                               40.36%, for the Class B Certificates 54.03% and
                               for the Class C Certificates 65.19%.
 
                             "Appraised Current Market Value" of any Aircraft
                               means the lower of the average and the median of
                               the most recent three Appraisals of such
                               Aircraft. After a Triggering Event occurs and any
                               Equipment Note becomes a Non-Performing Equipment
                               Note, the Subordination Agent shall obtain
                               Appraisals for the Aircraft (the "LTV
                               Appraisals") as soon as practicable and
                               additional LTV Appraisals on or prior to each
                               anniversary of the date of such initial LTV
                               Appraisals; provided that if the Controlling
                               Party reasonably objects to the appraised value
                               of the Aircraft shown in such LTV Appraisals, the
                               Controlling Party shall have the right to obtain
                               or cause to be obtained substitute LTV Appraisals
                               (including LTV Appraisals based upon physical
                               inspection of the Aircraft).
 
  (b) Deposits.............  Payments in respect of the Deposits are not subject
                               to the subordination provisions of the
                               Intercreditor Agreement.
 
  (c) Intercreditor
Rights.....................  Pursuant to the Intercreditor Agreement, the
                               Trustees and the Liquidity Providers have agreed
                               that, with respect to any Indenture at any given
                               time, the Loan Trustee will be directed (a) in
                               taking, or refraining
                                       28

<PAGE>   30
 
                               from taking, any action thereunder or with
                               respect to the Equipment Notes issued thereunder
                               by the holders of at least a majority of the
                               outstanding principal amount of such Equipment
                               Notes as long as no Indenture Default has
                               occurred and is continuing thereunder and (b)
                               subject to certain conditions, in taking, or
                               refraining from taking, any action thereunder
                               (including exercising remedies thereunder, such
                               as acceleration of such Equipment Notes or
                               foreclosing the lien on the Aircraft securing
                               such Equipment Notes) by the Controlling Party
                               insofar as an Indenture Default thereunder has
                               occurred and is continuing.
 
                             "Controlling Party" with respect to any Indenture
                               means: (x) the Class A Trustee; (y) upon payment
                               of Final Distributions to the holders of Class A
                               Certificates, the Class B Trustee; and (z) upon
                               payment of Final Distributions to the holders of
                               Class B Certificates, the Class C-I Trustee and
                               the Class C-II Trustee, who have agreed to act
                               together. See "Description of the New
                               Certificates -- Indenture Defaults and Certain
                               Rights Upon an Indenture Default" for a
                               description of the rights of the
                               Certificateholders of each Trust to direct the
                               respective Trustees. Notwithstanding the
                               foregoing, at any time after 18 months from the
                               earlier to occur of (x) the date on which the
                               entire available amount under any Liquidity
                               Facility shall have been drawn (for any reason
                               other than a Downgrade Drawing or a Non-Extension
                               Drawing) and remain unreimbursed and (y) the date
                               on which all Equipment Notes shall have been
                               accelerated (provided that prior to the Delivery
                               Period Termination Date the aggregate principal
                               amount thereof exceeds $280 million), the
                               Liquidity Providers with at least two-thirds of
                               unreimbursed Liquidity Obligations shall have the
                               right to become the Controlling Party with
                               respect to such Indenture. For purposes of giving
                               effect to the foregoing, the Trustees (other than
                               the Controlling Party) have irrevocably agreed
                               (and the Certificateholders (other than the
                               Certificateholders represented by the Controlling
                               Party) shall be deemed to agree by virtue of
                               their acquisition of Certificates) to exercise
                               their voting rights as directed by the
                               Controlling Party. For a description of certain
                               limitations on the Controlling Party's rights to
                               exercise remedies, see "Description of the
                               Equipment Notes -- Remedies".
 
                             "Final Distributions" means, with respect to the
                               Certificates of any Trust on any Distribution
                               Date, the sum of (x) accrued and unpaid interest
                               on such Certificates (excluding interest payable
                               on the Deposits relating to such Trust) and (y)
                               the Pool Balance of such Certificates as of the
                               immediately preceding Distribution Date (less the
                               amount of the Deposits for such Class of
                               Certificates as of such preceding Distribution
                               Date other than any portion of such Deposits
                               thereafter used to acquire Equipment Notes
                               pursuant to the Note Purchase Agreement).
 
                             (i) Upon the occurrence and during the continuation
                                 of any Indenture Default under any Indenture,
                                 the Controlling Party may accelerate and sell
                                 all (but not less than all) of the Equipment
                                 Notes issued under such Indenture to any
                                 person, subject to the provisions of paragraph
                                 (ii) below. The proceeds of such sale will be
                                 distributed pursuant to the provisions of the
                                 Intercreditor Agreement.
                                       29

<PAGE>   31
 
                             (ii) So long as any Certificates are outstanding,
                                  during nine months after the earlier of (x)
                                  the acceleration of the Equipment Notes under
                                  any Indenture or (y) the bankruptcy or
                                  insolvency of Continental, without the consent
                                  of each Trustee, (a) no Aircraft subject to
                                  the lien of such Indenture or such Equipment
                                  Notes may be sold, if the net proceeds from
                                  such sale would be less than the Minimum Sale
                                  Price for such Aircraft or such Equipment
                                  Notes, and (b) with respect to any Leased
                                  Aircraft, the amount and payment dates of
                                  rentals payable by Continental under the Lease
                                  for such Leased Aircraft may not be adjusted
                                  if, as a result of such adjustment, the
                                  discounted present value of all such rentals
                                  would be less than 75% of the discounted
                                  present value of the rentals payable by
                                  Continental under such Lease before giving
                                  effect to such adjustment, in each case, using
                                  the weighted average interest rate of the
                                  Equipment Notes issued under such Indenture as
                                  the discount rate.
 
                             "Minimum Sale Price" means, with respect to any
                               Aircraft or the Equipment Notes issued in respect
                               of such Aircraft, at any time, the lesser of (1)
                               75% of the Appraised Current Market Value of such
                               Aircraft and (2) the aggregate outstanding
                               principal amount of such Equipment Notes, plus
                               accrued and unpaid interest thereon.
 
Certificates; Book-Entry
  Registration.............  The New Certificates of each Trust will be
                               represented by one or more permanent global
                               Certificates in definitive, fully registered form
                               and registered in the name of Cede & Co.
                               ("Cede"), as nominee of The Depository Trust
                               Company ("DTC"). See "Description of the New
                               Certificates -- Book Entry; Delivery and Form".
 
Method of Distribution.....  The persons in whose names the Certificates are
                               registered will be treated as the owners of such
                               Certificates for the purpose of receiving
                               payments of principal of and interest on such
                               Certificates, payments under the Escrow
                               Agreements in respect of Deposits and for all
                               other purposes whatsoever. Therefore, none of the
                               Trustees, Continental, the Loan Trustees, the
                               Liquidity Providers, the Subordination Agent, the
                               Escrow Agents, the Paying Agents, the Owner
                               Participants or the Owner Trustees has any direct
                               responsibility or liability for distributions or
                               payments to owners of beneficial interests in the
                               Certificates (the "Certificate Owners").
                               Distributions by the Trustee and by the Paying
                               Agent in respect of Certificates registered in
                               the name of Cede, as nominee of DTC, including
                               the final distribution of principal with respect
                               to such Certificates of any Trust, will be made
                               in same-day funds to DTC. DTC will in turn make
                               distributions in same-day funds to those
                               participants in DTC who are credited with
                               ownership of such Certificates ("DTC
                               Participants") in amounts proportionate to the
                               amount of each such DTC Participant's respective
                               holdings of beneficial interests in such
                               Certificates. Corresponding payments by the DTC
                               Participants to beneficial owners of such
                               Certificates will be the responsibility of such
                               DTC Participants, and Continental expects that
                               they will be made in accordance with customary
                               industry practices. The final distribution with
                               respect to the Certificates of any Trust will be
                               made only upon surrender and presentation thereof
                               to the Trustee of such Trust. See "Description of
                               the New Certificates--Book-Entry; Delivery and
                               Form".
                                       30

<PAGE>   32
 
Federal Income Tax
  Consequences.............  The exchange of New Certificates for Old
                               Certificates will not be a sale or exchange or
                               otherwise a taxable event for Federal income tax
                               purposes.
 
ERISA Considerations.......  In general, employee benefit plans subject to Title
                               I of the Employee Retirement Income Security Act
                               of 1974, as amended ("ERISA"), or Section 4975 of
                               the Internal Revenue Code of 1986, as amended
                               (the "Code") (or entities which may be deemed to
                               hold the assets of any such plan) will be
                               eligible to purchase the Class A Certificates
                               subject to the circumstances applicable to such
                               plans. Plans will not be eligible to purchase
                               Class B or Class C Certificates, except that such
                               Certificates may be acquired with the assets of
                               an insurance company general account that may be
                               deemed to constitute Plan assets if the
                               conditions of Prohibited Transaction Class
                               Exemption ("PTCE") 95-60 are satisfied. Holders
                               of Class B or Class C Certificates that tender
                               such Old Certificates in exchange for New
                               Certificates will be deemed to have represented
                               and warranted that either (i) no Plan assets have
                               been used to acquire and hold such Certificate or
                               (ii) the acquisition and holding of such
                               Certificate is exempt from the prohibited
                               transaction restrictions of ERISA and Section
                               4975 of the Code pursuant to PTCE 95-60. See
                               "ERISA Considerations". Each Plan fiduciary (and
                               each fiduciary for a governmental or church plan
                               subject to rules similar to those imposed on
                               Plans under ERISA) should consult with its legal
                               advisor concerning an investment in any of the
                               Certificates.
 

<TABLE>
<CAPTION>
                                                                                                                      STANDARD
                                                                                                           MOODY'S    & POOR'S
                                                                                                           -------    --------
<S>                                                            <C>                                         <C>        <C>
Rating of the Liquidity Providers:                             Short Term
                                                               ABN AMRO..................................    P-1        A-1+
                                                               ING.......................................    P-1        A-1+
Threshold Rating:                                              Short Term................................    P-1        A-1+
</TABLE>

 
                                       31

<PAGE>   33
 
                            SELECTED FINANCIAL DATA
 
     The following selected consolidated financial data for the years ended
December 31, 1996, 1995 and 1994 is derived from the audited consolidated
financial statements of the Company. The consolidated financial data of the
Company for the three months ended March 31, 1997 and 1996 is derived from its
unaudited consolidated financial statements, which include all adjustments
(consisting solely of normal recurring accruals) that the Company considers
necessary for the presentation of the financial position and results of
operations for these periods. Operating results for the three months ended March
31, 1997 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1997. The Company's selected consolidated financial
data should be read in conjunction with, and are qualified in their entirety by
reference to, the consolidated financial statements, including the notes
thereto, incorporated by reference in this Prospectus.
 

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED
                                              MARCH 31,           YEAR ENDED DECEMBER 31,
                                          ------------------    ---------------------------
                                           1997       1996       1996      1995      1994
                                          -------    -------    ------    ------    -------
                                           (IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
                                             (UNAUDITED)
<S>                                       <C>        <C>        <C>       <C>       <C>
FINANCIAL DATA -- OPERATIONS:
Operating Revenue:
  Passenger.............................   $1,564     $1,375    $5,871    $5,302    $ 5,036
  Cargo, mail and other.................      134        114       489       523        634
                                           ------     ------    ------    ------    -------
                                            1,698      1,489     6,360     5,825      5,670
                                           ------     ------    ------    ------    -------
Operating Expenses:
  Wages, salaries and related costs.....      414        364     1,549     1,432(2)   1,532
  Aircraft fuel.........................      229        177       774       681        741
  Commissions...........................      138        126       510       489        439
  Aircraft rentals......................      131        124       509       497        433
  Maintenance, materials and repairs....      125        112       461       429        495
  Other rentals and landing fees........       97         84       350       356        392
  Depreciation and amortization.........       60         65       254       253        258
  Fleet disposition charge..............       --         --       128(1)     --         --
  Other.................................      358        317     1,300     1,303      1,391
                                           ------     ------    ------    ------    -------
                                            1,552      1,369     5,835     5,440      5,681
                                           ------     ------    ------    ------    -------
Operating Income (Loss).................      146        120       525       385        (11)
                                           ------     ------    ------    ------    -------
Nonoperating Income (Expense):
  Interest expense......................      (42)       (47)     (165)     (213)      (241)
  Interest capitalized..................        6          1         5         6         17
  Interest income.......................       13          9        43        31         23
  Other, net............................        1         12        20       101(3)    (439)(4)
                                           ------     ------    ------    ------    -------
                                              (22)       (25)      (97)      (75)      (640)
                                           ------     ------    ------    ------    -------
Income (Loss) before Income Taxes,
  Minority Interest and Extraordinary
  Loss..................................      124         95       428       310       (651)
Net Income (Loss).......................   $   74     $   88    $  319    $  224    $  (613)
Earnings (Loss) per Common and Common
  Equivalent Share......................   $ 1.13     $ 1.35    $ 4.87    $ 3.60    $(11.88)
                                           ======     ======    ======    ======    =======
Earnings (Loss) per Common Share
  Assuming Full Dilution................   $ 0.95     $ 1.18    $ 4.11    $ 3.15    $(11.88)
                                           ======     ======    ======    ======    =======
</TABLE>

 
                                          (See footnotes on the following page.)
                                       32

<PAGE>   34
 

<TABLE>
<CAPTION>
                                          MARCH 31,    DECEMBER 31,
                                            1997           1996
                                          ---------    ------------
                                          (IN MILLIONS OF DOLLARS)
                                          (UNAUDITED)
<S>                                       <C>          <C>
FINANCIAL DATA -- BALANCE SHEET:
Assets:
Cash and Cash Equivalents, including
  restricted cash and cash equivalents
  of $79 and $76, respectively(5).......   $  927         $1,061
Other Current Assets....................      647            573
Total Property and Equipment, Net.......    1,754          1,596
Routes, Gates and Slots, Net............    1,469          1,473
Other Assets, Net.......................      504            503
                                           ------         ------
          Total Assets..................   $5,301         $5,206
                                           ======         ======
Liabilities and Stockholders' Equity:
Current Liabilities.....................   $2,160         $2,104
Long-term Debt and Capital Leases.......    1,557          1,624
Deferred Credits and Other Long-term
  Liabilities...........................      620            594
Minority Interest.......................       16             15
Continental-Obligated Mandatorily
  Redeemable Preferred Securities of
  Subsidiary Trust holding solely
  Convertible Subordinated
  Debentures(6).........................      242            242
Redeemable Preferred Stock..............       47             46
Common Stockholders' Equity.............      659            581
                                           ------         ------
          Total Liabilities and
            Stockholders' Equity........   $5,301         $5,206
                                           ======         ======
</TABLE>

 
- ---------------
 
(1) The $128 million fleet disposition charge recorded in 1996 is associated
    primarily with the decision to accelerate the replacement of its DC-9-30,
    DC-10-10, 727-200, 737-100, and 737-200 aircraft. In connection with its
    decision to accelerate the replacement of such aircraft, the Company wrote
    down its Stage 2 aircraft inventory, that is not expected to be consumed
    through operations, to its estimated fair value and recorded a provision for
    costs associated with the return of leased aircraft at the end of their
    respective lease terms.
 
(2) Includes a $20 million cash payment in 1995 by the Company in connection
    with a 24-month collective bargaining agreement entered into by the Company
    and the Independent Association of Continental Pilots.
 
(3) Includes a pre-tax gain of $108 million ($30 million after tax) on the
    series of transactions by which the Company and its subsidiary, Continental
    CRS Interests, Inc., transferred certain assets and liabilities relating to
    the computerized reservation business of such subsidiary to a newly-formed
    limited liability company and the remaining assets and liabilities were
    sold.
 
(4) Includes a provision of $447 million recorded in 1994 associated with the
    planned early retirement of certain aircraft and closed or underutilized
    airport and maintenance facilities and other assets.
 
(5) Restricted cash and cash equivalents agreements relate primarily to workers'
    compensation claims and the terms of certain other agreements. In addition,
    CMI is required by its loan agreement to maintain certain minimum
    consolidated net worth and liquidity levels and is subject to restrictions
    on its ability to pay dividends to Continental, which effectively restrict
    the amount of cash available to Continental from CMI.
 
(6) The sole assets of the Trust are Convertible Subordinated Debentures, with
    an aggregate principal amount of $250 million, which bear interest at the
    rate of 8 1/2% per annum and mature on December 1, 2020. Upon repayment, the
    Continental-Obligated Mandatorily Redeemable Preferred Securities of
    Subsidiary Trust will be mandatorily redeemed.
                                       33

<PAGE>   35
 
                                  RISK FACTORS
 
     Holders of Old Certificates should carefully consider the following risk
factors, as well as other information set forth in this Prospectus, before
tendering their Old Certificates in the Exchange Offer. The risk factors set
forth below (other than "-- Risk Factors Relating to the Certificates and the
Offering -- Consequences of Failure to Exchange") are generally applicable to
the Old Certificates as well as the New Certificates.
 
RISK FACTORS RELATING TO THE COMPANY
 
  Leverage and Liquidity
 
     Continental has successfully negotiated a variety of agreements to increase
its liquidity. Nevertheless, Continental remains more leveraged and has
significantly less liquidity than certain of its competitors, several of whom
have available lines of credit and/or significant unencumbered assets.
Accordingly, Continental may be less able than certain of its competitors to
withstand a prolonged recession in the airline industry.
 
     As of March 31, 1997, Continental had approximately $1.8 billion (including
current maturities) of long-term debt and capital lease obligations and had
approximately $1.0 billion of minority interest, Continental-obligated
mandatorily redeemable preferred securities of subsidiary trust, redeemable
preferred stock and common stockholders' equity. Common stockholders' equity
reflects the adjustment of the Company's balance sheet and the recording of
assets and liabilities at fair market value as of April 27, 1993 in accordance
with the American Institute of Certified Public Accountants' Statement of
Position 90-7 -- "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7").
 
     During the first and second quarters of 1995, in connection with
negotiations with various lenders and lessors, Continental ceased or reduced
contractually required payments under various agreements, which produced a
significant number of events of default under debt, capital lease and operating
lease agreements. Through agreements reached with the various lenders and
lessors, Continental cured all of these events of default. The last such
agreement was put in place during the fourth quarter of 1995.
 
     As of March 31, 1997, Continental had $927 million of cash and cash
equivalents, including restricted cash and cash equivalents of $79 million.
Continental does not have general lines of credit and has significant encumbered
assets.
 
     For 1997, Continental expects to incur cash expenditures under operating
leases relating to aircraft of approximately $624 million, compared to $568
million for 1996 and approximately $232 million relating to facilities and other
rentals, compared to $210 million in 1996. In addition, Continental has capital
requirements relating to compliance with regulations that are discussed below.
See "-- Risk Factors Relating to the Airline Industry -- Regulatory Matters".
 
     As of March 31, 1997, Continental had firm commitments with The Boeing
Company ("Boeing") to take delivery of a total of 126 jet aircraft during the
years 1997 through 2003 with options for an additional 90 aircraft (exercisable
subject to certain conditions). These new aircraft will replace older, less
efficient Stage 2 aircraft and allow for growth of operations. The estimated
aggregate cost of the Company's firm commitments for Boeing aircraft is
approximately $4.3 billion. The offering of the Old Certificates provides for
the financing by the Company (either through leveraged leases or secured debt
financings) of the debt portion of the acquisition cost of the 30 Aircraft
(including two Aircraft delivered prior to the date of this Prospectus). In
connection therewith, owner participants have committed to approximately $160
million of equity financing underlying 22 of these aircraft (including two
Aircraft delivered prior to the date of this Prospectus). Continental has
additional firm commitments for approximately $1.1 billion of backstop financing
for its Boeing aircraft orders. Continental currently plans on financing the new
Boeing aircraft with enhanced equipment trust certificates or similar financing,
subject to availability and market conditions. However, further financing will
be needed to satisfy Continental's capital commitments for other aircraft and
other aircraft-related expenditures such as spare parts, simulators and related
items (including for Express's new Embraer ("EMB") -145 aircraft described
below). There can be no assurance that sufficient financing will be available
for all aircraft and other capital expenditures not covered by firm financing
commitments. Deliveries
 
                                       34

<PAGE>   36
 
of new Boeing aircraft are expected to increase aircraft rental, depreciation
and interest costs while generating cost savings in the areas of maintenance,
fuel and pilot training. Continental has also entered into agreements or letters
of intent to lease two DC-10-30 aircraft and will take delivery of such aircraft
in May 1997.
 
     In September 1996, Express placed an order for 25 firm EMB-145 50-seat
regional jets, with options for an additional 175 aircraft. Neither Express nor
Continental will have any obligation to take such aircraft that are not financed
by a third party and leased to the Company. However, if the Company fails to
confirm the first tranche of 25 options by August 1997, the rent associated with
the 25 firm aircraft will increase by an aggregate of $33.6 million over the
16-year life of the leases. Express has taken delivery of six of the firm
aircraft through the first quarter of 1997 and will take delivery of the
remaining 19 firm aircraft through the second quarter of 1998. The Company
expects to account for all of these aircraft as operating leases.
 
     In July 1996, CMI consummated a $320 million secured term loan financing
with a group of banks and other financial institutions. The loan is secured by
the stock of CMI and substantially all its unencumbered assets, consisting
primarily of CMI's route authorities, and is guaranteed by Continental and AMI.
The bank financing does not contain any restrictive covenants at the Continental
parent level, and none of the assets of Continental Airlines, Inc. (other than
its stock in AMI) is pledged in connection with the new financing.
 
     As a result of the recent weakness of the yen against the dollar and
increased fuel costs, CMI's operating earnings declined during the past three
quarters as compared to similar periods in the prior year, and are not expected
to improve materially absent a stronger yen or reduced fuel costs. The bank
financing contains significant financial covenants relating to CMI, including
maintenance of a minimum fixed charge coverage ratio, a minimum consolidated net
worth and minimum liquidity, and covenants restricting CMI's leverage, its
incurrence of certain indebtedness and its pledge of assets. The financial
covenants also limit the ability of CMI to pay dividends to Continental. In
January 1997, CMI elected to prepay $25 million of principal amount of its bank
financing rather than use such cash for other purposes. CMI may prepay
additional amounts of its bank financing to remain in compliance with certain
covenants contained in such financing.
 
     In May 1997, Continental entered into a commitment letter with certain
banks that contemplates the establishment of a $500 million credit facility (the
"$500 Million Credit Facility"), of which $275 million principal amount will be
a term loan and $225 million will be a revolving credit facility. The commitment
letter contemplates that the proceeds of the term loan to Continental will be
loaned to AMI, reloaned to CMI and used by CMI to repay its existing secured
term loan described above. The new loan to CMI will be secured by substantially
all of CMI's assets but will not contain any financial covenants relating to CMI
other than covenants restricting CMI's incurrence of certain indebtedness and
pledge of assets. AMI's rights with respect to its loan to CMI and Continental's
rights with respect to its loan to AMI (as well as Continental's stock in AMI)
will be pledged as collateral for Continental's loan under the $500 Million
Credit Facility. In addition, the $500 Million Credit Facility will contain
certain financial covenants applicable to Continental and will prohibit
Continental from granting a security interest on certain of its international
route authorities.
 
     In April 1997 Continental entered into a $160 million revolving credit
facility with a group of banks (the "Predelivery Deposit Revolver") to finance
predelivery deposits with respect to the acquisition of new Boeing 737 and 757
aircraft, which is secured by the purchase agreements with respect to such
aircraft, including the Aircraft.
 
     In February 1997, the Company began construction of a new hangar and
improvements to a cargo facility at the Company's hub at Newark International
Airport which is expected to be completed in the fourth quarter of 1997. The
Company expects to finance these projects, which will cost approximately $25
million, with tax-exempt bonds. In addition, the Company is also planning a
facility expansion at Newark which would require, among other matters,
agreements to be reached with the applicable airport authority.
 
     In March 1997, the Company announced plans to expand its facilities at its
Hopkins International Airport hub in Cleveland. The expansion, which will
include a new jet concourse for the new regional jet service offered by Express,
as well as other facility improvements, is expected to cost approximately $120
million, which the Company expects will be funded principally by the issuance of
a combination of tax-exempt special facilities revenue bonds and general airport
revenue bonds by the City of Cleveland. In
 
                                       35

<PAGE>   37
 
connection therewith, the Company expects to enter into long-term leases with
the City of Cleveland providing for the Company to make rental payments
sufficient to service the tax-exempt bonds.
 
     In April 1997, the Company announced plans to build a wide-body aircraft
maintenance hangar in Honolulu, Hawaii at an estimated cost of $24 million.
Construction of the hangar, anticipated to be completed by the second quarter of
1998, is expected to be financed by tax-exempt special facilities revenue bonds
issued by the State of Hawaii. In connection therewith, the Company expects to
enter into long-term leases under which rental payments will be sufficient to
service the related bonds.
 
     In April 1997, the City of Houston (the "City") completed the offering of
$190 million aggregate principal amount of tax-exempt special facilities revenue
bonds (the "IAH Bonds") payable solely from rentals paid by Continental under
long-term lease agreements with the City. The IAH Bonds are unconditionally
guaranteed by the Company. The proceeds from the IAH Bonds will be used to
finance the acquisition, construction and installation of certain terminal and
other airport facilities located at Continental's hub at George Bush
Intercontinental Airport in Houston, including a new automated people mover
system linking Terminals B and C and 20 aircraft gates in Terminal B into which
Continental intends to expand its operations. The expansion project is expected
to be completed by the summer of 1999.
 
     In April 1997, Continental redeemed for cash all of the 460,247 outstanding
shares of its Series A 12% Cumulative Preferred Stock held by an affiliate of
Air Canada, a Canadian corporation, for $100 per share plus accrued dividends
thereon. The redemption price, including accrued dividends, totaled $48 million.
 
  Continental's History of Operating Losses
 
     Although Continental recorded net income of $74 million in the first
quarter of 1997, $319 million in 1996 and $224 million in 1995, it had
experienced significant operating losses in the previous eight years. In the
long term, Continental's viability depends on its ability to sustain profitable
results of operations.
 
  Aircraft Fuel
 
     Since fuel costs constitute a significant portion of Continental's
operating costs (approximately 13.3% for the year ended December 31, 1996 and
14.8% for the three months ended March 31, 1997), significant changes in fuel
costs would materially affect the Company's operating results. Jet fuel prices
have increased significantly since December 31, 1995, although such prices have
moderated recently. Fuel prices continue to be susceptible to international
events, and the Company cannot predict near or longer-term fuel prices. The
Company enters into petroleum option contracts to provide some short-term
protection (generally three to six months) against a sharp increase in jet fuel
prices. In the event of a fuel supply shortage resulting from a disruption of
oil imports or otherwise, higher fuel prices or curtailment of scheduled service
could result.
 
  Labor Matters
 
     The Company has recently begun collective bargaining agreement negotiations
with its Continental Airlines and Express pilots whose contracts become
amendable in July 1997 and October 1997, respectively. In addition, the
Company's collective bargaining agreements with its CMI flight attendants and
CMI mechanics and mechanic-related employees became amendable in September 1996
and March 1997, respectively. Negotiations are in progress to amend these two
contracts. The Company believes that mutually acceptable agreements can be
reached with all such employees, although the ultimate outcome of the
negotiations is unknown at this time. The CMI agent-classification employees'
collective bargaining agreement, which became amendable in March 1997, was
ratified and approved in April 1997. The agreement, which becomes amendable in
March 2001, provides for an 8.7% increase in wages over a four-year period.
 
  Certain Tax Matters
 
     The Company's United States federal income tax return for the year ended
December 31, 1996 is expected to reflect net operating loss carryforwards
("NOLs") of $2.3 billion that will expire through 2009 and federal investment
tax credit carry forwards of $45 million that will expire through 2001. For
financial
 
                                       36

<PAGE>   38
 
reporting purposes, Continental began accruing tax expense on its income
statement during the second quarter of 1996.
 
     The Company had, as of December 31, 1996, deferred tax assets aggregating
$1.3 billion, including $804 million of NOLs. The Company recorded a valuation
allowance of $694 million against such assets as of December 31, 1996.
Realization of a substantial portion of the Company's remaining NOLs will
require the completion by April 27, 1998 of transactions resulting in
recognition of built-in gains for federal income tax purposes. The Company has
consummated several such transactions and currently intends to consummate one or
more additional transactions. If the Company were to determine in the future
that such transactions will not be completed and if future income is not
sufficient to recognize the benefit of previously completed transactions, an
adjustment to the net deferred tax liability of up to $85 million would be
charged to income in the period such determination was made. In the event the
Company recognizes additional tax benefits related to NOLs and investment tax
credit carryforwards attributable to the Company's predecessor, Holdings,
together with its operating subsidiaries, those benefits would be applied to
reduce reorganizational value in excess of amounts allocable to identifiable
assets and other intangibles to zero, and thereafter as an addition to paid-in
capital.
 
     As a result of NOLs, the Company will not pay United States federal income
taxes (other than alternative minimum tax) until it has recorded approximately
an additional $1.1 billion of taxable income following December 31, 1996.
Section 382 of the Internal Revenue Code ("Section 382") imposes limitations on
a corporation's ability to utilize NOLs if it experiences an "ownership change."
In general terms, an ownership change may result from transactions increasing
the ownership of certain stockholders in the stock of a corporation by more than
50 percentage points over a three-year period. In the event that an ownership
change should occur, utilization of Continental's NOLs would be subject to an
annual limitation under Section 382 determined by multiplying the value of the
Company's stock at the time of the ownership change by the applicable long-term
tax-exempt rate (which is 5.64% for May 1997). Unused annual limitation may be
carried over to later years, and the amount of the limitation may under certain
circumstances be increased by the built-in gains in assets held by the Company
at the time of the change that are recognized in the five-year period after the
change. Under current conditions, if an ownership change were to occur,
Continental's annual NOL utilization would be limited to approximately $123
million per year.
 
  Continental Micronesia
 
     Because the majority of CMI's traffic originates in Japan, its results of
operations are substantially affected by the Japanese economy and changes in the
value of the yen as compared to the dollar. Appreciation of the yen against the
dollar during 1994 and 1995 increased CMI's profitability while a decline of the
yen against the dollar in 1996 reduced CMI's profitability. As a result of the
recent weakness of the yen against the dollar and increased fuel costs, CMI's
operating earnings declined during the past three quarters as compared to
similar periods a year ago, and are not expected to improve materially absent a
stronger yen or reduced fuel costs. The $320 million financing consummated by
CMI in July 1996 contains significant financial covenants relating to CMI,
including maintenance of a minimum fixed charge coverage ratio, a minimum
consolidated net worth and minimum liquidity, and covenants restricting CMI's
leverage, its incurrence of certain indebtedness and its pledge of assets. The
financial covenants also limit the ability of CMI to pay dividends to
Continental. In January 1997, CMI elected to prepay $25 million of principal
amount of its bank financing rather than use such cash for other purposes. CMI
may prepay additional amounts of its bank financing to remain in compliance with
certain covenants contained in such financing. Continental has entered into a
commitment letter that contemplates the establishment of a new credit facility
under which CMI's existing bank financing will be repaid and financial covenants
applicable to CMI eliminated. See "-- Risk Factors Relating to the
Company -- Leverage and Liquidity".
 
     To reduce the potential negative impact on CMI's dollar earnings, CMI, from
time to time, purchases average rate options as a hedge against a portion of its
expected net yen cash flow position. Any significant and sustained decrease in
traffic or yields (including due to the value of the yen) to and from Japan
could materially adversely affect Continental's consolidated profitability.
 
                                       37

<PAGE>   39
 
  Principal Stockholder
 
     On November 21, 1996, Air Partners, L.P., a Texas limited partnership and
major stockholder of the Company ("Air Partners"), exercised its right to sell
to the Company, and the Company subsequently purchased, for $50 million,
warrants to purchase 2,614,379 shares of Class B common stock (representing a
portion of the total warrants held by Air Partners) pursuant to an agreement
entered into earlier in 1996 with the Company. As of April 30, 1997, Air
Partners held approximately 9.5% of the common equity interest and 40.7% of the
general voting power of the Company. If all the remaining warrants held by Air
Partners had been exercised on April 30, 1997, approximately 19.6% of the common
equity interest and 52.8% of the general voting power of the Company would have
been held by Air Partners. Various provisions in the Company's Certificate of
Incorporation and Bylaws currently provide Air Partners with the right to elect
one-third of the directors in certain circumstances; these provisions could have
the effect of delaying, deferring or preventing a change in the control of the
Company.
 
RISK FACTORS RELATING TO THE AIRLINE INDUSTRY
 
  Industry Conditions and Competition
 
     The airline industry is highly competitive and susceptible to price
discounting. The Company has in the past both responded to discounting actions
taken by other carriers and initiated significant discounting actions itself.
Continental's competitors include carriers with substantially greater financial
resources (and in certain cases, lower cost structures), as well as smaller
carriers with low cost structures. Airline profit levels are highly sensitive
to, and during recent years have been severely impacted by, changes in fuel
costs, fare levels (or "average yield") and passenger demand. Passenger demand
and yields have been affected by, among other things, the general state of the
economy, international events and actions taken by carriers with respect to
fares. From 1990 to 1993, these factors contributed to the domestic airline
industry's incurring unprecedented losses. Although fare levels have increased
recently, fuel costs have also increased significantly. In addition, significant
industry-wide discounts could be reimplemented at any time, and the introduction
of broadly available, deeply discounted fares by a major United States airline
would likely result in lower yields for the entire industry and could have a
material adverse effect on the Company's operating results.
 
     The airline industry has consolidated in past years as a result of mergers
and liquidations and may further consolidate in the future. Among other effects,
such consolidation has allowed certain of Continental's major competitors to
expand (in particular) their international operations and increase their market
strength. Furthermore, the emergence in recent years of several new carriers,
typically with low cost structures, has further increased the competitive
pressures on the major United States airlines. In many cases, the new entrants
have initiated or triggered price discounting. Aircraft, skilled labor and gates
at most airports continue to be readily available to start-up carriers.
Competition with new carriers or other low cost competitors on Continental's
routes could negatively impact Continental's operating results.
 
  Regulatory Matters
 
     In the last several years, the United States Federal Aviation
Administration (the "FAA") has issued a number of maintenance directives and
other regulations relating to, among other things, retirement of older aircraft,
security measures, collision avoidance systems, airborne windshear avoidance
systems, noise abatement, commuter aircraft safety and increased inspections and
maintenance procedures to be conducted on older aircraft. The Company expects to
continue incurring expenses for the purpose of complying with the FAA's noise
and aging aircraft regulations. In addition, several airports have recently
sought to increase substantially the rates charged to airlines, and the ability
of airlines to contest such increases has been restricted by federal
legislation, DOT regulations and judicial decisions.
 
     Management believes that the Company benefited in the first quarter of 1996
and 1997 from the expiration of the aviation trust fund tax (the "ticket tax").
The ticket tax was reinstated on March 7, 1997. Management believes that the
ticket tax has a negative impact on the Company, although neither the amount of
such negative impact directly resulting from the imposition of the ticket tax,
nor the benefit realized by its expiration can be precisely determined.
 
                                       38

<PAGE>   40
 
     Additional laws and regulations have been proposed from time to time that
could significantly increase the cost of airline operations by imposing
additional requirements or restrictions on operations. Laws and regulations have
also been considered that would prohibit or restrict the ownership and/or
transfer of airline routes or takeoff and landing slots. Also, the availability
of international routes to United States carriers is regulated by treaties and
related agreements between the United States and foreign governments that are
amendable. Continental cannot predict what laws and regulations may be adopted
or their impact, but there can be no assurance that laws or regulations
currently proposed or enacted in the future will not adversely affect the
Company.
 
  Seasonal Nature of Airline Business
 
     Due to the greater demand for air travel during the summer months, revenue
in the airline industry in the third quarter of the year is generally
significantly greater than revenue in the first quarter of the year and
moderately greater than revenue in the second and fourth quarters of the year
for the majority of air carriers. Continental's results of operations generally
reflect this seasonality, but have also been impacted by numerous other factors
that are not necessarily seasonal, including the extent and nature of
competition from other airlines, fare wars, changing levels of operations, fuel
prices, foreign currency exchange rates and general economic conditions.
 
RISK FACTORS RELATING TO THE CERTIFICATES AND THE OFFERING
 
  Consequences of Failure to Exchange
 
     Holders of Old Certificates who do not exchange their Old Certificates for
New Certificates pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Old Certificates as set forth in the legend
thereon as a consequence of the issuance of the Old Certificates pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Old Certificates may not be offered or sold, unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the Old
Certificates under the Securities Act. To the extent that Old Certificates are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Old Certificates could be adversely affected.
 
  Appraisals and Realizable Value of Aircraft
 
     Appraisals in respect of the Aircraft (without physical inspection thereof)
have been prepared by AISI, BK and MBA, and such appraisals are based on varying
assumptions and methodologies which differ among the Appraisers. The Appraisers
have delivered letters summarizing their respective reports, copies of which are
annexed to this Prospectus as Appendix II. See "Description of the Aircraft and
the Appraisals -- The Appraisals". The appraised value of each Aircraft, and
accordingly the initial aggregate Aircraft value as referred to herein, is based
upon the lesser of the average and median value of such Aircraft as appraised by
the Appraisers and projected as of the scheduled delivery month of such
Aircraft. Such aggregate appraised values also assume depreciation of
approximately 2% of the initial appraised value for Aircraft delivered more than
one year prior to the scheduled Delivery Period Termination Date (although no
assurance can be given as to the actual market value rate of depreciation, which
may differ from 2% during such period). Appraisals that are based on different
assumptions and methodologies may result in valuations that are materially
different from those contained in the appraisals of the Appraisers. An appraisal
is only an estimate of value, is not indicative of the price at which an
Aircraft may be purchased from the manufacturer and should not in any event be
relied upon as a measure of realizable value; the proceeds realized upon a sale
of any Aircraft may be less than the appraised value thereof. In particular, the
appraisals are estimates of values as of future delivery dates. The value of the
Aircraft in the event of the exercise of remedies under the applicable Indenture
will depend on market and economic conditions, the supply of aircraft, the
availability of buyers, the condition of the Aircraft and other factors.
Accordingly, there can be no assurance that the proceeds realized upon any such
exercise with respect to the Equipment Notes and the Aircraft pursuant to the
applicable Pass Through
 
                                       39

<PAGE>   41
 
Trust Agreement and the applicable Indenture would be sufficient to satisfy in
full payments due on the Certificates.
 
  Priority of Distributions; Subordination
 
     Pursuant to the Intercreditor Agreement to which the Trustees, the
Subordination Agent and the Liquidity Providers are parties, on each
Distribution Date, so long as no Triggering Event shall have occurred, all
payments in respect of Equipment Notes received by the Subordination Agent will
be distributed in the following order: (1) payment of certain Liquidity
Obligations to the Liquidity Providers; (2) payment of Expected Distributions to
the holders of Class A Certificates; (3) payment of Expected Distributions to
the holders of Class B Certificates; (4) payment of Expected Distributions to
the holders of Class C Certificates; and (5) payment of certain fees and
expenses of the Subordination Agent and the Trustees.
 
     In addition, upon the occurrence of a Triggering Event and at all times
thereafter, all payments received by the Subordination Agent in respect of the
Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) to the Subordination Agent,
the Trustee and certain other parties in payment of the Administration Expenses
and to the Liquidity Providers in payment of the Liquidity Obligations; (2) to
the holders of Class A Certificates in payment of Adjusted Expected
Distributions; (3) to the holders of Class B Certificates in payment of Adjusted
Expected Distributions; and (4) to the holders of Class C Certificates in
payment of Adjusted Expected Distributions.
 
     The priority of distributions after a payment default under any Equipment
Note will have the effect in certain circumstances of requiring the distribution
to more senior Classes of Certificates of payments received in respect of one or
more junior series of Equipment Notes. If this should occur, the interest
accruing on the remaining Equipment Notes would in the aggregate be less than
the interest accruing on the remaining Certificates because such Certificates
include a relatively greater proportion of junior Classes with relatively higher
interest rates. As a result of this possible interest shortfall, the holders of
one or more junior Classes of Certificates may not receive the full amount due
them after a payment default under any Equipment Note even if all Equipment
Notes are eventually paid in full.
 
     Payments in respect of the Deposits are not subject to the subordination
provisions of the Intercreditor Agreement.
 
  Control over Collateral; Sale of Collateral
 
     Pursuant to the Intercreditor Agreement, the Trustees and the Liquidity
Providers have agreed that, with respect to any Indenture at any given time, the
Loan Trustee will be directed (a) in taking, or refraining from taking, any
action thereunder by the holders of at least a majority of the outstanding
principal amount of the Equipment Notes issued thereunder as long as no
Indenture Default has occurred and is continuing thereunder and (b) subject to
certain conditions, in exercising remedies thereunder (including acceleration of
such Equipment Notes or foreclosing the lien on the Aircraft securing such
Equipment Notes) insofar as an Indenture Default has occurred and is continuing
by the Controlling Party. See "Description of the New Certificates -- Indenture
Defaults and Certain Rights Upon an Indenture Default" for a description of the
rights of the Certificateholders of each Trust to direct the respective
Trustees. Notwithstanding the foregoing, at any time after 18 months from the
earlier to occur of (x) the date on which the entire available amount under any
Liquidity Facility shall have been drawn (for any reason other than a Downgrade
Drawing or a Non-Extension Drawing) and remain unreimbursed and (y) the date on
which all Equipment Notes shall have been accelerated (provided that prior to
the Delivery Period Termination Date the aggregate principal amount thereof
exceeds $280 million), the Liquidity Providers with at least two-thirds of the
unreimbursed Liquidity Obligations shall have the right to elect to become the
Controlling Party with respect to such Indenture. For purposes of giving effect
to the foregoing, the Trustees (other than the Controlling Party) shall
irrevocably agree, and the Certificateholders (other than the Certificateholders
represented by the Controlling Party) shall be deemed to agree by virtue of
their purchase of Certificates, to exercise their voting rights as directed by
the Controlling Party. For a description of certain limitations on the
Controlling Party's rights to exercise remedies, see "Description of the
Equipment Notes -- Remedies".
 
                                       40

<PAGE>   42
 
     Upon the occurrence and during the continuation of any Indenture Default
under any Indenture, the Controlling Party may accelerate and, subject to the
provisions described in the last sentence of this paragraph, sell all (but not
less than all) of the Equipment Notes issued under such Indenture to any person.
The market for Equipment Notes at the time of the existence of any Indenture
Default may be very limited, and there can be no assurance as to the price at
which they could be sold. If the Controlling Party sells any such Equipment
Notes for less than their outstanding principal amount, certain
Certificateholders will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall against Continental,
any Owner Trustee, any Owner Participant or any Trustee. So long as any
Certificates are outstanding, during nine months after the earlier of (x) the
acceleration of the Equipment Notes under any Indenture and (y) the bankruptcy
or insolvency of Continental, without the consent of each Trustee, (a) no
Aircraft subject to the lien of such Indenture or such Equipment Notes may be
sold, if the net proceeds from such sale would be less than the Minimum Sale
Price for such Aircraft or such Equipment Notes, and (b) with respect to any
Leased Aircraft, the amount and payment dates of rentals payable by Continental
under the Lease for such Leased Aircraft may not be adjusted, if, as a result of
such adjustment, the discounted present value of all such rentals would be less
than 75% of the discounted present value of the rentals payable by Continental
under such Lease before giving effect to such adjustment, in each case, using
the weighted average interest rate of the Equipment Notes issued under such
Indenture as the discount rate.
 
     The Equipment Notes are not cross-collateralized and, consequently,
proceeds from the sale of an Aircraft in excess of the amounts due on Equipment
Notes related to such Aircraft will not be available to cover losses, if any, on
any other Equipment Notes.
 
  Owner Participant; Revisions to Agreements
 
     Continental has obtained commitments of certain companies to act as the
Owner Participant with respect to the leveraged leases for all of the Aircraft
and, in certain cases, is seeking alternative commitments on more favorable
terms. The existing commitments are subject to satisfaction of certain
conditions with respect to each Aircraft and, in certain cases, Continental may
elect to terminate such commitments with respect to certain Aircraft.
Accordingly, Continental may select one or more other Owner Participants for
some or all of such Aircraft or finance such Aircraft as Owned Aircraft rather
than Leased Aircraft. Such Owner Participants may request revisions to the forms
of the Participation Agreement, the Lease and the Leased Aircraft Indenture that
are contemplated by the Note Purchase Agreement, so that the terms of such
agreements applicable to any particular Leased Aircraft may differ from the
description of such agreements contained in this Prospectus. However, under the
Note Purchase Agreement, the terms of such agreements are required to (i)
contain the Mandatory Document Terms and (ii) not vary the Mandatory Economic
Terms. In addition, Continental is obligated (i) to certify to the Trustee that
any such modifications do not materially and adversely affect the
Certificateholders and (ii) to obtain written confirmation from each Rating
Agency that the use of versions of such agreements modified in any material
respect will not result in a withdrawal, suspension or downgrading of the rating
of any Class of Certificates. See "Description of the New
Certificates -- Obligation to Purchase Equipment Notes".
 
     Each Owner Participant will have the right to sell, assign or otherwise
transfer its interests as Owner Participant in any of such leveraged leases,
subject to the terms and conditions of the relevant Participation Agreement and
related documents.
 
  Unused Deposits
 
     The Trustees' obligations to purchase the Equipment Notes issued with
respect to each Aircraft are subject to satisfaction of certain conditions at
the time of delivery, as set forth in the Note Purchase Agreement. See
"Description of the New Certificates -- Obligation to Purchase Equipment Notes".
Since the Aircraft are scheduled for delivery from time to time during the
Delivery Period, no assurance can be given that all such conditions will be
satisfied at the time of delivery for each Aircraft. Moreover, since the
Aircraft will be newly manufactured, their delivery as scheduled is subject to
delays in the manufacturing process and to the manufacturer's right to postpone
deliveries under its agreement with Continental. See "Description of the
Aircraft and Appraisals -- Deliveries of Aircraft". Depending on the
circumstances of the financing of
 
                                       41

<PAGE>   43
 
each Aircraft, the maximum aggregate principal amount of Equipment Notes may not
be issued. In addition, Continental's obligations to Boeing relating to the
ordered aircraft and under the Predelivery Deposit Revolver are secured by
Continental's purchase agreement with Boeing relating to the Aircraft.
Accordingly, if Continental should breach its obligations secured thereby, the
secured parties could exercise remedies and prevent delivery of Aircraft to
Continental. If any funds remain as Deposits with respect to any Trust at the
Delivery Period Termination Date, they will be withdrawn by the Escrow Agent and
distributed, with accrued and unpaid interest thereon, plus a premium payable by
Continental (i) in the case of the holders of the Certificates issued by the
Class A Trust, the Class B Trust and the Class C-I Trust, equal to the Deposit
Make-Whole Premium with respect to the aggregate amount of funds so distributed
(excluding accrued interest) and (ii) in the case of the holders of the
Certificates issued by the Class C-II Trust, equal to the Class C-II Premium
with respect to such aggregate amount, to the Certificateholders of such Trust.
See "Description of the Deposit Agreements -- Unused Deposits".
 
  Special Distributions to Class C-II Certificateholders
 
     The Deposits relating to the Class C-I Trust will be utilized to purchase
Series C Equipment Notes prior to the utilization of Deposits relating to Class
C-II Trust. If any funds remain as Deposits with respect to any Trust at the
Delivery Period Termination Date, they will be withdrawn by the Escrow Agent and
distributed, together with accrued and unpaid interest thereon and a premium, to
the Certificateholders of such Trust. See "--Unused Deposits". As a result,
there is a greater likelihood that a special distribution that will reduce the
Pool Balance of the Class C-II Certificates will be required than with respect
to the other Certificates. In addition, to the extent that the Class C-II Trust
acquires Series C Equipment Notes, such Equipment Notes will relate to fewer
Aircraft than the Equipment Notes held by the other Trusts. Accordingly, if
Continental exercises its rights under a Lease or Owned Aircraft Indenture to
cause the Series C Equipment Notes held by the Class C-II Trust to be redeemed,
such as upon termination of the Lease for obsolescence, refunding of such
Equipment Notes or payment of stipulated loss value upon the occurrence of an
event of loss with respect to the Aircraft that secures such Equipment Notes,
the resulting special distribution with respect to the Class C-II Certificates
will reduce the Pool Balance of the Class C-II Trust by a greater percentage
than the reduction that would be applicable to the other Trusts had such an
event occurred with respect to the same number of Aircraft securing Equipment
Notes held by the other Trusts. See "Description of the Equipment
Notes -- Redemption".
 
  Withholding Tax on Foreign Investors
 
     Because of the possibility that the Original Trusts may be treated for
United States federal income tax purposes as partnerships engaged in U.S. trades
or businesses, tax will be withheld from distributions with respect to the
Original Trusts and the Deposits to foreign persons who are beneficial owners of
Certificates. Each foreign investor, by accepting an interest in a Certificate,
will agree to indemnify the Original Trustee, the Original Trust, and the Paying
Agent against any liability for improper failure to withhold tax. Although
foreign investors can file United States federal income tax returns seeking
refunds of any withheld taxes, there is no assurance that such refund claims
will be successful. Even if such refund claims are successful, the refund
process will result in a delay in the receipt of cash by foreign investors.
 
  Absence of an Established Market
 
     Prior to the Exchange Offer, there has been no public market for the
Certificates and neither Continental nor any Trust intends to apply for listing
of the Certificates on any national securities exchange or otherwise. Certain of
the Initial Purchasers have previously made a market in the Old Certificates and
Continental has been advised by the Initial Purchasers that one or more of them
presently intend to make a market in the New Certificates, as permitted by
applicable laws and regulations, after consummation of the Exchange Offer. None
of the Initial Purchasers is obligated, however, to make a market in the Old
Certificates or the New Certificates, and any such market making activity may be
discontinued at any time without notice at the sole discretion of each Initial
Purchaser. There can be no assurance as to the liquidity of the public market
for the Certificates or that any active public market for the Certificates will
develop or continue. If an active public
 
                                       42

<PAGE>   44
 
market does not develop or continue, the market price and liquidity of the
Certificates may be adversely affected.
 
                                USE OF PROCEEDS
 
     There will be no cash proceeds payable to Continental from the issuance of
the New Certificates pursuant to the Exchange Offer. The proceeds from the sale
of the Old Certificates issued by each Trust were deposited with the Depositary
on behalf of the Escrow Agent for the benefit of the Certificateholders of such
Trust. Such proceeds will be used to purchase Equipment Notes during the
Delivery Period issued, at Continental's election, either (i) by the Owner
Trustees to finance the purchase of the Leased Aircraft or (ii) by Continental
to finance the purchase of the Owned Aircraft. Prior to the date of this
Prospectus, two Boeing 757-224 Aircraft have been delivered, and funds were
withdrawn from the Deposits to purchase Equipment Notes in respect of such
Aircraft in the aggregate principal amount of $74.4 million.
 
                      RATIOS OF EARNINGS TO FIXED CHARGES
 
     The following information for the year ended December 31, 1992 and for the
period January 1, 1993 through April 27, 1993 relates to Continental's
predecessor, Holdings. Information for the period April 28, 1993 through
December 31, 1993, for the years ended December 31, 1994, 1995 and 1996 and for
the three months ended March 31, 1996 and 1997 relates to Continental. The
information as to Continental has not been prepared on a consistent basis of
accounting with the information as to Holdings due to Continental's adoption,
effective April 27, 1993, of fresh start reporting in accordance with the
American Institute of Certified Public Accountants' Statement of Position
90-7 -- "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7").
 
     For the year ended December 31, 1992, for the periods January 1, 1993
through April 27, 1993 and April 28, 1993 through December 31, 1993 and for the
year ended December 31, 1994, earnings were not sufficient to cover fixed
charges. Additional earnings of $131 million, $979 million, $60 million and $667
million would have been required to achieve ratios of earnings to fixed charges
of 1.0. The ratio of earnings to fixed charges for the years ended December 31,
1995 and December 31, 1996 was 1.53 and 1.81, respectively. The ratio of
earnings to fixed charges for the three months ended March 31, 1996 and March
31, 1997 was 1.70 and 1.88, respectively. For purposes of calculating this
ratio, earnings consist of earnings before taxes, minority interest and
extraordinary items plus interest expense (net of capitalized interest), the
portion of rental expense deemed representative of the interest expense and
amortization of previously capitalized interest. Fixed charges consist of
interest expense and the portion of rental expense representative of interest
expense.
 
                               THE EXCHANGE OFFER
 
     The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and reference is made to the
provisions of the Registration Rights Agreement, which has been filed as an
exhibit to the Registration Statement and a copy of which is available as set
forth under the heading "Available Information".
 
TERMS OF THE EXCHANGE OFFER
 
  General
 
     In connection with the issuance of the Old Certificates pursuant to a
Purchase Agreement dated as of March 12, 1997, between the Company, the Trusts,
the Depositary and the Initial Purchasers, the Initial Purchasers and their
respective assignees became entitled to the benefits of the Registration Rights
Agreement.
 
     Under the Registration Rights Agreement, the Company is obligated to use
its best efforts to (i) file the Registration Statement of which this Prospectus
is a part for a registered exchange offer with respect to an
 
                                       43

<PAGE>   45
 
issue of new certificates identical in all material respects to the Old
Certificates within 120 days after March 21, 1997, the Issuance Date, (ii) cause
the Registration Statement to become effective under the Securities Act within
180 days after the Issuance Date, (iii) cause the Registration Statement to
remain effective until the closing of the Exchange Offer and (iv) consummate the
Exchange Offer within 210 calendar days after the Issuance Date. The Company
will keep the Exchange Offer open for a period of not less than 30 days. The
Exchange Offer being made hereby, if commenced and consummated within the time
periods described in this paragraph, will satisfy those requirements under the
Registration Rights Agreement.
 
     Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal (which together constitute the Exchange Offer),
all Old Certificates validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date will be accepted for exchange. New
Certificates of the same class will be issued in exchange for an equal face
amount of outstanding Old Certificates accepted in the Exchange Offer. Old
Certificates may be tendered only in integral multiples of $1,000. This
Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders as of [          ]. The Exchange Offer is not conditioned
upon any minimum principal amount of Old Certificates being tendered for
exchange. However, the obligation to accept Old Certificates for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
herein under "-- Conditions".
 
     Old Certificates shall be deemed to have been accepted as validly tendered
when, as and if the Trustee has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Certificates for the purposes of receiving the New Certificates and
delivering New Certificates to such holders.
 
     Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, including the Exchange Offer
No-Action Letters, the Company believes that the New Certificates issued
pursuant to the Exchange Offer in exchange for Old Certificates may be offered
for resale, resold or otherwise transferred by holders thereof (other than a
broker-dealer who acquired such Old Certificates directly from the Trustee for
resale pursuant to Rule 144A under the Securities Act or any other available
exemption under the Securities Act or any holder that is an "affiliate" of the
Company as defined under Rule 405 of the Securities Act), without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such New Certificates are acquired in the ordinary course of such
holders' business and such holders are not engaged in, and do not intend to
engage in, a distribution of such New Certificates and have no arrangement with
any person participate in a distribution of such New Certificates. By tendering
the Old Certificates in exchange for New Certificates, each holder, other than a
broker-dealer, will represent to the Company that: (i) it is not an affiliate of
the Company (as defined under Rule 405 of the Securities Act) nor a
broker-dealer tendering Old Certificates acquired directly from the Company for
its own account; (ii) any New Certificates to be received by it will be acquired
in the ordinary course of its business; and (iii) it is not engaged in, and does
not intend to engage in, a distribution of such New Certificates and has no
arrangement or understanding to participate in a distribution of the New
Certificates. If a holder of Old Certificates is engaged in or intends to engage
in a distribution of the New Certificates or has any arrangement or
understanding with respect to the distribution of the New Certificates to be
acquired pursuant to the Exchange Offer, such holder may not rely on the
applicable interpretations of the staff of the Commission and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each Participating
Broker-Dealer that receives New Certificates for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Certificates. The Letter of Transmittal states that
by so acknowledging and by delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of New Certificates received in exchange for Old
Certificates where such Old Certificates were acquired by such Participating
Broker-Dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date and
ending on the close of business 180 days after the Expiration Date, it will make
this Prospectus available to any Participating Broker-Dealer for use in
connection with any such resale. See "Plan of Distribution."
 
                                       44

<PAGE>   46
 
     In the event that any changes in law or the applicable interpretations of
the staff of the Commission do not permit Continental to effect the Exchange
Offer, if the Registration Statement is not declared effective within 180
calendar days after the Issuance Date under certain circumstances or the
Exchange Offer is not consummated within 210 days after the Issuance Date under
certain other circumstances, at the request of a holder not eligible to
participate in the Exchange Offer or under certain other circumstances described
in the Registration Rights Agreement, Continental will, in lieu of effecting the
registration of the New Certificates pursuant to the Registration Statement and
at no cost to the holders of Old Certificates, (a) as promptly as practicable
file with the Commission a shelf registration statement (the "Shelf Registration
Statement") covering resales of the Old Certificates, (b) use its best efforts
to cause the Shelf Registration Statement to be declared effective under the
Securities Act by the 180th calendar day after the Issuance Date and (c) use its
best efforts to keep effective the Shelf Registration Statement for a period of
two years after its effective date (or for such shorter period as shall end when
all of the Old Certificates covered by the Shelf Registration Statement have
been sold pursuant thereto or may be freely sold pursuant to Rule 144 under the
Securities Act).
 
     In the event that neither the consummation of the Exchange Offer nor the
declaration by the Commission of the Shelf Registration Statement to be
effective (each a "Registration Event") occurs on or prior to the 210th calendar
day following the Issuance Date, the interest rate per annum borne by the
Equipment Notes and Deposits shall be increased by 0.50% from and including such
210th day to but excluding the earlier of (i) the date on which a Registration
Event occurs and (ii) the date on which all of the Certificates otherwise become
transferable by Certificateholders (other than affiliates or former affiliates
of Continental) without further registration under the Securities Act. In the
event that the Shelf Registration Statement ceases to be effective at any time
during the period specified by the Registration Rights Agreement for more than
60 days, whether or not consecutive, during any 12-month period, the interest
rate per annum borne by the Equipment Notes and the Deposits shall be increased
by 0.50% from the 61st day of the applicable 12-month period such Shelf
Registration Statement ceases to be effective until such time as the Shelf
Registration Statement again becomes effective (or, if earlier, the end of such
period specified by the Registration Rights Agreement).
 
     Upon consummation of the Exchange Offer, subject to certain exceptions,
holders of Old Certificates who do not exchange their Old Certificates for New
Certificates in the Exchange Offer will no longer be entitled to registration
rights and will not be able to offer or sell their Old Certificates, unless such
Old Certificates are subsequently registered under the Securities Act (which,
subject to certain limited exceptions, the Company will have no obligation to
do), except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. See "Risk
Factors -- Risk Factors Relating to the Certificates -- Consequences of Failure
to Exchange".
 
  Expiration Date; Extensions; Amendments; Termination
 
     The term "Expiration Date" shall mean [          ] (30 calendar days
following the commencement of the Exchange Offer), unless the Company, in its
sole discretion, extends the Exchange Offer, in which case the term "Expiration
Date" shall mean the latest date to which the Exchange Offer is extended.
Notwithstanding any extension of the Exchange Offer, if the Exchange Offer is
not consummated by October 17, 1997, the interest rate borne by the Equipment
Notes and Deposits is subject to increase. See "-- General".
 
     In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Certificates an announcement thereof, each prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
 
     The Company reserves the right (i) to delay acceptance of any Old
Certificates, to extend the Exchange Offer or to terminate the Exchange Offer
and not permit acceptance of Old Certificates not previously accepted if any of
the conditions set forth herein under "-- Conditions" shall have occurred and
shall not have been waived by the Company, by giving oral or written notice of
such delay, extension or termination to the
 
                                       45

<PAGE>   47
 
Exchange Agent, or (ii) to amend the terms of the Exchange Offer in any manner
deemed by it to be advantageous to the holders of the Old Certificates. Any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by oral or written notice thereof to the Exchange Agent.
If the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, the Company will promptly disclose such amendment
in a manner reasonably calculated to inform the holders of the Old Certificates
of such amendment.
 
     Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
 
INTEREST ON THE NEW CERTIFICATES
 
     The New Certificates will accrue interest at the applicable per annum rate
for such Trust set forth on the cover page of this Prospectus, from the Issuance
Date. Interest on the New Certificates is payable on April 1 and October 1 of
each year commencing upon the consummation of the Exchange Offer, subject to the
terms of the Intercreditor Agreement.
 
PROCEDURES FOR TENDERING
 
     To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either (i) certificates for such Old
Certificates must be received by the Exchange Agent along with the Letter of
Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Certificates, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date or
(iii) the holder must comply with the guaranteed delivery procedures described
below. THE METHOD OF DELIVERY OF OLD CERTIFICATES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD CERTIFICATES
SHOULD BE SENT TO THE COMPANY. Delivery of all documents must be made to the
Exchange Agent at its address set forth below. Holders may also request their
respective brokers, dealers, commercial banks, trust companies or nominees to
effect such tender for such holders.
 
     The tender by a holder of Old Certificates will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal.
 
     Only a holder of Old Certificates may tender such Old Certificates in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Old Certificates are registered on the books of the Company
or any other person who has obtained a properly completed bond power from the
registered holder.
 
     Any beneficial owner whose Old Certificates are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Certificates, either
make appropriate arrangements to register ownership of the Old Certificates in
such owner's name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
 
                                       46

<PAGE>   48
 
     Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution") unless the Old
Certificates tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
 
     If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Certificates listed therein, such Old Certificates
must be endorsed or accompanied by bond powers and a proxy which authorizes such
person to tender the Old Certificates on behalf of the registered holder, in
each case as the name of the registered holder or holders appears on the Old
Certificates.
 
     If the Letter of Transmittal or any Old Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
 
     All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Old Certificates will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Certificates not properly tendered or any Old Certificates the acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the absolute right to waive any irregularities or conditions of
tender as to particular Old Certificates. The Company's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Old Certificates
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old
Certificates, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Certificates will not be deemed to have been made
until such irregularities have been cured or waived. Any Old Certificates
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost to such holder by the Exchange Agent to the tendering holders of
Old Certificates, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
 
     In addition, the Company reserves the right in its sole discretion, subject
to the provisions of the Pass Through Trust Agreements, to (i) purchase or make
offers for any Old Certificates that remain outstanding subsequent to the
Expiration Date or, as set forth under "-- Conditions," to terminate the
Exchange Offer in accordance with the terms of the Registration Rights Agreement
and (ii) to the extent permitted by applicable law, purchase Old Certificates in
the open market, in privately negotiated transactions or otherwise. The terms of
any such purchases or offers could differ from the terms of the Exchange Offer.
 
ACCEPTANCE OF OLD CERTIFICATES FOR EXCHANGE; DELIVERY OF NEW CERTIFICATES
 
     Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Old Certificates properly tendered will be accepted, promptly after the
Expiration Date, and the New Certificates will be issued promptly after
acceptance of the Old Certificates. See "-- Conditions" below. For purposes of
the Exchange Offer, Old Certificates shall be deemed to have been accepted for
exchange when, as and if the Company has given oral or written notice thereof to
the Exchange Agent.
 
     In all cases, issuance of New Certificates for Old Certificates that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Old Certificates
or a timely Book-Entry Confirmation of such Old Certificates into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents. If any
tendered Old Certificates are not accepted for any reason set forth in the
 
                                       47

<PAGE>   49
 
terms and conditions of the Exchange Offer or if Old Certificates are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or nonexchanged Old Certificates will be returned without expense to
the tendering holder thereof (or, in the case of Old Certificates tendered by
book-entry transfer procedures described below, such nonexchanged Old
Certificates will be credited to an account maintained with such Book-Entry
Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
 
BOOK-ENTRY TRANSFER
 
     The Exchange Agent will make a request to establish an account with respect
to the Old Certificates at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Certificates by causing
the Book-Entry Transfer Facility to transfer such Old Certificates into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Certificates may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "-- Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
 
GUARANTEED DELIVERY PROCEDURES
 
     If a registered holder of the Old Certificates desires to tender such Old
Certificates, and the Old Certificates are not immediately available, or time
will not permit such holder's Old Certificates or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedures for book-
entry transfer cannot be completed on a timely basis, a tender may be effected
if (i) the tender is made through an Eligible Institution, (ii) prior to the
Expiration Date, the Exchange Agent receives from such Eligible Institution a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) and Notice of Guaranteed Delivery, substantially in the form provided
by the Company (by facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Certificates and the amount of Old
Certificates tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Certificates, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent and (iii) the certificates for all
physically tendered Old Certificates, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the Letter of Transmittal are received by the Exchange Agent within three NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
 
WITHDRAWAL OF TENDERS
 
     Tenders of Old Certificates may be withdrawn at any time prior to 5:00
p.m., New York City time on the Expiration Date.
 
     For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date at one of the addresses set forth below under "-- Exchange
Agent". Any such notice of withdrawal must specify the name of the person having
tendered the Old Certificates to be withdrawn, identify the Old Certificates to
be withdrawn (including the principal amount of such Old Certificates) and
(where certificates for Old Certificates have been transmitted) specify the name
in which such Old Certificates are registered, if different from that of the
withdrawing holder. If certificates for Old Certificates have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Old Certificates have been tendered pursuant to the
 
                                       48

<PAGE>   50
 
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Old Certificates and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Old Certificates so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the Exchange Offer. Any Old Certificates which have
been tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder (or, in the case of
Old Certificates tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Certificates will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Certificates) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Certificates may be retendered by
following one of the procedures described under "-- Procedures for Tendering"
and "-- Book-Entry Transfer" above at any time on or prior to the Expiration
Date.
 
CONDITIONS
 
     Notwithstanding any other term of the Exchange Offer, Old Certificates will
not be required to be accepted for exchange, nor will New Certificates be issued
in exchange for, any Old Certificates, and the Company may terminate or amend
the Exchange Offer as provided herein before the acceptance of such Old
Certificates, if because of any change in law, or applicable interpretations
thereof by the Commission, the Company determines that it is not permitted to
effect the Exchange Offer, and the Company has no obligation to, and will not
knowingly, permit acceptance of tenders of Old Certificates from affiliates of
the Company (within the meaning of Rule 405 under the Securities Act) or from
any other holder or holders who are not eligible to participate in the Exchange
Offer under applicable law or interpretations thereof by the Commission, or if
the New Certificates to be received by such holder or holders of Old
Certificates in the Exchange Offer, upon receipt, will not be tradable by such
holder without restriction under the Securities Act and the Exchange Act and
without material restrictions under the "blue sky" or securities laws of
substantially all of the states of the United States.
 
EXCHANGE AGENT
 
     Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
 

<TABLE>
<S>                                         <C>
     By Mail or Overnight Delivery:                         By Hand:
        Wilmington Trust Company                    Wilmington Trust Company
        1100 North Market Street              1105 North Market Street, 1st Floor
    Wilmington, Delaware 19890-0001                Wilmington, Delaware 19890
         Attention: Jill Rylee               Attention: Corporate Trust Operations
</TABLE>

 
                            Facsimile Transmission:
                                 (302) 651-1079
 
                             Confirm by Telephone:
                                 (302) 651-8869
                                   Jill Rylee
 
FEES AND EXPENSES
 
     The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy, electronic mail or in person by officers
and regular employees of the Company.
 
                                       49

<PAGE>   51
 
     The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of the Prospectus and related documents to the beneficial
owners of the Old Certificates, and in handling or forwarding tenders for
exchange.
 
     The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company, including fees and expenses of the Exchange Agent and
Trustee and accounting, legal, printing and related fees and expenses.
 
     The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Certificates pursuant to the Exchange Offer. If, however, certificates
representing New Certificates or Old Certificates for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered holder
of the Old Certificates tendered, or if tendered Old Certificates are registered
in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Certificates pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
 
                      DESCRIPTION OF THE NEW CERTIFICATES
 
     The New Certificates will be issued pursuant to four separate Pass Through
Trust Agreements. The following summary describes certain terms of the
Certificates, the Deposits and the Pass Through Trust Agreements. The summary
does not purport to be complete, and reference is made to all of the provisions
of the Pass Through Trust Agreements, the Deposit Agreements, the Escrow
Agreements and the Intercreditor Agreement, which have been filed as exhibits to
the Registration Statement and copies of which are available as set forth under
the heading "Available Information". Except as otherwise indicated, the
following summary relates to each of the Trusts and the Certificates issued by
each Trust. The terms and conditions governing each of the Trusts are
substantially the same, except as described under "-- Subordination" below and
except that the principal amount and scheduled principal repayments of the
Equipment Notes held by each Trust and the interest rate and maturity date of
the Equipment Notes held by each of the Class A Trust, the Class B Trust and the
Class C Trusts will differ. The references to Sections in parentheses in the
following summary are to the relevant Sections of the Pass Through Trust
Agreements unless otherwise indicated.
 
GENERAL
 
     The New Certificates of each Trust will be issued in fully registered form
only and will be subject to the provisions described below under "-- Book Entry;
Delivery and Form". (Section 3.01) Each New Certificate will represent a
fractional undivided interest in the Trust created by the Pass Through Trust
Agreement pursuant to which such Certificate is issued. (Section 3.01) The Trust
Property of each Trust consists of (i) the rights of such Trust to acquire
Equipment Notes under the Note Purchase Agreement issued, at Continental's
election in connection with the delivery of each Aircraft during the Delivery
Period, either (a) on a nonrecourse basis by an Owner Trustee in each separate
leveraged lease transaction with respect to each Leased Aircraft to finance the
purchase of such Leased Aircraft by the Owner Trustee, in which case the
applicable Leased Aircraft will be leased to Continental, or (b) on a recourse
basis by Continental in connection with each separate secured loan transaction
with respect to each Owned Aircraft, if any, to finance the purchase of such
Owned Aircraft by Continental, (ii) Equipment Notes acquired under the Note
Purchase Agreement (consisting, as of the date of this Prospectus, of $74.4
million principal amount issued with respect to two Boeing 757-224 Aircraft in
leveraged lease transactions), (iii) the rights of such Trust under the
applicable Escrow Agreement (including the right to request the Escrow Agent to
withdraw from
 
                                       50

<PAGE>   52
 
the Depositary funds sufficient to enable such Trust to purchase Equipment Notes
on the delivery of each Aircraft during the Delivery Period), (iv) the rights of
such Trust under the Intercreditor Agreement (including all monies receivable in
respect of such rights), (v) all monies receivable under the Liquidity Facility
for such Trust and (vi) funds from time to time deposited with the Trustee in
accounts relating to such Trust. The New Certificates represent pro rata shares
of the Equipment Notes and other property held in the related Trust and will be
issued only in minimum denominations of $1,000 and integral multiples thereof.
(Section 3.01).
 
     On the Transfer Date, each of the Original Trusts will transfer and assign
all of its assets and rights to a substantially identical Successor Trust, and
the New Trustee will assume the obligations of the related Original Trustee
under each transaction document to which such Original Trustee was a party. Upon
the effectiveness of such transfer, assignment and assumption, each of the
Original Trusts will be liquidated and each of the Certificates will represent
the same interest in the Successor Trust as it represented in the Original Trust
immediately prior to such transfer, assignment and assumption. Unless the
context otherwise requires, all references in this Prospectus to the Trusts, the
Trustees, the Pass Through Trust Agreements and similar terms shall be
applicable to the Original Trusts until the effectiveness of such transfer,
assignment and assumption and thereafter shall be applicable with respect to the
Successor Trusts. See "-- Liquidation of Original Trusts".
 
     The Certificates represent interests in the respective Trusts, and all
payments and distributions thereon will be made only from the Trust Property of
the related Trust. (Section 3.11) The Certificates do not represent an interest
in or obligation of Continental, the Trustees, any of the Loan Trustees or Owner
Trustees in their individual capacities, any Owner Participant, or any affiliate
of any thereof.
 
     Pursuant to the Escrow Agreement applicable to each Trust, the
Certificateholders of such Trust as holders of the Escrow Receipts affixed to
each Certificate are entitled to certain rights with respect to the Deposits
relating to such Trust. Accordingly, any transfer of a Certificate will have the
effect of transferring the corresponding rights with respect to the Deposits,
and rights with respect to the Deposits may not be separately transferred by
Certificateholders. Rights with respect to the Deposits and the Escrow Agreement
relating to a Trust, except for the right to request withdrawals for the
purchase of Equipment Notes, do not constitute Trust Property of such Trust.
 
SUBORDINATION
 
     Pursuant to the Intercreditor Agreement to which the Trustees, the
Subordination Agent and the Liquidity Providers are parties, on each
Distribution Date, so long as no Triggering Event shall have occurred (whether
or not continuing), all payments received by the Subordination Agent in respect
of Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) payment of certain Liquidity
Obligations to the Liquidity Providers; (2) payment of Expected Distributions to
the holders of Class A Certificates; (3) payment of Expected Distributions to
the holders of Class B Certificates; (4) payment of Expected Distributions to
the holders of Class C Certificates; and (5) payment of certain fees and
expenses of the Subordination Agent and the Trustees.
 
     In addition, upon the occurrence of a Triggering Event and at all times
thereafter, all payments received by the Subordination Agent in respect of the
Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) to reimburse the
Subordination Agent, the Trustees and certain other parties for the payment of
the Administration Expenses and to the Liquidity Providers in payment of the
Liquidity Obligations; (2) to the holders of Class A Certificates in payment of
Adjusted Expected Distributions; (3) to the holders of Class B Certificates in
payment of Adjusted Expected Distributions; and (4) to the holders of Class C
Certificates in payment of Adjusted Expected Distributions.
 
     The priority of distributions after a Triggering Event will have the effect
in certain circumstances of requiring the distribution to more senior Classes of
Certificates of payments received in respect of one or more junior series of
Equipment Notes. If this should occur, the interest accruing on the remaining
Equipment Notes would in the aggregate be less than the interest accruing on the
remaining Certificates because such Certificates include a relatively greater
proportion of junior Classes with relatively higher interest rates. As a
 
                                       51

<PAGE>   53
 
result of such possible interest shortfalls, the holders of one or more junior
Classes of Certificates may not receive the full amount due them after a
Triggering Event even if all Equipment Notes are eventually paid in full.
 
     Payments in respect of the Deposits relating to a Trust are not subject to
the subordination provisions of the Intercreditor Agreement.
 
PAYMENTS AND DISTRIBUTIONS
 
     Payments of interest on the Deposits with respect to each Trust and
payments of principal, premium (if any) and interest on the Equipment Notes or
with respect to other Trust Property held in each Trust will be distributed by
the Paying Agent (in the case of the Deposits) or by the Trustee (in the case of
Trust Property of such Trust) to Certificateholders of such Trust on the date
receipt of such payment is confirmed, except in the case of certain types of
Special Payments.
 
     The Deposits held with respect to each Trust and the Equipment Notes held
in each Trust will accrue interest at the applicable rate per annum for
Certificates to be issued by such Trust set forth on the cover page of this
Prospectus, payable on April 1 and October 1 of each year, commencing on October
1, 1997 (or, in the case of Equipment Notes issued after such date, commencing
with the first such date to occur after initial issuance thereof). Such interest
payments will be distributed to Certificateholders of such Trust on each such
date until the final Distribution Date for such Trust, subject in the case of
payments on the Equipment Notes to the Intercreditor Agreement. Interest is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The interest rates for the Deposits and the Equipment Notes are subject to
change under certain circumstances. See "The Exchange Offer -- Terms of the
Exchange Offer -- General". Payments of interest applicable to the Certificates
issued by each of the Trusts are supported by two separate Liquidity Facilities
provided by the Liquidity Providers for the benefit of the holders of such
Certificates in an aggregate amount sufficient to pay interest thereon at the
Stated Interest Rate for such Trust on up to three successive Regular
Distribution Dates (without regard to any future payments of principal on such
Certificates), except that the Liquidity Facilities with respect to such Trust
do not cover interest payable by the Depositary on the Deposits relating to such
Trust. The Liquidity Facilities for any Class of Certificates do not provide for
drawings thereunder to pay for principal of or premium on the Certificates of
such Class, any interest on the Certificates of such Class in excess of the
Stated Interest Rates, or, notwithstanding the subordination provisions of the
Intercreditor Agreement, principal of or interest or premium on the Certificates
of any other Class. Therefore, only the holders of the Certificates to be issued
by a particular Trust will be entitled to receive and retain the proceeds of
drawings under the Liquidity Facilities for such Trust. See "Description of the
Liquidity Facilities".
 
     Payments of principal of the Equipment Notes held in each Trust are
scheduled to be received by the Trustee on April 1 and October 1 in certain
years depending upon the terms of the Equipment Notes held in such Trust,
commencing April 1, 1998. Scheduled payments of interest on the Deposits and of
interest or principal on the Equipment Notes are herein referred to as
"Scheduled Payments", and April 1 and October 1 of each year are herein referred
to as "Regular Distribution Dates". See "Description of the Equipment
Notes -- Principal and Interest Payments". The "Final Maturity Date" for the
Class A Certificates is October 1, 2016, for the Class B Certificates is October
1, 2014 and for the Class C Certificates is October 1, 2008.
 
     The Paying Agent with respect to each Escrow Agreement will distribute on
each Regular Distribution Date to the Certificateholders of the Trust to which
such Escrow Agreement relates all Scheduled Payments received in respect of the
related Deposits, the receipt of which is confirmed by the Paying Agent on such
Regular Distribution Date. The Trustee of each Trust will distribute, subject to
the Intercreditor Agreement, on each Regular Distribution Date to the
Certificateholders of such Trust all Scheduled Payments received in respect of
Equipment Notes held on behalf of such Trust, the receipt of which is confirmed
by the Trustee on such Regular Distribution Date. Each Certificateholder of each
Trust will be entitled to receive a pro rata share of any distribution in
respect of Scheduled Payments of interest on the Deposits relating to such Trust
and, subject to the Intercreditor Agreement, of principal or interest on
Equipment Notes held on behalf of
 
                                       52

<PAGE>   54
 
such Trust. Each such distribution of Scheduled Payments will be made by the
applicable Paying Agent or Trustee to the Certificateholders of record of the
relevant Trust on the Record Date applicable to such Scheduled Payment subject
to certain exceptions. (Sections 4.01 and 4.02, and Section 2.03 of the Escrow
Agreement) If a Scheduled Payment is not received by the applicable Paying Agent
or Trustee on a Regular Distribution Date but is received within five days
thereafter, it will be distributed to such holders of record on the date
received. If it is received after such five-day period, it will be treated as a
Special Payment and distributed as described below.
 
     Any payment in respect of, or any proceeds of, any Equipment Note or the
Trust Indenture Estate under (and as defined in) each Indenture other than a
Scheduled Payment (each, a "Special Payment") will be scheduled to be
distributed on, in the case of an early redemption or a purchase of the
Equipment Notes relating to one or more Aircraft, the date of such early
redemption or purchase (which shall be a Business Day), and otherwise on the
Business Day specified for distribution of such Special Payment pursuant to a
notice delivered by each Trustee as soon as practicable after the Trustee has
received funds for such Special Payment (each a "Special Distribution Date"),
subject to the Intercreditor Agreement. Any unused Deposits to be distributed
after the Delivery Period Termination Date or the occurrence of a Triggering
Event, together with accrued and unpaid interest thereon and the premium payable
by Continental (each, also a "Special Payment"), will be scheduled to be
distributed on a date 35 days after the Paying Agent has received notice of the
event requiring such distribution (also a "Special Distribution Date") unless
such date is within 10 days before or after a Regular Distribution Date, in
which case such Special Payment shall be made on such Regular Distribution Date.
Each Paying Agent, in the case of the Deposits, and each Trustee, in the case of
Trust Property or the premium payable by Continental in connection with certain
distributions of unused Deposits, will mail a notice to the Certificateholders
of the applicable Trust stating the scheduled Special Distribution Date, the
related Record Date, the amount of the Special Payment and the reason for the
Special Payment. In the case of a redemption or purchase of the Equipment Notes
held in the related Trust or any distribution of unused Deposits after the
Delivery Period Termination Date or the occurrence of a Triggering Event, such
notice will be mailed not less than 20 days prior to the date such Special
Payment is scheduled to be distributed, and in the case of any other Special
Payment, such notice will be mailed as soon as practicable after the Trustee has
confirmed that it has received funds for such Special Payment. (Section 4.02(c)
and Section 2.03 of the Escrow Agreement) Each distribution of a Special
Payment, other than a final distribution, on a Special Distribution Date for any
Trust will be made by the Paying Agent or the Trustee, as applicable, to the
Certificateholders of record of such Trust on the Record Date applicable to such
Special Payment. (Section 4.02(b) and Section 2.03 of the Escrow Agreement) See
"-- Indenture Defaults and Certain Rights Upon an Indenture Default" and
"Description of the Equipment Notes -- Redemption".
 
     Each Pass Through Trust Agreement requires that the Trustee establish and
maintain, for the related Trust and for the benefit of the Certificateholders of
such Trust, one or more accounts (the "Certificate Account") for the deposit of
payments representing Scheduled Payments received by such Trustee. Each Pass
Through Trust Agreement also requires that the Trustee establish and maintain,
for the related Trust and for the benefit of the Certificateholders of such
Trust, one or more accounts (the "Special Payments Account") for the deposit of
payments representing Special Payments received by such Trustee, which shall be
non-interest bearing except in certain circumstances where the Trustee may
invest amounts in such account in certain permitted investments. Pursuant to the
terms of each Pass Through Trust Agreement, the Trustee is required to deposit
any Scheduled Payments relating to the applicable Trust received by it in the
Certificate Account of such Trust and to deposit any Special Payments so
received by it in the Special Payments Account of such Trust. (Section 4.01) All
amounts so deposited will be distributed by the Trustee on a Regular
Distribution Date or a Special Distribution Date, as appropriate. (Section 4.02)
 
     Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the Receiptholders, one or more accounts (the
"Paying Agent Account"), which shall be non-interest bearing. Pursuant to the
terms of the Escrow Agreement, the Paying Agent is required to deposit interest
on Deposits relating to such Trust and any unused Deposits withdrawn by the
Escrow Agent in the Paying Agent Account. All amounts so deposited will be
distributed by the Paying Agent on a Regular Distribution Date or Special
Distribution Date, as appropriate.
 
                                       53

<PAGE>   55
 
     The final distribution for each Trust will be made only upon presentation
and surrender of the Certificates for such Trust at the office or agency of the
Trustee specified in the notice given by the Trustee of such final distribution.
The Trustee will mail such notice of the final distribution to the
Certificateholders of such Trust, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.01) See
"-- Termination of the Trusts" below. Distributions in respect of Certificates
issued in global form will be made as described in "-- Book Entry; Delivery and
Form" below.
 
     If any Regular Distribution Date or Special Distribution Date is a
Saturday, Sunday or other day on which commercial banks are authorized or
required to close in New York, New York, Houston, Texas, Wilmington, Delaware,
or Salt Lake City, Utah (any other day being a "Business Day"), distributions
scheduled to be made on such Regular Distribution Date or Special Distribution
Date will be made on the next succeeding Business Day without additional
interest.
 
POOL FACTORS
 
     The "Pool Balance" for each Trust or for the Certificates issued by any
Trust indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all payments made in
respect of the Certificates of such Trust or in respect of Deposits relating to
such Trust other than payments made in respect of interest or premium thereon or
reimbursement of any costs and expenses in connection therewith. The Pool
Balance for each Trust or for the Certificates issued by any Trust as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to any special distribution with respect to unused Deposits,
payment of principal of the Equipment Notes or payment with respect to other
Trust Property held in such Trust and the distribution thereof to be made on
that date. (Section 1.01)
 
     The "Pool Factor" for each Trust as of any Regular Distribution Date or
Special Distribution Date is the quotient (rounded to the seventh decimal place)
computed by dividing (i) the Pool Balance by (ii) the original aggregate face
amount of the Certificates of such Trust. The Pool Factor for each Trust or for
the Certificates issued by any Trust as of any Regular Distribution Date or
Special Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property held in such
Trust and the distribution thereof to be made on that date. (Section 1.01) The
Pool Factor for each Trust was 1.0000000 on the Issuance Date, and will decline
as described herein to reflect reductions in the Pool Balance of such Trust. The
amount of a Certificateholder's pro rata share of the Pool Balance of a Trust
can be determined by multiplying the par value of the holder's Certificate of
such Trust by the Pool Factor for such Trust as of the applicable Regular
Distribution Date or Special Distribution Date. Notice of the Pool Factor and
the Pool Balance for each Trust will be mailed to Certificateholders of such
Trust on each Regular Distribution Date and Special Distribution Date. (Section
4.03)
 
                                       54

<PAGE>   56
 
     The Mandatory Economic Terms require that, assuming each Aircraft is
delivered in the month scheduled for its delivery (see "Description of the
Aircraft and the Appraisals -- The Appraisals" for the delivery schedule) and
that Equipment Notes in the maximum principal amount in respect of all of the
Aircraft are purchased by the Trusts, the scheduled aggregate payments of
principal of the Equipment Notes held in each Trust as of each Regular
Distribution Date be as set forth in the applicable column below (the "Assumed
Amortization Schedule"). In addition, assuming that no early redemption or
purchase, or default in the payment of principal, in respect of any Equipment
Notes shall occur, the Pool Factors for each Trust after taking into account
each such Scheduled Payment will be as set forth below:

<TABLE>
<CAPTION>
                                                                                          1997-1C-I
                                1997-1A TRUST               1997-1B TRUST                   TRUST
                                  EQUIPMENT      1997-1A      EQUIPMENT      1997-1B      EQUIPMENT
                                    NOTES         TRUST         NOTES         TRUST         NOTES
                                  SCHEDULED     EXPECTED      SCHEDULED     EXPECTED      SCHEDULED
                                 PAYMENTS OF      POOL       PAYMENTS OF      POOL       PAYMENTS OF
             DATE                 PRINCIPAL      FACTOR       PRINCIPAL      FACTOR       PRINCIPAL
             ----               -------------   ---------   -------------   ---------   -------------
<S>                             <C>             <C>         <C>             <C>         <C>
March 21, 1997                  $        0.00   1.0000000   $        0.00   1.0000000   $        0.00
October 1, 1997                          0.00   1.0000000            0.00   1.0000000            0.00
April 1, 1998                    3,934,879.12   0.9910137    1,552,705.03   0.9895323    1,882,103.25
October 1, 1998                  1,681,582.29   0.9871734       66,785.83   0.9890821            0.00
April 1, 1999                    5,222,970.99   0.9752454    1,129,105.40   0.9814701    1,138,727.15
October 1, 1999                  1,785,140.00   0.9711686      304,080.00   0.9794201      229,980.50
April 1, 2000                    8,598,044.60   0.9515328    1,752,510.54   0.9676054    5,327,605.14
October 1, 2000                  3,208,002.92   0.9442065      304,080.00   0.9655554       12,443.50
April 1, 2001                   10,559,336.19   0.9200916    1,934,649.19   0.9525128   11,673,393.02
October 1, 2001                  1,785,140.00   0.9160148      609,560.00   0.9484034    4,845,496.82
April 1, 2002                   16,672,796.22   0.8779383    2,214,649.16   0.9334732   17,842,891.27
October 1, 2002                  2,613,116.99   0.8719706      859,499.57   0.9276788    7,003,522.61
April 1, 2003                    7,485,290.53   0.8548760    3,977,291.36   0.9008655   21,300,149.75
October 1, 2003                  1,785,140.00   0.8507992      609,560.00   0.8967561    2,640,287.94
April 1, 2004                    7,556,409.30   0.8335423    9,438,941.06   0.8331227   18,622,511.38
October 1, 2004                  1,785,140.00   0.8294654      609,560.00   0.8290133   4,873 ,236.58
April 1, 2005                    4,169,719.26   0.8199428   17,874,572.95   0.7085102   10,440,888.52
October 1, 2005                  1,785,140.00   0.8158660      609,560.00   0.7044008            0.00
April 1, 2006                    4,081,965.16   0.8065438   12,148,154.28   0.6225030    2,370,247.10
October 1, 2006                  6,009,321.43   0.7928200    4,482,202.42   0.5922858            0.00
April 1, 2007                    9,892,990.06   0.7702269   16,738,430.54   0.4794422      889,515.48
October 1, 2007                  4,397,087.96   0.7601850    3,826,001.10   0.4536489            0.00
April 1, 2008                   13,716,127.67   0.7288608   20,295,722.81   0.3168235            0.00
October 1, 2008                  3,671,847.23   0.7204752      400,701.24   0.3141221            0.00
April 1, 2009                   16,318,218.06   0.6832085   18,630,088.20   0.1885257            0.00
October 1, 2009                  2,445,509.15   0.6776235    2,166,372.54   0.1739210            0.00
April 1, 2010                   43,451,307.24   0.5783915    9,711,448.30   0.1084504            0.00
October 1, 2010                    185,691.30   0.5779675            0.00   0.1084504            0.00
April 1, 2011                   37,047,170.31   0.4933609    7,998,172.64   0.0545300            0.00
October 1, 2011                  6,646,530.16   0.4781819            0.00   0.0545300            0.00
April 1, 2012                   56,076,129.35   0.3501180    7,751,645.54   0.0022716            0.00
October 1, 2012                          0.00   0.3501180      323,595.36   0.0000900            0.00
April 1, 2013                   77,092,583.73   0.1740577       13,354.94   0.0000000            0.00
October 1, 2013                  1,274,987.73   0.1711459            0.00   0.0000000            0.00
April 1, 2014                   43,773,295.63   0.0711786            0.00   0.0000000            0.00
October 1, 2014                 10,042,845.35   0.0482432            0.00   0.0000000            0.00
April 1, 2015                   21,124,544.06   0.0000000            0.00   0.0000000            0.00
 
<CAPTION>
                                               1997-IC-II    1997-IC-II
                                                 TRUST          TRUST
                                               EQUIPMENT      EQUIPMENT
                                 1997-1C-I       NOTES          NOTES
                                   TRUST       SCHEDULED      SCHEDULED
                                 EXPECTED     PAYMENTS OF    PAYMENTS OF
             DATE               POOL FACTOR    PRINCIPAL      PRINCIPAL
             ----               -----------   ------------   -----------
<S>                             <C>           <C>            <C>
March 21, 1997                   1.0000000    $       0.00     1.0000000
October 1, 1997                  1.0000000            0.00     1.0000000
April 1, 1998                    0.9830583      169,416.91     0.9830583
October 1, 1998                  0.9830583            0.00     0.9830583
April 1, 1999                    0.9728081      102,502.15     0.9728081
October 1, 1999                  0.9707379       20,701.62     0.9707379
April 1, 2000                    0.9227817      479,562.63     0.9227817
October 1, 2000                  0.9226697        1,120.10     0.9226697
April 1, 2001                    0.8175920    1,050,776.65     0.8175920
October 1, 2001                  0.7739754      436,165.81     0.7739754
April 1, 2002                    0.6133632    1,606,122.01     0.6133632
October 1, 2002                  0.5503212      630,419.79     0.5503212
April 1, 2003                    0.3585886    1,917,326.00     0.3585886
October 1, 2003                  0.3348222      237,664.65     0.3348222
April 1, 2004                    0.1671922    1,676,299.26     0.1671922
October 1, 2004                  0.1233260      438,662.79     0.1233260
April 1, 2005                    0.0293426      939,833.16     0.0293426
October 1, 2005                  0.0293426            0.00     0.0293426
April 1, 2006                    0.0080069      213,357.02     0.0080069
October 1, 2006                  0.0080069            0.00     0.0080069
April 1, 2007                    0.0000000       80,069.44     0.0000000
October 1, 2007                  0.0000000            0.00     0.0000000
April 1, 2008                    0.0000000            0.00     0.0000000
October 1, 2008                  0.0000000            0.00     0.0000000
April 1, 2009                    0.0000000            0.00     0.0000000
October 1, 2009                  0.0000000            0.00     0.0000000
April 1, 2010                    0.0000000            0.00     0.0000000
October 1, 2010                  0.0000000            0.00     0.0000000
April 1, 2011                    0.0000000            0.00     0.0000000
October 1, 2011                  0.0000000            0.00     0.0000000
April 1, 2012                    0.0000000            0.00     0.0000000
October 1, 2012                  0.0000000            0.00     0.0000000
April 1, 2013                    0.0000000            0.00     0.0000000
October 1, 2013                  0.0000000            0.00     0.0000000
April 1, 2014                    0.0000000            0.00     0.0000000
October 1, 2014                  0.0000000            0.00     0.0000000
April 1, 2015                    0.0000000            0.00     0.0000000
</TABLE>

 
     The final schedule of principal payments and the resulting schedule of Pool
Balances and Pool Factors may change from that set forth above if, among other
things, the aggregate principal amount of the Equipment Notes acquired by the
Trusts is less than the maximum permitted by the Mandatory Economic Terms,
Equipment Notes with respect to any Aircraft are purchased by the Trusts in
other than the month currently scheduled for delivery of such Aircraft or
Equipment Notes as to which the projected LTVs are lower than other Equipment
Notes are not acquired by the Trusts. In addition, the Pool Factor and Pool
Balance of each Trust will be recomputed if there has been an early redemption,
purchase, or a default in the payment of principal or interest in respect of one
or more issues of the Equipment Notes held in a Trust, as described in
"-- Indenture Defaults and Certain Rights Upon an Indenture Default" and
"Description of the Equipment Notes -- Redemption", or a special distribution
attributable to unused Deposits after the Delivery Period Termination Date or
the occurrence of a Triggering Event, as described in "Description of the
Deposit
 
                                       55

<PAGE>   57
 
Agreements". In the event of (i) any such change in the scheduled repayments or
(ii) any such redemption, purchase, default or special distribution, the Pool
Factors and the Pool Balances of each Trust so affected will be recomputed after
giving effect thereto and notice thereof will be mailed to the
Certificateholders of such Trust promptly after the Delivery Period Termination
Date in the case of clause (i) and promptly after the occurrence of any event
described in clause (ii).
 
REPORTS TO CERTIFICATEHOLDERS
 
     On each Distribution Date, the applicable Paying Agent and Trustee will
include with each distribution by it of a Scheduled Payment or Special Payment
to Certificateholders of the related Trust a statement, giving effect to such
distribution to be made on such Distribution Date, setting forth the following
information (per $1,000 aggregate principal amount of Certificate for such
Trust, as to (ii), (iii), (iv) and (v) below):
 
          (i) the aggregate amount of such funds distributed on such
     Distribution Date under the Pass Through Trust Agreement and the Escrow
     Agreement, indicating the amount allocable to each source;
 
          (ii) the amount of such distribution under the Pass Through Trust
     Agreement allocable to principal and the amount allocable to premium
     (including any premium paid by Continental with respect to unused
     Deposits), if any;
 
          (iii) the amount of such distribution under the Pass Through Trust
     Agreement allocable to interest;
 
          (iv) the amount of such distribution under the Escrow Agreement
     allocable to interest;
 
          (v) the amount of such distribution under the Escrow Agreement
     allocable to unused Deposits (if any); and
 
          (vi) the Pool Balance and the Pool Factor for such Trust. (Section
     4.03)
 
     With respect to the Certificates registered in the name of Cede, as nominee
for DTC, on the Record Date prior to each Distribution Date, the applicable
Trustee will request from DTC a securities position listing setting forth the
names of all DTC Participants reflected on DTC's books as holding interests in
the Certificates on such record date. On each Distribution Date, the applicable
Paying Agent and Trustee will mail to each such DTC Participant the statement
described above and will make available additional copies as requested by such
DTC Participant for forwarding to holders of Certificates. (Section 4.03(a))
 
     In addition, after the end of each calendar year, the applicable Trustee
and Paying Agent will furnish to each Certificateholder of each Trust at any
time during the preceding calendar year a report containing the sum of the
amounts determined pursuant to clauses (i), (ii), (iii), (iv) and (v) above with
respect to the Trust for such calendar year or, in the event such person was a
Certificateholder during only a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to such Trustee and which a Certificateholder shall reasonably request
as necessary for the purpose of such Certificateholder's preparation of its U.S.
federal income tax returns. (Section 4.03(b)) With respect to Certificates
registered in the name of Cede, as nominee for DTC, such report and such other
items shall be prepared on the basis of information supplied to the applicable
Trustee by the DTC Participants and shall be delivered by such Trustee to such
DTC Participants to be available for forwarding by such DTC Participants to
Certificate Owners in the manner described above. (Section 4.03(b))
 
     With respect to the Certificates issued in definitive form, the applicable
Paying Agent and Trustee will prepare and deliver the information described
above to each Certificateholder of record of each Trust as the name of such
Certificateholder appears on the records of the registrar of the Certificates.
 
INDENTURE DEFAULTS AND CERTAIN RIGHTS UPON AN INDENTURE DEFAULT
 
     An event of default under an Indenture (an "Indenture Default") will, with
respect to the Leased Aircraft Indentures, include an event of default under the
related Lease (a "Lease Event of Default"). See "Description of Equipment
Notes-Indenture Default; Notice and Waiver". Since the Equipment Notes issued
under an Indenture may be held in more than one Trust, a continuing Indenture
Default under such Indenture
 
                                       56

<PAGE>   58
 
would affect the Equipment Notes held by each such Trust. There are no
cross-default provisions in the Indentures or in the Leases (unless, in the case
of a Lease, otherwise agreed between an Owner Participant and Continental).
Consequently, events resulting in an Indenture Default under any particular
Indenture may or may not result in an Indenture Default under any other
Indenture, and a Lease Event of Default under any particular Lease may or may
not constitute a Lease Event of Default under any other Lease. If an Indenture
Default occurs in fewer than all of the Indentures, notwithstanding the
treatment of Equipment Notes issued under any Indenture under which an Indenture
Default has occurred, payments of principal and interest on the Equipment Notes
issued pursuant to Indentures with respect to which an Indenture Default has not
occurred will continue to be distributed to the holders of the Certificates as
originally scheduled, subject to the Intercreditor Agreement. See "Description
of the Intercreditor Agreement -- Priority of Distributions".
 
     With respect to each Leased Aircraft, the applicable Owner Trustee and
Owner Participant will, under the related Leased Aircraft Indenture, have the
right under certain circumstances to cure Indenture Defaults that result from
the occurrence of a Lease Event of Default under the related Lease. If the Owner
Trustee or the Owner Participant exercises any such cure right, the Indenture
Default will be deemed to have been cured.
 
     In the event that the same institution acts as Trustee of multiple Trusts,
in the absence of instructions from the Certificateholders of any such Trust,
such Trustee could be faced with a potential conflict of interest upon an
Indenture Default. In such event, each Trustee has indicated that it would
resign as Trustee of one or all such Trusts, and a successor trustee would be
appointed in accordance with the terms of the applicable Pass Through Trust
Agreement. Wilmington Trust Company is the initial Trustee under each Trust.
 
     Upon the occurrence and continuation of any Indenture Default under any
Indenture, the Controlling Party will direct the Indenture Trustee under such
Indenture in the exercise of remedies thereunder and may accelerate and sell all
(but not less than all) of the Equipment Notes issued under such Indenture to
any person, subject to certain limitations. See "Description of Intercreditor
Agreement-Sale of Equipment Notes and Aircraft". The proceeds of such sale will
be distributed pursuant to the provisions of the Intercreditor Agreement. Any
such proceeds so distributed to any Trustee upon any such sale shall be
deposited in the applicable Special Payments Account and shall be distributed to
the Certificateholders of such Trust on a Special Distribution Date. (Sections
4.01 and 4.02) The market for Equipment Notes at the time of the existence of
any Indenture Default may be very limited and there can be no assurance as to
the price at which they could be sold. If any such Equipment Notes are sold for
less than their outstanding principal amount, certain Certificateholders will
receive a smaller amount of principal distributions than anticipated and will
not have any claim for the shortfall against Continental, any Liquidity
Provider, any Owner Trustee, any Owner Participant or any Trustee.
 
     Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Trustee of any Trust by the Subordination
Agent on account of any Equipment Note or Trust Indenture Estate (as defined in
each Indenture) held in such Trust following an Indenture Default under any
Indenture will be deposited in the Special Payments Account for such Trust and
will be distributed to the Certificateholders of such Trust on a Special
Distribution Date. (Sections 4.01 and 4.02) In addition, if, following an
Indenture Default under any Leased Aircraft Indenture relating to a Leased
Aircraft, the applicable Owner Participant or Owner Trustee exercises its option
to redeem or purchase the outstanding Equipment Notes issued under such Leased
Aircraft Indenture, the price paid by such Owner Participant or Owner Trustee
for the Equipment Notes issued under such Leased Aircraft Indenture and
distributed to such Trust by the Subordination Agent will be deposited in the
Special Payments Account for such Trust and will be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Sections 4.01
and 4.02)
 
     Any funds representing payments received with respect to any defaulted
Equipment Notes, or the proceeds from the sale of any Equipment Notes, held by
the Trustee in the Special Payments Account for such Trust will, to the extent
practicable, be invested and reinvested by such Trustee in certain permitted
investments pending the distribution of such funds on a Special Distribution
Date. (Section 4.04) Such permitted investments are defined as obligations of
the United States or agencies or instrumentalities thereof for the payment of
which the full faith and credit of the United States is pledged and which mature
in not
 
                                       57

<PAGE>   59
 
more than 60 days or such lesser time as is required for the distribution of any
such funds on a Special Distribution Date. (Section 1.01)
 
     Each Pass Through Trust Agreement provides that the Trustee of the related
Trust will, within 90 days after the occurrence of any default, give to the
Certificateholders of such Trust notice, transmitted by mail, of all uncured or
unwaived defaults with respect to such Trust known to it, provided that, except
in the case of default in a payment of principal, premium, if any, or interest
on any of the Equipment Notes held in such Trust, the applicable Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of such Certificateholders.
(Section 7.02) The term "default" as used in this paragraph only with respect to
any Trust means the occurrence of an Indenture Default under any Indenture
pursuant to which Equipment Notes held by such Trust were issued, as described
above, except that in determining whether any such Indenture Default has
occurred, any grace period or notice in connection therewith will be
disregarded.
 
     Each Pass Through Trust Agreement contains a provision entitling the
Trustee of the related Trust, subject to the duty of such Trustee during a
default to act with the required standard of care, to be offered reasonable
security or indemnity by the holders of the Certificates of such Trust before
proceeding to exercise any right or power under such Pass Through Trust
Agreement at the request of such Certificateholders. (Section 7.03(e))
 
     Subject to certain qualifications set forth in the Pass Through Trust
Agreements and to the Intercreditor Agreement, the Certificateholders of each
Trust holding Certificates evidencing fractional undivided interests aggregating
not less than a majority in interest in such Trust shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to such Trust or pursuant to the terms of
the Intercreditor Agreement, or exercising any trust or power conferred on such
Trustee under such Pass Through Trust Agreement or the Intercreditor Agreement,
including any right of such Trustee as Controlling Party under the Intercreditor
Agreement or as holder of the Equipment Note. (Section 6.04)
 
     In certain cases, the holders of the Certificates of a Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust may on behalf of the holders of all the Certificates of such Trust
waive any past Indenture Default under any Indenture pursuant to which Equipment
Notes held by such Trust were issued or, if the Trustee of such Trust is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default and thereby annul any direction
given by such holders or Trustee to such Loan Trustee with respect thereto,
except (i) a default in the deposit of any Scheduled Payment or Special Payment
or in the distribution thereof, (ii) a default in payment of the principal,
premium, if any, or interest with respect to any of the Equipment Notes and
(iii) a default in respect of any covenant or provision of the related Pass
Through Trust Agreement that cannot be modified or amended without the consent
of each Certificateholder of such Trust affected thereby. (Section 6.05) Each
Indenture provides that, with certain exceptions, the holders of the majority in
aggregate unpaid principal amount of the Equipment Notes issued thereunder may
on behalf of all such holders waive any past default or Indenture Default
thereunder. Notwithstanding such provisions of the Indentures, pursuant to the
Intercreditor Agreement only the Controlling Party will be entitled to waive any
such past default or Indenture Default.
 
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
 
     Upon the occurrence and during the continuation of a Triggering Event, with
ten days' written notice to the Trustee and each Certificateholder of the same
Class (i) the Class B Certificateholders will have the right to purchase all,
but not less than all, of the Class A Certificates and (ii) the Class C
Certificateholders will have the right to purchase all, but not less than all,
of the Class A Certificates and the Class B Certificates, in each case at a
purchase price equal to the Pool Balance of the relevant Class or Classes of
Certificates plus accrued and unpaid interest thereon to the date of purchase
without premium but including any other amounts due to the Certificateholders of
such Class or Classes. In each case, if prior to the end of the ten-day period,
any other Certificateholder of the same Class notifies the purchasing
Certificateholder that the other
 
                                       58

<PAGE>   60
 
Certificateholder wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder to purchase the
Certificates pro rata based on the interest in the Trust held by each
Certificateholder. (Section 6.01(b))
 
PTC EVENT OF DEFAULT
 
     A PTC Event of Default is defined under each Pass Through Trust Agreement
as the failure to pay within 10 Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of Certificates on the Final
Maturity Date for such Class or (ii) interest due on such Class of Certificates
on any Distribution Date (unless, in the case of the Class A, B, C-I or C-II
Certificates, the Subordination Agent shall have made Interest Drawings, or
drawings on the Cash Collateral Account for such Class of Certificates, with
respect thereto in an aggregate amount sufficient to pay such interest and shall
have distributed such amount to the Trustee entitled thereto). Any failure to
make expected principal distributions on any Class of Certificates on any
Regular Distribution Date (other than the Final Maturity Date) will not
constitute a PTC Event of Default with respect to such Certificates. A PTC Event
of Default with respect to the most senior outstanding Class of Certificates
resulting from an Indenture Default under all Indentures will constitute a
Triggering Event.
 
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
 
     Continental is prohibited from consolidating with or merging into any other
corporation or transferring substantially all of its assets as an entirety to
any other corporation unless (i) the surviving successor or transferee
corporation shall (a) be a "citizen of the United States" as defined in Title 49
of the United States Code, as amended, relating to aviation (the "Transportation
Code"), (b) be a United States certificated air carrier and (c) expressly assume
all of the obligations of Continental contained in the Pass Through Trust
Agreements, the Note Purchase Agreement, the Indentures, the Participation
Agreements and the Leases; and (ii) Continental shall have delivered a
certificate and an opinion or opinions of counsel indicating that such
transaction complies with such conditions. (Section 5.02) Additionally, after
giving effect to such transaction, no Lease Event of Default, in the case of a
Leased Aircraft, or Indenture Event of Default, in the case of an Owned
Aircraft, shall have occurred and be continuing. (Leases, Section 13.02; Owned
Aircraft Indenture, Section 4.09)
 
     The Pass Through Trust Agreements, the Note Purchase Agreement, the
Indentures, the Participation Agreements and the Leases do not contain any
covenants or provisions which may afford the applicable Trustee or
Certificateholders protection in the event of a highly leveraged transaction,
including transactions effected by management or affiliates, which may or may
not result in a change in control of Continental.
 
MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
 
     Each Pass Through Trust Agreement contains provisions permitting, at the
request of the Company, the execution of amendments or supplements to such Pass
Through Trust Agreement or, if applicable, to the Deposit Agreements, the Escrow
Agreements, the Intercreditor Agreement, the Note Purchase Agreement, the
Registration Rights Agreement or any Liquidity Facility, without the consent of
the holders of any of the Certificates of such Trust, (i) to evidence the
succession of another corporation to Continental and the assumption by such
corporation of Continental's obligations under such Pass Through Trust
Agreement, the Note Purchase Agreement, the Registration Rights Agreement or any
Liquidity Facility, (ii) to add to the covenants of Continental for the benefit
of holders of such Certificates or to surrender any right or power conferred
upon Continental in such Pass Through Trust Agreement, the Note Purchase
Agreement, the Registration Rights Agreement or any Liquidity Facility, (iii) to
correct or supplement any provision of such Pass Through Trust Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note
Purchase Agreement, the Registration Rights Agreement or any Liquidity Facility
which may be defective or inconsistent with any other provision in such Pass
Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Note Purchase Agreement, the Registration Rights
Agreement or any Liquidity Facility, as applicable, or to cure any ambiguity,
correct any mistake or to modify any other provisions with respect to matters or
questions arising under such Pass
 
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<PAGE>   61
 
Through Trust Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Note Purchase Agreement, the Registration Rights
Agreement or any Liquidity Facility, provided such action shall not materially
adversely affect the interests of the holders of such Certificates, (iv) to
comply with any requirement of the Commission, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates are
listed, any regulatory body or the Registration Rights Agreement to effectuate
the Exchange Offer, (v) to add to such Pass Through Trust Agreement such other
provisions as may be expressly permitted by the Trust Indenture Act and (vi) to
provide for a successor Trustee or to add to or change any provision of such
Pass Through Trust Agreement as shall be necessary to facilitate the
administration of the Trust thereunder by more than one Trustee, provided that
in each case, such modification or supplement does not adversely affect the
status of the Trust as a grantor trust under Subpart E, Part I of Subchapter J
of Chapter 1 of Subtitle A of the Code for U.S. federal income tax purposes.
(Section 9.01)
 
     Each Pass Through Trust Agreement also contains provisions permitting the
execution, with the consent of the holders of the Certificates of the related
Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, and with the consent of the applicable Owner
Trustee (such consent not to be unreasonably withheld), of amendments or
supplements for the purposes of adding any provisions to or changing or
eliminating any of the provisions of such Pass Through Trust Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note
Purchase Agreement, the Registration Rights Agreement or any Liquidity Facility
or of modifying the rights and obligations of the Certificateholders, except
that no such amendment or supplement may, without the consent of the holder of
each Certificate so affected thereby, (a) reduce in any manner the amount of, or
delay the timing of, any receipt by the Trustee (or, with respect to the
Deposits, the Certificateholders) of payments with respect to the Deposits, the
Equipment Notes or other Trust Property held in such Trust or distributions in
respect of any Certificate related to such Trust, or change the date or place of
any payment in respect of any Certificate, or make distributions payable in coin
or currency other than that provided for in such Certificates, or impair the
right of any Certificateholder of such Trust to institute suit for the
enforcement of any such payment when due, (b) permit the disposition of any
Equipment Note held in such Trust, except as provided in such Pass Through Trust
Agreement, or otherwise deprive any Certificateholder of the benefit of the
ownership of the applicable Equipment Notes, (c) alter the priority of
distributions specified in the Intercreditor Agreement in a manner adverse to
the Certificateholders, (d) reduce the percentage of the aggregate fractional
undivided interests of the Trust provided for in such Pass Through Trust
Agreement, the consent of the holders of which is required for any such
supplemental trust agreement or for any waiver provided for in such Pass Through
Trust Agreement, (e) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of events of default or receipt of
payment or (f) adversely affect the status of the Trust as a grantor trust under
Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Code for
U.S. federal income tax purposes. (Section 9.02)
 
     In the event that a Trustee, as holder (or beneficial owner through the
Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders of the relevant Trust or as Controlling Party under the
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any Participation Agreement, any
Lease, any Equipment Note or any other related document, the Trustee shall
forthwith send a notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder of the relevant Trust as of the date of
such notice. The Trustee shall request from the Certificateholders a direction
as to (a) whether or not to take or refrain from taking (or direct the
Subordination Agent to take or refrain from taking) any action which a holder of
such Equipment Note or the Controlling Party has the option to take, (b) whether
or not to give or execute (or direct the Subordination Agent to give or execute)
any waivers, consents, amendments, modifications or supplements as a holder of
such Equipment Note or as Controlling Party and (c) how to vote (or direct the
Subordination Agent to vote) any Equipment Note if a vote has been called for
with respect thereto. Provided such a request for Certificateholder direction
shall have been made, in directing any action or casting any vote or giving any
consent as the holder of any Equipment Note (or in directing the Subordination
Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee
shall vote for or give consent to any such action with respect to such Equipment
Note in the same
 
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<PAGE>   62
 
proportion as that of (x) the aggregate face amounts of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the relevant Trust and (ii) as the Controlling
Party, the Trustee shall vote as directed in such Certificateholder direction by
the Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest in the relevant Trust (or, in the event that
the Trustees of the Class C Trusts jointly are the Controlling Party, as such
Trustees, considered in the aggregate, are directed in their respective
Certificateholder directions by the Certificateholders of such Trusts evidencing
fractional undivided interests aggregating not less than a majority in interest
in the Class C Trusts, taken together). For purposes of the immediately
preceding sentence, a Certificate shall have been "actually voted" if the Holder
of such Certificate has delivered to the Trustee an instrument evidencing such
Holder's consent to such direction prior to two Business Days before the Trustee
directs such action or casts such vote or gives such consent. Notwithstanding
the foregoing, but subject to certain rights of the Certificateholders under the
relevant Pass Through Trust Agreement and subject to the Intercreditor
Agreement, the Trustee may, in its own discretion and at its own direction,
consent and notify the relevant Loan Trustee of such consent (or direct the
Subordination Agent to consent and notify the relevant Loan Trustee of such
consent) to any amendment, modification, waiver or supplement under the relevant
Indenture, Participation Agreement or Lease, any relevant Equipment Note or any
other related document, if an Indenture Default under any Indenture shall have
occurred and be continuing, or if such amendment, modification, waiver or
supplement will not materially adversely affect the interests of the
Certificateholders. (Section 10.01)
 
OBLIGATION TO PURCHASE EQUIPMENT NOTES
 
     The Trustees are obligated to purchase the Equipment Notes issued with
respect to the Aircraft during the Delivery Period, subject to the terms and
conditions of the Note Purchase Agreement. Under the Note Purchase Agreement,
Continental has agreed to finance each Aircraft in the manner provided therein
and in connection therewith will have the option of entering into a leverage
lease financing or a secured debt financing with respect to each Aircraft. The
Note Purchase Agreement provides for the relevant parties to enter into (i) with
respect to each Leased Aircraft, a Participation Agreement, a Lease and a Leased
Aircraft Indenture relating to the financing of such Leased Aircraft and (ii)
with respect to each Owned Aircraft, a Participation Agreement and an Owned
Aircraft Indenture relating to the financing of such Owned Aircraft. The
description of such agreements in this Prospectus is based on the forms of such
agreements contemplated by the Note Purchase Agreement. In the case of a Leased
Aircraft, the terms of the agreements actually entered into may differ from the
forms of such agreements and, consequently, may differ from the description of
such agreements contained in this Prospectus. See "Risk Factors -- Risk Factors
Relating to the Certificates and the Offering -- Owner Participant; Revisions to
Agreements". However, under the Note Purchase Agreement, the terms of such
agreements are required to (i) contain the Mandatory Document Terms and (ii) not
vary the Mandatory Economic Terms. In addition, Continental is obligated (i) to
certify to the Trustees that any such modifications do not materially and
adversely affect the Certificateholders and (ii) to obtain written confirmation
from each Rating Agency that the use of versions of such agreements modified in
any material respect will not result in a withdrawal, suspension or downgrading
of the rating of any Class of Certificates. Further, under the Note Purchase
Agreement, it is a condition precedent to the obligation of each Trustee to
purchase the Equipment Notes related to the financing of an Aircraft that no
Triggering Event shall have occurred. The Trustees will have no right or
obligation to purchase Equipment Notes after the Delivery Period Termination
Date.
 
     The "Mandatory Economic Terms", as defined in the Note Purchase Agreement,
require, among other things, that (i) the maximum principal amount of all the
Equipment Notes issued with respect to an Aircraft not exceed $37,600,000 for
each Boeing 757-224 Aircraft, $18,400,000 for each Boeing 737-524 Aircraft and
$24,400,000 for each Boeing 737-724 Aircraft, (ii) the initial loan to aircraft
value with respect to an Aircraft (with the value of any Aircraft for these
purposes to equal the value for such Aircraft set forth in "Prospectus
Summary -- Terms of Certificates -- Equipment Notes and the Aircraft" under the
column "Appraised Value"), not exceed 41% in the case of Series A Equipment
Notes, 55% in the case of Series B Equipment Notes and 69.99% for Boeing 757-224
Aircraft, 66.19% for Boeing 737-524 Aircraft and 66.25% for Boeing 737-724
Aircraft in the case of Series C Equipment Notes, (iii) the initial average life
of the Series A
 
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<PAGE>   63
 
Equipment Notes not be less than 11.75 nor more than 12.60 years in the case of
the 757-224 Aircraft, less than 11.00 nor more than 12.55 years in the case of
the 737-524 Aircraft and less than 12.25 nor more than 12.55 years in the case
of the 737-724 Aircraft, of the Series B Equipment Notes not be less than 9.00
nor more than 9.75 years in the case of the 757-224 Aircraft, less than 6.90 nor
more than 10.52 years in the case of the 737-524 Aircraft and less than 9.75 nor
more than 10.05 years in the case of the 737-724 Aircraft and of the Series C
Equipment Notes not be less than 4.50 nor more than 5.55 years in the case of
the 757-224 Aircraft, less than 3.50 nor more than 7.60 years in the case of the
737-524 Aircraft and less than 5.25 nor more than 5.55 years in the case of the
737-724 Aircraft, (iv) the amortization schedules for each Series of Equipment
Notes, assuming the maximum amount thereof in respect of all of the Aircraft are
purchased by the Trusts and all Aircraft are delivered as currently scheduled,
shall be as set forth in the table under "Description of the New
Certificates -- Pool Factors", (v) as of the Delivery Period Termination Date
(or if earlier, the date of the occurrence of a Triggering Event), the average
life of the Class A Certificates, the Class B Certificates, the Class C-I
Certificates and the Class C-II Certificates shall not exceed, respectively,
12.91 years, 10.15 years, 6.00 years and 6.00 years (computed without regard to
the acceleration of any Equipment Notes and after giving effect to any special
distribution on the Certificates thereafter required in respect of unused
Deposits), (vi) the final maturity date of (a) the Series A Equipment Notes not
be in excess of 18.025 years after the Issuance Date, (b) the Series B Equipment
Notes not be in excess of 16.025 years after the Issuance Date and (c) the
Series C Equipment Notes not be in excess of 10.025 years after the Issuance
Date, (vii) the original aggregate principal amount of all of the Equipment
Notes of each Series shall not exceed the original aggregate face amount of the
Certificates issued by the corresponding Trust, (viii) the maximum aggregate
principal amount of the Equipment Notes issued with respect to all Boeing
757-224 Aircraft shall not exceed $300,800,000, all Boeing 737-524 Aircraft
shall not exceed $331,200,000 and all Boeing 737-724 Aircraft shall not exceed
$97,600,000, (ix) the interest rate applicable to each Series of Equipment Notes
must be equal to the rate applicable to the Certificates issued by the
corresponding Trust, (x) the payment dates for the Equipment Notes and basic
rent under the Leases must be April 1 and October 1, (xi) basic rent, stipulated
loss values and termination values under the Leases must be sufficient to pay
amounts due with respect to the related Equipment Notes, (xii) the amounts
payable under the all-risk aircraft hull insurance maintained with respect to
each Aircraft must be sufficient to pay the applicable stipulated loss value,
subject to certain rights of self-insurance and (xiii) (a) the past due rate in
the Indentures and the Leases, (b) the Make-Whole Premium payable under the
Indentures, (c) the provisions relating to the redemption and purchase of
Equipment Notes in the Indentures, (d) the minimum liability insurance amount on
Aircraft in the Leases, (e) the interest rate payable with respect to stipulated
loss value in the Leases, and (f) the indemnification of the Loan Trustees,
Subordination Agent, Liquidity Providers, Trustees, Escrow Agents and registered
holders of the Equipment Notes (in such capacity, the "Note Holders") with
respect to certain taxes and expenses, in each case be provided as set forth in
the form of Participation Agreements, Lease and Indentures (collectively, the
"Aircraft Operative Agreements").
 
     The "Mandatory Document Terms" prohibit modifications in any material
adverse respect to certain specified provisions of the Aircraft Operative
Agreements contemplated by the Note Purchase Agreement. In the case of the
Indentures, such modifications are prohibited (i) to the Granting Clause of the
Indentures so as to deprive the Note Holders of a first priority security
interest in the Aircraft, certain of Continental's rights under its purchase
agreement with the related manufacturer and, in the case of a Leased Aircraft,
the Lease or to eliminate the obligations intended to be secured thereby, (ii)
to certain provisions relating to the issuance, redemption, purchase, payments,
and ranking of the Equipment Notes (including the obligation to pay the
Make-Whole Premium in certain circumstances), (iii) to certain provisions
regarding Indenture Defaults, remedies relating thereto and rights of the Owner
Trustee and Owner Participant in such circumstances, (iv) to certain provisions
relating to any replaced airframe or engines with respect to an Aircraft and (v)
to the provision that New York law will govern the Indentures. In the case of
the Lease, such modifications are prohibited to certain provisions regarding the
obligation of Continental (i) to pay basic rent, stipulated loss value and
termination value to the Leased Aircraft Trustee, (ii) to record the Leased
Aircraft Indenture with the Federal Aviation Administration and to maintain such
Indenture as a first-priority perfected mortgage on the related Aircraft, (iii)
to furnish certain opinions with respect to a replacement airframe and (iv) to
consent to the assignment of the Lease by the Owner Trustee as collateral under
the Leased Aircraft
 
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<PAGE>   64
 
Indenture, as well as modifications which would either alter the provision that
New York law will govern the Lease or would deprive the Loan Trustee of rights
expressly granted to it under the Leases. In the case of the Participation
Agreement, such modifications are prohibited (i) to certain conditions to the
obligations of the Trustees to purchase the Equipment Notes issued with respect
to an Aircraft involving good title to such Aircraft, obtaining a certificate of
airworthiness with respect to such Aircraft, entitlement to the benefits of
Section 1110 with respect to such Aircraft and filings of certain documents with
the Federal Aviation Administration, (ii) to the provisions restricting the Note
Holder's ability to transfer such Equipment Notes, (iii) to certain provisions
requiring the delivery of legal opinions and (iv) to the provision that New York
law will govern the Participation Agreement. In the case of all of the Aircraft
Operative Agreements, modifications are prohibited in any material adverse
respect as regards the interest of the Note Holders, the Subordination Agent,
the Liquidity Providers or the Loan Trustee in the definition of "Make-Whole
Premium". Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be defective or
to cure any ambiguity or correct any mistake, provided that any such action
shall not materially adversely affect the interests of the Note Holders, the
Subordination Agent, the Liquidity Providers, the Mortgagee or the
Certificateholders.
 
LIQUIDATION OF ORIGINAL TRUSTS
 
     At the Transfer Date, each of the Original Trusts will transfer and assign
all of its assets and rights to a Successor Trust with substantially identical
terms, except that (i) the Successor Trusts will not have the right to purchase
new Equipment Notes and (ii) Delaware law will govern the Original Trusts and
New York law will govern the Successor Trusts. The Trustee of each of the
Original Trusts will also act as Trustee of the corresponding Successor Trust,
and each New Trustee will assume the obligations of the Original Trustee under
each transaction document to which such Original Trustee was a party. Upon
effectiveness of such transfer, assignment and assumption, each of the Original
Trusts will be liquidated and each of the Certificates will represent the same
interest in the Successor Trust as it represented in the Original Trust
immediately prior to such transfer and assignment. Unless the context otherwise
requires, all references in this Prospectus to the Trusts, the Trustees, the
Pass Through Trust Agreements and similar terms shall be applicable with respect
to the Original Trusts until the effectiveness of such transfer, assignment and
assumption and thereafter shall be applicable with respect to the Successor
Trusts. If for any reason such transfer, assignment and assumption cannot be
effected to any Successor Trust, the related Original Trust will continue in
existence until it is effected.
 
TERMINATION OF THE TRUSTS
 
     The obligations of Continental and the applicable Trustee with respect to a
Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the applicable
Pass Through Trust Agreement and the disposition of all property held in such
Trust. The applicable Trustee will send to each Certificateholder of such Trust
notice of the termination of such Trust, the amount of the proposed final
payment and the proposed date for the distribution of such final payment for
such Trust. The final distribution to any Certificateholder of such Trust will
be made only upon surrender of such Certificateholder's Certificates at the
office or agency of the applicable Trustee specified in such notice of
termination. (Section 11.01)
 
THE TRUSTEES
 
     The Trustee for each Trust is Wilmington Trust Company. With certain
exceptions, the Trustees make no representations as to the validity or
sufficiency of the Pass Through Trust Agreements, the Certificates, the
Intercreditor Agreement, the Equipment Notes, the Deposit Agreements, the Escrow
Agreements, the Indentures, the Participation Agreements, the Leases or other
related documents. (Sections 7.04 and 7.15) The Trustee of any Trust shall not
be liable, with respect to the Certificates of such Trust, for any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the holders of Certificates of such Trust evidencing fractional undivided
interests aggregating not less than a majority in interest of such Trust.
Subject to certain provisions, the Trustees shall be under no obligation to
exercise any of their rights or powers
 
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<PAGE>   65
 
under any Pass Through Trust Agreement at the request of any holders of
Certificates issued thereunder unless there shall have been offered to the
Trustees reasonable security and indemnity. (Section 7.03(e)) Each Pass Through
Trust Agreement provides that the Trustees in their individual or any other
capacity may acquire and hold Certificates issued thereunder and, subject to
certain conditions, may otherwise deal with Continental, with any Owner Trustee
or with any Loan Trustee with the same rights they would have if they were not
the Trustees. (Section 7.05)
 
     Any Trustee may resign with respect to any or all of the Trusts of which it
is the Trustee at any time, in which event Continental will be obligated to
appoint a successor trustee. If any Trustee ceases to be eligible to continue as
Trustee with respect to a Trust or becomes incapable of acting as Trustee or
becomes insolvent, Continental may, with the consent of the Owner Participants
for the Leased Aircraft (which consent shall not be unreasonably withheld),
remove such Trustee, or any holder of the Certificates of such Trust for at
least six months may, on behalf of such holder and all others similarly
situated, petition any court of competent jurisdiction for the removal of such
Trustee and the appointment of a successor trustee. Any resignation or removal
of the Trustee with respect to a Trust and appointment of a successor trustee
for such Trust does not become effective until acceptance of the appointment by
the successor trustee. (Sections 7.09 and 7.10) Pursuant to such resignation and
successor trustee provisions, it is possible that a different trustee could be
appointed to act as the successor trustee with respect to each Trust. All
references in this Prospectus to the Trustee should be read to take into account
the possibility that the Trusts could have different successor trustees in the
event of such a resignation or removal.
 
     Each Pass Through Trust Agreement provides that Continental will pay or
cause to be paid the applicable Trustee's fees and expenses. (Section 7.07)
 
BOOK-ENTRY; DELIVERY AND FORM
 
     The New Certificates of each Trust will be represented by one or more
permanent global Certificates, in definitive, fully registered form without
interest coupons (the "Global Certificates"), to be deposited with the Trustee
as custodian for DTC and registered in the name of Cede, as nominee for DTC.
 
     DTC has advised Continental as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provision of Section 17A of the Exchange Act. DTC was created to hold securities
for its participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
 
     Ownership of beneficial interests in Global Certificates is limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the Global
Certificates is shown on, and the transfer of that ownership is effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities. Such limits
and such laws may limit the market for beneficial interests in the Global
Certificates.
 
     So long as DTC or its nominee is the registered owner or holder of the
Global Certificates, DTC or such nominee, as the case may be, will be considered
the sole record owner or holder of the Certificates represented by such Global
Certificates for all purposes under the related Pass Through Trust Agreements.
No beneficial owners of an interest in the Global Certificates will be able to
transfer that interest except in accordance with DTC's applicable procedures, in
addition to those provided for under the Pass Through Trust Agreements and, if
applicable, Euroclear or Cedel.
 
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<PAGE>   66
 
     Payments of the principal of, premium, if any, and interest on the Global
Certificates will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither Continental, the Trustee, nor any paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Certificates or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
 
     Continental expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Certificates
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial ownership interests in the principal amount of such
Global Certificates, as shown on the records of DTC or its nominee. Continental
also expects that payments by participants to owners of beneficial interests in
such Global Certificates held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
 
     Neither Continental nor the Trustee has any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
 
     If DTC is at any time unwilling or unable to continue as a depositary for
the Global Certificates and a successor depositary is not appointed by within 90
days, the Trusts will issue certificates in definitive, fully registered form in
exchange for the Global Certificates.
 
                     DESCRIPTION OF THE DEPOSIT AGREEMENTS
 
     The following summary describes certain terms of the Deposit Agreements.
The summary does not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Deposit Agreements which have been
filed as exhibits to the Registration Statement and copies of which are
available as set forth under the heading "Available Information". The provisions
of the Deposit Agreements are substantially identical except as otherwise
indicated.
 
GENERAL
 
     Under the Escrow Agreements, the Escrow Agent with respect to each Trust
has entered into a separate Deposit Agreement with the Depositary pursuant to
which the Depositary has established separate accounts into which the proceeds
of the initial sale of the Old Certificates of such Trust were deposited on
behalf of such Escrow Agent, from which the Escrow Agent, upon request from the
Trustee of such Trust, will make withdrawals and into which such Trustee will
make re-deposits during the Delivery Period. Pursuant to the Deposit Agreement
with respect to each Trust, on each Regular Distribution Date the Depositary
will pay to the Paying Agent on behalf of the applicable Escrow Agent, for
distribution to the Certificateholders of such Trust, an amount equal to
interest accrued on the Deposits relating to such Trust during the relevant
interest period at a rate per annum equal to the interest rate applicable to the
Certificates issued by such Trust. The interest rates payable on the Deposits
are subject to change under certain circumstances described in "The Exchange
Offer -- Terms of the Exchange Offer--General". Upon each delivery of an
Aircraft during the Delivery Period, the Trustees for the Class A Trust, the
Class B Trust and the Class C-I Trust (or, if the Deposits relating to the Class
C-I Trust have been fully withdrawn, the Class C-II Trust) will request the
Escrow Agent relating to such Trust to withdraw from the Deposits relating to
such Trust funds sufficient to enable the Trustee of such Trust to purchase the
Equipment Note of the series applicable to such Trust issued with respect to
such Aircraft. Accrued but unpaid interest on all such Deposits withdrawn will
be paid on the next Regular Distribution Date. Any portion of any Deposit
withdrawn which is not used to purchase such Equipment Note will be re-deposited
by each Trustee into an account relating to the applicable Trust. Prior to the
date of this Prospectus, two Boeing 757-224 Aircraft have been delivered and
funds were withdrawn from the Deposits to purchase Equipment Notes in respect of
such Aircraft in the aggregate principal amount of $74.4 million in leveraged
lease transactions. The Deposits relating to each Trust and interest paid
thereon are
 
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<PAGE>   67
 
not subject to the subordination provisions of the Intercreditor Agreement and
will not be available to pay any other amount in respect to the Certificates.
 
UNUSED DEPOSITS
 
     The Trustees' obligations to purchase the Equipment Notes issued with
respect to each Aircraft are subject to satisfaction of certain conditions at
the time of delivery, as set forth in the Note Purchase Agreement. See
"Description of the New Certificates -- Obligation to Purchase Equipment Notes".
Since the Aircraft are scheduled for delivery from time to time during the
Delivery Period, no assurance can be given that all such conditions will be
satisfied at the time of delivery for each Aircraft. Moreover, since the
Aircraft will be newly manufactured, their delivery as scheduled is subject to
delays in the manufacturing process and to the manufacturer's right to postpone
deliveries under its agreement with Continental. See "Description of the
Aircraft and Appraisals -- Deliveries of Aircraft". Depending on the
circumstances of the financing of each Aircraft, the maximum aggregate principal
amount of Equipment Notes may not be issued. In addition, Continental's
obligations to Boeing relating to ordered aircraft and the Predelivery Deposit
Revolver are secured by Continental's purchase agreements with Boeing relating
to the Aircraft. Accordingly, if Continental should breach its obligations
secured thereby, the secured parties could exercise remedies and prevent
delivery of Aircraft to Continental. If any funds remain as Deposits with
respect to any Trust at the Delivery Period Termination Date, they will be
withdrawn by the Escrow Agent and distributed, with accrued and unpaid interest
thereon, plus a premium payable by Continental (i) in the case of the holders of
Certificates issued by the Class A Trust, the Class B Trust and the Class C-I
Trust, equal to the Deposit Make-Whole Premium with respect to the aggregate
amount of funds so distributed (excluding accrued interest) and (ii) in the case
of the holders of Certificates issued by the Class C-II Trust, equal to the
Class C-II Premium with respect to such aggregate amount, to the
Certificateholders of such Trust after at least 20 days' prior written notice.
 
     "Deposit Make-Whole Premium" means, with respect to the distribution of
unused Deposits to holders of any Class of Certificates, as of any date of
determination, an amount equal to the excess, if any, of (a) the present value
of the excess of (i) the scheduled payment of principal and interest to maturity
of the Equipment Notes, assuming the maximum principal amount thereof were
issued, on each remaining Regular Distribution Date for such Class under the
Assumed Amortization Schedule over (ii) the scheduled payment of principal and
interest to maturity of the Equipment Notes actually acquired by the Trustee for
such Class on each such Regular Distribution Date, such present value computed
by discounting such excess on a semiannual basis on each Regular Distribution
Date (assuming a 360-day year of twelve 30-day months) using a discount rate
equal to the Treasury Yield over (b) the amount of such unused Deposits to be
distributed to the holders of such Certificates plus accrued and unpaid interest
to but excluding the date of determination from and including the preceding
Regular Distribution Date (or if such date of determination precedes the first
Regular Distribution Date, the date of issuance of the Old Certificates).
 
     "Class C-II Premium" means, as of any date of determination, with respect
to the distribution of unused Deposits to holders of Class C-II Certificates,
(a) if Equipment Notes with respect to all of the Aircraft (or Substitute
Aircraft in lieu thereof) have been purchased by the Trusts prior to the date of
determination, an amount equal to the excess, if any, of (i) the present value
of the excess of (x) the scheduled payment of principal and interest to maturity
of the Equipment Notes on each remaining Regular Distribution Date for the Class
C-II Certificates under the Assumed Amortization Schedule over (y) the scheduled
payment of principal and interest to maturity of the Equipment Notes actually
acquired by the Trustee for such Class on each such Regular Distribution Date,
such present value computed by discounting such excess on a semiannual basis on
each Regular Distribution Date (assuming a 360-day year of twelve 30-day months)
using a discount rate equal to the "Adjusted Treasury Yield" (meaning the
Treasury Yield plus 42 basis points) over (ii) the amount of such unused
Deposits to be distributed to the holders of such Certificates plus accrued and
unpaid interest to but excluding the date of determination from and including
the preceding Regular Distribution Date (or if such date of determination
precedes the first Regular Distribution Date, the date of issuance of the Old
Certificates) or (b) in any other case, an amount equal to the sum of (i) a
premium calculated pursuant to the preceding clause (a) determined with respect
to the portion of such
 
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<PAGE>   68
 
unused Deposits that would have remained unused had the maximum principal amount
of Series C Equipment Notes been purchased with respect to each of the Aircraft
as to which Equipment Notes were not actually purchased by any of the Trusts and
as to which no replacement by a Substitute Aircraft was made and (ii) the
Deposit Make-Whole Premium determined with respect to the balance of such unused
Deposits.
 
DISTRIBUTION UPON OCCURRENCE OF TRIGGERING EVENT
 
     If a Triggering Event shall occur prior to the Delivery Period Termination
Date, the Escrow Agent for each Trust will withdraw any funds then held as
Deposits with respect to such Trust and cause such funds, with accrued and
unpaid interest thereon but without any premium, to be distributed to the
Certificateholders of such Trust by the Paying Agent on behalf of the Escrow
Agent, after at least 20 days' prior written notice. Accordingly, if a
Triggering Event occurs prior to the Delivery Period Termination Date, the
Trusts will not acquire Equipment Notes issued with respect to Aircraft
delivered after the occurrence of such Triggering Event.
 
DEPOSITARY
 
     The Depositary is Credit Suisse First Boston, New York Branch. Credit
Suisse First Boston is a Swiss Bank and is one of the largest banking
institutions in the world, with total consolidated assets of approximately Sfr
412 billion ($307 billion) and total consolidated shareholders' equity of
approximately Sfr 9.7 billion ($7.2 billion), in each case as of December 31,
1996, on a pro forma basis. As a "universal bank" (engaged in both commercial
and investment banking activities), Credit Suisse First Boston provides a full
range of banking and financial services from locations around the globe to
corporate, institutional and public sector clients. Credit Suisse, the
predecessor to Credit Suisse First Boston, was founded in 1856 in Zurich and is
the oldest of Switzerland's three principal banks. Banking operations of Credit
Suisse in the United States began in 1940 and are currently conducted through
branches of Credit Suisse First Boston in New York and Los Angeles and a
representative office in Chicago.
 
     Effective January 1, 1997, Credit Suisse First Boston became the successor
to the institutional asset management business and the global corporate and
investment banking business of Credit Suisse Group (formerly CS Holding) and its
principal international banking subsidiary, Credit Suisse. The global corporate
and investment banking business is largely conducted through Credit Suisse First
Boston and its subsidiaries (together, the "CSFB Business Unit"), including
Credit Suisse First Boston Corporation, a U.S. registered broker-dealer, which
acted as an Initial Purchaser of the Old Certificates. The CSFB Business Unit
has four core business divisions: (i) the corporate and investment banking
division, (ii) the trading division, (iii) Credit Suisse Financial Products and
(iv) the private equity division.
 
     Credit Suisse Group (formerly CS Holding) is the parent of Credit Suisse
First Boston. Credit Suisse Group is also the parent of Credit Suisse, a Swiss
bank which effective January 1, 1997 became the successor to the Swiss domestic
banking operations and global private banking operations of the former Credit
Suisse and its affiliate Swiss Volksbank.
 
     Credit Suisse First Boston is subject to regulation by the Swiss Federal
Banking Commission and the Swiss National Bank. Under Swiss banking law, a bank
is subject to inspection and supervision by an independent auditing firm and is
required to maintain an adequate relationship between its equity resources and
its total liabilities. The New York Branch of Credit Suisse First Boston is
licensed and subject to supervision and regulation by the Superintendent of
Banks of the State of New York. It is examined by the New York State Banking
Department and is subject to banking laws and regulations applicable to a
foreign bank that operates a New York branch. It is also subject to review and
supervision by the Federal Reserve Bank.
 
     Credit Suisse First Boston has long-term unsecured debt ratings of Aa3 from
Moody's and AA from Standard & Poor's and short-term unsecured debt ratings of
P-1 from Moody's and A-1+ from Standard & Poor's.
 
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<PAGE>   69
 
     Credit Suisse First Boston's principal office is at Uetlihof,
Uetlibergstrasse 231, CH-8045, Zurich, Switzerland, and its New York Branch has
executive offices at Eleven Madison Avenue, New York, New York 10010, (212)
325-9000. A copy of the Annual Report of Credit Suisse for the year ended
December 31, 1996 may be obtained from Credit Suisse First Boston by delivery of
a written request to its New York Branch, Attention: Corporate Affairs.
 
                      DESCRIPTION OF THE ESCROW AGREEMENTS
 
     The following summary describes certain terms of the Escrow Agreements,
which have been filed as exhibits to the Registration Statement and copies of
which are available as set forth under the heading "Available Information". The
summary does not purport to be complete and is qualified in its entirety by
reference to the provisions of the Escrow Agreements.
 
     Each Escrow Agent, each Paying Agent, each Trustee and the Initial
Purchasers have entered into a separate Escrow Agreement for the benefit of the
Certificateholders of each Trust as holders of the Escrow Receipts affixed
thereto (in such capacity, a "Receiptholder"). The cash proceeds of the initial
sale of Old Certificates of each Trust have been deposited on behalf of the
Escrow Agent (for the benefit of Receiptholders) with the Depositary as Deposits
relating to such Trust. The Escrow Agent of each Trust has been given
irrevocable instructions (i) to permit the Trustee of such Trust to cause funds
to be withdrawn from such Deposits on or prior to the Delivery Period
Termination Date for the purpose of enabling such Trustee to purchase Equipment
Notes on and subject to the terms and conditions of the Note Purchase Agreement
and (ii) to direct the Depositary to pay interest on the Deposits accrued in
accordance with the Deposit Agreement to the Paying Agent for distribution to
the Receiptholders.
 
     Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the related Receiptholders, one or more Paying
Agent Account(s), which shall be non-interest-bearing. Pursuant to the terms of
the Escrow Agreement, the Paying Agent is required to deposit interest on
Deposits relating to each Trust and any unused Deposits withdrawn by the Escrow
Agent in the Paying Agent Account. All amounts so deposited will be distributed
by the Paying Agent on a Regular Distribution Date or Special Distribution Date,
as appropriate.
 
     Upon receipt by the Depositary on behalf of the Escrow Agent of the cash
proceeds from the Old Certificates as described above, the Escrow Agent issued
Escrow Receipts which were affixed by the relevant Trustee to each Old
Certificate. Each Escrow Receipt evidences a fractional undivided interest in
amounts from time to time deposited into the Paying Agent Account and is limited
in recourse to amounts deposited into such Account. An Escrow Receipt may not be
assigned or transferred except in connection with the assignment or transfer of
the Certificate to which it is affixed. Each Escrow Receipt will be registered
by the Escrow Agent in the same name and manner as the Certificate to which it
is affixed. Escrow Receipts will be affixed to New Certificates issued pursuant
to the Exchange Offer.
 
                    DESCRIPTION OF THE LIQUIDITY FACILITIES
 
     The following summary describes certain terms of the Liquidity Facilities
and certain provisions of the Intercreditor Agreement relating to the Liquidity
Facilities. The summary does not purport to be complete and reference is made to
all of the provisions of the Liquidity Facilities and certain provisions of the
Intercreditor Agreement, each of which has been filed as an exhibit to the
Registration Statement and copies of which are available as set forth under the
heading "Available Information". The provisions of the Liquidity Facilities are
substantially identical except as otherwise indicated.
 
GENERAL
 
     Each Liquidity Provider will enter into a separate Liquidity Facility with
the Subordination Agent with respect to the Certificates of each of the Trusts
pursuant to which the Liquidity Providers will make one or more advances to the
Subordination Agent to pay interest on such Certificates subject to certain
limitations. The Liquidity Facilities for each Trust are intended to enhance the
likelihood of timely receipt by the
 
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<PAGE>   70
 
Certificateholders of such Trust of the interest payable on the Certificates of
such Trust at the Stated Interest Rate therefor on up to three consecutive
semiannual Regular Distribution Dates. If interest payment defaults occur which
exceed the amount covered by or available under the Liquidity Facilities for any
Trust, the Certificateholders of such Trust will bear their allocable share of
the deficiencies to the extent that there are no other sources of funds.
Although ABN AMRO and ING are the initial Liquidity Providers for each of the
Trusts, ABN AMRO and ING each may be replaced by one or more other entities with
respect to the Trusts under certain circumstances. Therefore, the Liquidity
Providers for each Trust may differ.
 
DRAWINGS
 
     The initial amount available under the Liquidity Facilities for the Class A
Trust, the Class B Trust, the Class C-I Trust and the Class C-II Trust at April
1, 1998, the first Regular Distribution Date after the scheduled Delivery Period
Termination Date, assuming that Equipment Notes in the maximum principal amount
with respect to all Aircraft are acquired by the Trusts and that all interest
and principal due on or prior to April 1, 1998 is paid, will be $48,564,521,
$16,426,917, $12,155,173 and $1,094,144, respectively. Except as otherwise
provided below, the Liquidity Facilities for each Trust will enable the
Subordination Agent to make Interest Drawings thereunder promptly after any
Regular Distribution Date to pay interest then due and payable on the
Certificates of such Trust at the Stated Interest Rate for such Trust to the
extent that the amount, if any, available to the Subordination Agent on such
Regular Distribution Date is not sufficient to pay such interest; provided,
however, that the maximum amount available to be drawn under a Liquidity
Facility with respect to any Trust on any Regular Distribution Date to fund any
shortfall of interest on Certificates of such Trust will not exceed the then
Maximum Available Commitment under such Liquidity Facility. The Liquidity
Facilities for any Trust do not provide for drawings thereunder to pay for
principal of or premium on the Certificates of such Trust or any interest on the
Certificates of such Trust in excess of the Stated Interest Rate for such Trust
or more than three semiannual installments of interest thereon or principal of
or interest or premium on the Certificates of any other Trust. (Liquidity
Facilities, Section 2.02; Intercreditor Agreement, Section 3.6) In addition, the
Liquidity Facilities with respect to each Trust will not cover interest payable
by the Depositary on the Deposits relating to such Trust.
 
     Each payment by the Liquidity Provider under each Liquidity Facility
reduces pro tanto the Maximum Available Commitment under such Liquidity
Facility, subject to reinstatement as hereinafter described. With respect to any
Interest Drawings under either Liquidity Facility for any Trust, upon
reimbursement of the relevant Liquidity Provider in full for the amount of such
Interest Drawings plus interest thereon, the Maximum Available Commitment under
such Liquidity Facility in respect of interest on the Certificates of such Trust
will be reinstated to an amount not to exceed the Stated Portion of the then
Required Amount of such Liquidity Facility; provided, however, that such
Liquidity Facility will not be so reinstated at any time after (i) a Liquidity
Event of Default shall have occurred and be continuing and (ii) less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes. With respect to any other drawings under such
Liquidity Facility, amounts available to be drawn thereunder are not subject to
reinstatement. The Required Amount of the Liquidity Facilities for any Trust
will be automatically increased or reduced from time to time to an amount equal
to the next three successive interest payments due on the Certificates of such
Trust (without regard to expected future payment of principal of such
Certificates) at the Stated Interest Rate for such Trust, but excluding interest
payable by the Depositary as described above. (Liquidity Facilities, Section
2.04(a); Intercreditor Agreement, Section 3.6(j))
 
     If at any time the short-term unsecured debt rating of a Liquidity Provider
for any Trust then issued by either Rating Agency is lower than the Threshold
Rating, the Liquidity Facility provided by such Liquidity Provider for the
related Class of Certificates will be required to be replaced. In the event that
such Liquidity Facility is not replaced within 10 days after notice of the
downgrading and as otherwise provided in the Intercreditor Agreement, the
Subordination Agent will request the Downgrade Drawing in an amount equal to the
then Maximum Available Commitment thereunder and will hold the proceeds thereof
in the Cash Collateral Account for such Trust as cash collateral to be used for
the same purposes and under the same circumstances as cash payments of Interest
Drawings under such Liquidity Facility would be used. (Liquidity Facilities,
Section 2.02(c); Intercreditor Agreement, Section 3.6(c))
 
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<PAGE>   71
 
     A "Replacement Facility" for any Liquidity Facility means an irrevocable
liquidity facility in substantially the form of the replaced Liquidity Facility,
including reinstatement provisions, or in such other form (which may include a
letter of credit) as shall permit the Rating Agencies to confirm in writing
their respective ratings then in effect for the Certificates (before downgrading
of such ratings, if any, as a result of the downgrading of the applicable
Liquidity Provider), in a face amount equal to the Stated Portion of the amount
of interest payable on the Certificates of such Trust (at the Stated Interest
Rate for such Trust, and without regard to expected future principal payments)
on the three Regular Distribution Dates following the date of replacement of
such Liquidity Facility (which will not cover scheduled interest payments with
respect to the Deposits relating to such Trust) and issued by a Person having
unsecured short-term debt ratings issued by both Rating Agencies which are equal
to or higher than the Threshold Rating. (Intercreditor Agreement, Section 1.1)
 
     "Threshold Rating" means the short-term unsecured debt rating of P-1 by
Moody's and A-1+ by Standard & Poor's.
 
     Each Liquidity Facility for each Trust provides that the relevant Liquidity
Provider's obligations thereunder will expire on the earliest of (i) 364 days
after the Issuance Date; (ii) the date on which the Subordination Agent delivers
to such Liquidity Provider a certification that all of the Certificates of such
Trust have been paid in full; (iii) the date on which the Subordination Agent
delivers to such Liquidity Provider a certification that a Replacement Facility
has been substituted for such Liquidity Facility; (iv) the fifth Business Day
following receipt by the Subordination Agent of a Termination Notice from such
Liquidity Provider (see "-- Liquidity Events of Default"); and (v) the date on
which no amount is or may (by reason of reinstatement) become available for
drawing under such Liquidity Facility. Each Liquidity Facility provides that the
scheduled expiration date thereof may be extended for additional 364-day periods
by mutual agreement. The Intercreditor Agreement will provide for the
replacement of any Liquidity Facility for any Trust (other than a Liquidity
Facility which expires no earlier than 15 days later than the final maturity
date) in the event that such Liquidity Facility is not extended at least 25 days
prior to its then scheduled expiration date. In the event such Liquidity
Facility is not so extended or replaced by the 25th day prior to its then
scheduled expiration date, the Subordination Agent shall request the
Non-Extension Drawing in an amount equal to the then Maximum Available
Commitment thereunder and hold the proceeds thereof in the Cash Collateral
Account for such Trust as cash collateral to be used for the same purposes and
under the same circumstances, and subject to the same conditions, as cash
payments of Interest Drawings under such Liquidity Facility would be used.
(Liquidity Facilities, Section 2.02(b))
 
     Continental may, at its option, arrange for a Replacement Facility at any
time to replace either Liquidity Facility for any Trust (including without
limitation any Replacement Facility described in the following sentence). In
addition, if any Liquidity Provider shall determine not to extend its Liquidity
Facility, then such Liquidity Provider may, at its option, arrange for a
Replacement Facility to replace such Liquidity Facility during the period no
earlier than 40 days and no later than 25 days prior to the then scheduled
expiration date of such Liquidity Facility. If any Replacement Facility is
provided at any time after the Downgrade Drawing or a Non-Extension Drawing
under such Liquidity Facility, the funds with respect to the relevant Liquidity
Facility on deposit in the Cash Collateral Account for such Trust will be
returned to the Liquidity Provider being replaced. (Intercreditor Agreement,
Section 3.6(e))
 
     The Intercreditor Agreement provides that, upon receipt by the
Subordination Agent of a Termination Notice with respect to any Liquidity
Facility from the relevant Liquidity Provider (given as described in
"-- Liquidity Events of Default"), the Subordination Agent will request a Final
Drawing under such Liquidity Facility in an amount equal to the then Maximum
Available Commitment thereunder and will hold the proceeds thereof in the Cash
Collateral Account for the related Trust as cash collateral to be used for the
same purposes and under the same circumstances, and subject to the same
conditions, as cash payments of Interest Drawings under such Liquidity Facility
would be used. (Liquidity Facilities, Section 2.02(d); Intercreditor Agreement,
Section 3.6(i))
 
     Drawings under any Liquidity Facility will be made by delivery by the
Subordination Agent of a certificate in the form required by such Liquidity
Facility. Upon receipt of such a certificate, the relevant
 
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<PAGE>   72
 
Liquidity Provider is obligated to make payment of the drawing requested thereby
in immediately available funds. Upon payment by any Liquidity Provider of the
amount specified in any drawing under any Liquidity Facility, such Liquidity
Provider will be fully discharged of its obligations under such Liquidity
Facility with respect to such drawing and will not thereafter be obligated to
make any further payments under such Liquidity Facility in respect of such
drawing to the Subordination Agent or any other person.
 
REIMBURSEMENT OF DRAWINGS
 
     Amounts drawn under any Liquidity Facility by reason of an Interest Drawing
or the Final Drawing will be immediately due and payable, together with interest
on the amount of such drawing, with respect to the period from the date of its
borrowing to (but excluding) the third business day following the applicable
Liquidity Provider's receipt of the notice of such Interest Drawing, at the Base
Rate plus 1.75% per annum, and thereafter, at LIBOR for the applicable Interest
Period plus 1.75% per annum, provided that, in the case of a Final Drawing, the
Subordination Agent may convert the Final Drawing into a Drawing bearing
interest at the Base Rate plus 1.75% per annum on the last day of an Interest
Period for such Drawing; provided, further, that the Subordination Agent will be
obligated to reimburse such amounts only to the extent that the Subordination
Agent has funds available therefor.
 
     The amount drawn under any Liquidity Facility for any Trust by reason of a
Downgrade Drawing or a Non-Extension Drawing will be treated as follows: (i)
such amount will be released on any Distribution Date to the relevant Liquidity
Provider to the extent that such amount exceeds the Stated Portion of the
Required Amount; (ii) any portion of such amount withdrawn from the Cash
Collateral Account for such Certificates to pay interest on such Certificates
will be treated in the same way as Interest Drawings; and (iii) the balance of
such amount will be invested in Eligible Investments. The Downgrade Drawing
under any Liquidity Facility (other than any portion thereof applied to the
payment of interest on the Certificates) will bear interest (i) during the
period from the date of its borrowing to (but excluding) the stated expiry date
of such Liquidity Facility, in an amount equal to the investment earnings on
amounts deposited in the relevant Cash Collateral Account attributable to such
Liquidity Facility plus .35% per annum on the amount of such Downgrade Drawing
and (ii) thereafter, at a rate equal to LIBOR for the applicable Interest Period
plus .40% per annum, and a Non-Extension Drawing (other than any portion thereof
applied to the payment of interest on the Certificates) will bear interest with
respect to the period from the date of borrowing to (but excluding) the third
Business Day following the applicable Liquidity Provider's receipt of the notice
of such Non-Extension Drawing, at the Base Rate plus .40% per annum, and
thereafter at LIBOR for the applicable Interest Period plus .40% per annum;
provided that the Subordination Agent will be obligated to pay such amount only
to the extent that the Subordination Agent has funds available therefor.
(Liquidity Facilities, Section 2.06)
 
LIQUIDITY EVENTS OF DEFAULT
 
     Events of Default under each Liquidity Facility (each, a "Liquidity Event
of Default") will consist of: (i) the acceleration of all the Equipment Notes
(provided, that during the Delivery Period the aggregate principal amount
thereof exceeds $280 million) and (ii) certain bankruptcy or similar events
involving Continental. (Liquidity Facilities, Section 1.01)
 
     If (i) any Liquidity Event of Default under any Liquidity Facility has
occurred and is continuing and (ii) less than 65% of the aggregate outstanding
principal amount of all Equipment Notes are Performing Equipment Notes, the
applicable Liquidity Provider may, in its discretion, give a notice of
termination of the related Liquidity Facility (a "Termination Notice") the
effect of which will be to cause (i) such Liquidity Facility to expire on the
fifth Business Day after the date on which such Termination Notice is received
by the Subordination Agent, (ii) the Subordination Agent to promptly request,
and the Liquidity Provider to make, a Final Drawing thereunder in an amount
equal to the then Maximum Available Commitment thereunder, (iii) any Drawing
remaining unreimbursed as of the date of termination to be automatically
converted into a Final Drawing under such Liquidity Facility, and (iv) all
amounts owing to such Liquidity Provider automatically to become accelerated.
Notwithstanding the foregoing, the Subordination Agent will be obligated to pay
amounts owing to the Liquidity Providers only to the extent of funds available
therefor after giving effect to the payments in accordance with the provisions
set forth under "Description of the
 
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<PAGE>   73
 
Intercreditor Agreement -- Priority of Distributions". (Liquidity Facilities,
Section 6.01) Upon the circumstances described below under "Description of the
Intercreditor Agreement -- Intercreditor Rights", a Liquidity Provider may
become the Controlling Party with respect to the exercise of remedies under the
Indentures. (Intercreditor Agreement, Section 2.6(c))
 
LIQUIDITY PROVIDERS
 
     The initial Liquidity Providers for each Trust are ABN AMRO and ING, each
of which is a bank organized under the laws of the Netherlands. ABN AMRO has
short term debt ratings of P-1 from Moody's and A-1+ from Standard & Poor's. ING
has short term debt ratings of P-1 from Moody's and A-1+ from Standard & Poor's.
 
                   DESCRIPTION OF THE INTERCREDITOR AGREEMENT
 
     The following summary describes certain provisions of the Intercreditor
Agreement. The summary does not purport to be complete and reference is made to
all of the provisions of the Intercreditor Agreement, which has been filed as an
exhibit to the Registration Statement and is available as set forth under the
heading "Available Information".
 
INTERCREDITOR RIGHTS
 
  Controlling Party
 
     Pursuant to the Intercreditor Agreement, the Trustees and each Liquidity
Provider has agreed that, with respect to any Indenture at any given time, the
Loan Trustee will be directed (a) in taking, or refraining from taking, any
action thereunder or with respect to the Equipment Notes issued thereunder, by
the holders of at least a majority of the outstanding principal amount of the
Equipment Notes issued thereunder (provided that, for so long as the
Subordination Agent is the registered holder of the Equipment Notes, the
Subordination Agent will act with respect to this clause (a) in accordance with
the directions of the Trustees (in the case of each such Trustee, with respect
to the Equipment Notes issued under such Indenture and held as Trust Property of
such Trust) constituting, in the aggregate, directions with respect to such
principal amount of Equipment Notes), so long as no Indenture Default (which,
with respect to Leased Aircraft, has not been cured by the applicable Owner
Trustee or Owner Participant) shall have occurred and be continuing thereunder,
and (b) after the occurrence and during the continuance of an Indenture Default
thereunder (which, with respect to Leased Aircraft, has not been cured by the
applicable Owner Trustee or Owner Participant), in taking, or refraining from
taking, any action thereunder or with respect to the Equipment Notes issued
thereunder, including exercising remedies thereunder or with respect to such
Equipment Notes (including acceleration of such Equipment Notes or foreclosing
the lien on the Aircraft securing such Equipment Notes), by the Controlling
Party, subject to the limitations described below. See "Description of the New
Certificates -- Indenture Defaults and Certain Rights Upon an Indenture Default"
for a description of the rights of the Certificateholders of each Trust to
direct the respective Trustees. Notwithstanding the foregoing, at any time after
18 months from the earlier to occur of (x) the date on which the entire
available amount under any Liquidity Facility shall have been drawn (for any
reason other than a Downgrade Drawing or a Non-Extension Drawing) and remain
unreimbursed and (y) the date on which all Equipment Notes shall have been
accelerated (provided, that prior to the Delivery Period Termination Date the
aggregate outstanding principal amount thereof exceeds $280 million), the
Liquidity Providers with at least two-thirds of unreimbursed Liquidity
Obligations will have the right to elect to become the Controlling Party with
respect to any Indenture. For purposes of giving effect to the foregoing, the
Trustees (other than the Controlling Party) will irrevocably agree, and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) will be deemed to agree by virtue of their purchase of
Certificates, that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the Equipment Notes as
directed by the Controlling Party. (Intercreditor Agreement, Section 2.6) For a
description of certain limitations on the Controlling Party's rights to exercise
remedies, see "Description of the Equipment Notes -- Remedies".
 
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<PAGE>   74
 
  Sale of Equipment Notes or Aircraft
 
     Upon the occurrence and during the continuation of any Indenture Default
under any Indenture, the Controlling Party may accelerate and, subject to the
provisions of the immediately following sentence, sell all (but not less than
all) of the Equipment Notes issued under such Indenture to any person. So long
as any Certificates are outstanding, during nine months after the earlier of (x)
the acceleration of the Equipment Notes under any Indenture and (y) the
bankruptcy or insolvency of Continental, without the consent of each Trustee,
(a) no Aircraft subject to the lien of such Indenture or such Equipment Notes
may be sold, if the net proceeds from such sale would be less than the Minimum
Sale Price for such Aircraft or such Equipment Notes, and (b) with respect to
any Leased Aircraft, the amount and payment dates of rentals payable by
Continental under the Lease for such Leased Aircraft may not be adjusted, if, as
a result of such adjustment, the discounted present value of all such rentals
would be less than 75% of the discounted present value of the rentals payable by
Continental under such Lease before giving effect to such adjustment, in each
case, using the weighted average interest rate of the Equipment Notes issued
under such Indenture as the discount rate.
 
     The Subordination Agent may from time to time during the continuance of an
Indenture Default (and before the occurrence of a Triggering Event) commission
Appraisals with respect to an Aircraft at the request of the Controlling Party.
(Intercreditor Agreement, Section 4.1(a)(iii))
 
PRIORITY OF DISTRIBUTIONS
 
     So long as no Triggering Event shall have occurred, the payments in respect
of the Equipment Notes and certain other payments received on any Distribution
Date will be promptly distributed by the Subordination Agent on such
Distribution Date in the following order of priority:
 
          (i) to pay the Liquidity Obligations (other than any interest accrued
     thereon or the principal amount of any Drawing) (the "Liquidity Expenses")
     to the Liquidity Providers;
 
          (ii) to pay interest accrued on the Liquidity Obligations to the
     Liquidity Providers;
 
          (iii) to pay or reimburse the Liquidity Providers for the Liquidity
     Obligations (other than amounts payable pursuant to clauses (i) and (ii)
     above) and/or, if applicable, to replenish each Cash Collateral Account up
     to the Required Amount;
 
          (iv) to pay Expected Distributions to the holders of Class A
     Certificates;
 
          (v) to pay Expected Distributions to the holders of Class B
     Certificates;
 
          (vi) to pay Expected Distributions to the holders of Class C
     Certificates; and
 
          (vii) to pay certain fees and expenses of the Subordination Agent and
     the Trustees.
 
     "Expected Distributions" means, with respect to the Certificates of any
Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits relating to such Trust) and (y) the difference between (A) the
Pool Balance of such Certificates as of the immediately preceding Distribution
Date and (B) the Pool Balance of such Certificates as of the Current
Distribution Date, calculated on the basis that (i) the principal of the
Equipment Notes held in such Trust has been paid when due (whether at stated
maturity, upon redemption, prepayment or acceleration or otherwise) and such
payments have been distributed to the holders of such Certificates and (ii) the
principal of any Equipment Notes formerly held in such Trust that have been sold
pursuant to the Intercreditor Agreement has been paid in full and such payments
have been distributed to the holders of such Certificates, but without giving
effect to any reduction in the Pool Balance as a result of any distribution
attributable to Deposits.
 
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<PAGE>   75
 
     Subject to the terms of the Intercreditor Agreement, upon the occurrence of
a Triggering Event and at all times thereafter, all funds received by the
Subordination Agent in respect of the Equipment Notes and certain other payments
will be promptly distributed by the Subordination Agent in the following order
of priority:
 
          (i) to pay certain out-of-pocket costs and expenses actually incurred
     by the Subordination Agent or any Trustee or to reimburse any
     Certificateholder or the Liquidity Providers in respect of payments made to
     the Subordination Agent or any Trustee in connection with the protection or
     realization of the value of the Equipment Notes or any Trust Indenture
     Estate (the "Administration Expenses");
 
          (ii) to the Liquidity Providers, to pay the Liquidity Expenses;
 
          (iii) to the Liquidity Providers, to pay interest accrued on the
     Liquidity Obligations;
 
          (iv) to the Liquidity Providers, to pay the outstanding amount of all
     Liquidity Obligations and/or, if applicable, with respect to any particular
     Liquidity Facility, unless (x) less than 65% of the aggregate outstanding
     principal amount of all Equipment Notes are Performing Equipment Notes and
     a Liquidity Event of Default shall have occurred and be continuing under
     such Liquidity Facility or (y) a Final Drawing shall have occurred under
     such Liquidity Facility, to replenish the Cash Collateral Account with
     respect to such Liquidity Facility up to the Stated Portion of the Required
     Amount for the related Class of Certificates (less the amount of any
     repayments of Interest Drawings under such Liquidity Facility while
     sub-clause (x) is applicable);
 
          (v) to pay certain fees, taxes, charges and other amounts payable to
     the Subordination Agent, any Trustee or any Certificateholder;
 
          (vi) to pay Adjusted Expected Distributions to the holders of Class A
     Certificates;
 
          (vii) to pay Adjusted Expected Distributions to the holders of Class B
     Certificates; and
 
          (viii) to pay Adjusted Expected Distributions to the holders of Class
     C Certificates.
 
     "Adjusted Expected Distributions" means, with respect to the Certificates
of any Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits relating to such Trust) and (y) the greater of:
 
          (A) the difference between (x) the Pool Balance of such Certificates
     as of the immediately preceding Distribution Date and (y) the Pool Balance
     of such Certificates as of the Current Distribution Date calculated on the
     basis that (i) the principal of the Non-Performing Equipment Notes held in
     such Trust has been paid in full and such payments have been distributed to
     the holders of such Certificates, (ii) the principal of the Performing
     Equipment Notes held in such Trust has been paid when due (but without
     giving effect to any unpaid acceleration of Performing Equipment Notes) and
     such payments have been distributed to the holders of such Certificates and
     (iii) the principal of any Equipment Notes formerly held in such Trust that
     have been sold pursuant to the Intercreditor Agreement has been paid in
     full and such payments have been distributed to the holders of such
     Certificates, but without giving effect to any reduction in the Pool
     Balance as a result of any distribution attributable to Deposits, and
 
          (B) the amount of the excess, if any, of (i) the Pool Balance of such
     Class of Certificates as of the immediately preceding Distribution Date
     (less the amount of the Deposits for such Class of Certificates as of such
     preceding Distribution Date other than any portion of such Deposits
     thereafter used to acquire Equipment Notes pursuant to the Note Purchase
     Agreement), over (ii) the Aggregate LTV Collateral Amount for such Class of
     Certificates for the Current Distribution Date;
 
provided that, until the date of the initial LTV Appraisals, clause (B) shall
not apply.
 
     For purposes of calculating Expected Distributions or Adjusted Expected
Distributions with respect to the Certificates of any Trust, any premium paid on
the Equipment Notes held in such Trust that has not been distributed to the
Certificateholders of such Trust (other than such premium or a portion thereof
applied to the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the amount of
Expected Distributions or Adjusted Expected Distributions.
 
                                       74

<PAGE>   76
 
     "Aggregate LTV Collateral Amount" for any Class of Certificates for any
Distribution Date means the sum of the applicable LTV Collateral Amounts for
each Aircraft, minus the Pool Balance for each Class of Certificates, if any,
senior to such Class, after giving effect to any distribution on such
Distribution Date of principal of the Equipment Notes held by the Trust or
Trusts of such senior Class or Classes.
 
     "LTV Collateral Amount" of any Aircraft for any Class of Certificates
means, as of any Distribution Date, the lesser of (i) the LTV Ratio for such
Class of Certificates multiplied by the Appraised Current Market Value of such
Aircraft (or with respect to any such Aircraft that has suffered an Event or
Loss under and as defined in any Lease or Indenture, the amount of the insurance
proceeds paid to the related Loan Trustee in respect thereof to the extent then
held by such Loan Trustee (and/or on deposit in the Special Payments Account) or
payable to such Loan Trustee in respect thereof) and (ii) the outstanding
principal amount of the Equipment Notes secured by such Aircraft after giving
effect to any principal payments of such Equipment Notes on or before such
Distribution Date.
 
     "LTV Ratio" means for the Class A Certificates 40.36%, for the Class B
Certificates 54.03% and for the Class C Certificates 65.19%.
 
     "Appraised Current Market Value" of any Aircraft means the lower of the
average and the median of the most recent three Appraisals of such Aircraft.
After a Triggering Event occurs and any Equipment Note becomes a Non-Performing
Equipment Note, the Subordination Agent shall obtain LTV Appraisals for the
Aircraft as soon as practicable and additional LTV Appraisals on or prior to
each anniversary of the date of such initial LTV Appraisals; provided that if
the Controlling Party reasonably objects to the appraised value of the Aircraft
shown in such Appraisals, the Controlling Party shall have the right to obtain
or cause to be obtained substitute LTV Appraisals (including LTV Appraisals
based upon physical inspection of the Aircraft).
 
     "Appraisal" means a fair market value appraisal (which may be a "desktop"
appraisal) performed by any Appraiser or any other nationally recognized
appraiser on the basis of an arm's-length transaction between an informed and
willing purchaser under no compulsion to buy and an informed and willing seller
under no compulsion to sell and both having knowledge of all relevant facts.
 
     In the case of Leased Aircraft Indentures relating to transactions in which
Boeing or an affiliate of Boeing is the Owner Participant, certain amounts
payable to the Trustees, the Subordination Agent and the Liquidity Providers,
including fees and expenses of the Trustees and the Subordination Agent and
indemnification obligations of Continental, will not be entitled to the benefits
of the lien of the Indentures. Consequently, if a default occurs in the payment
of any such amounts, and to the extent that such amounts are distributed to any
such party in accordance with the priorities of distribution described above,
the holders of one or more junior Classes of Certificates may not receive the
full amount due them even if all Equipment Notes are eventually paid in full,
and any unpaid amounts will be unsecured claims against Continental.
 
     Interest Drawings under the Liquidity Facility and withdrawals from the
Cash Collateral Account, in each case in respect of interest on the Certificates
of any Trust, will be distributed to the Trustee for such Trust, notwithstanding
the priority of distributions set forth in the Intercreditor Agreement and
otherwise described herein. All amounts on deposit in the Cash Collateral
Account for any Trust that are in excess of the Required Amount will be paid to
the applicable Liquidity Provider.
 
VOTING OF EQUIPMENT NOTES
 
     In the event that the Subordination Agent, as the registered holder of any
Equipment Note, receives a request for its consent to any amendment,
modification, consent or waiver under such Equipment Note or the related
Indenture (or, if applicable, the Lease, the Participation Agreement or other
related document), (i) if no Indenture Default shall have occurred and be
continuing with respect to such Indenture, the Subordination Agent shall request
instructions from the Trustees and shall vote or consent in accordance with the
directions of the Trustees (in the case of each such Trustee, with respect to
the Equipment Notes held in such Trust) constituting, in the aggregate,
directions with respect to the requisite principal amount of Equipment Notes
under such Indenture and (ii) if any Indenture Default shall have occurred and
be continuing with respect to
 
                                       75

<PAGE>   77
 
such Indenture, the Subordination Agent will exercise its voting rights as
directed by the Controlling Party, subject to certain limitations; provided that
no such amendment, modification, consent or waiver shall, without the consent of
each Liquidity Provider, reduce the amount of rent, supplemental rent or
stipulated loss values payable by Continental under any Lease or reduce the
amount of principal or interest payable by Continental under any Equipment Note
issued under any Owned Aircraft Indenture. (Intercreditor Agreement, Section
9.1)
 
THE SUBORDINATION AGENT
 
     Wilmington Trust Company is the Subordination Agent under the Intercreditor
Agreement. Continental and its affiliates may from time to time enter into
banking and trustee relationships with the Subordination Agent and its
affiliates. The Subordination Agent's address is Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.
 
     The Subordination Agent may resign at any time, in which event a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. The Controlling Party may remove the Subordination Agent for cause as
provided in the Intercreditor Agreement. In such circumstances, a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. Any resignation or removal of the Subordination Agent and appointment
of a successor Subordination Agent does not become effective until acceptance of
the appointment by the successor Subordination Agent. (Intercreditor Agreement,
Section 8.1)
 
                 DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
 
THE AIRCRAFT
 
     The Aircraft consist of eight Boeing 757-224 aircraft, eighteen Boeing
737-524 and four Boeing 737-724 aircraft, all of which will be newly delivered
by the manufacturer at the time that the Equipment Notes relating thereto are
issued. The Aircraft have been designed to be in compliance with Stage 3 noise
level standards, which are the most restrictive regulatory standards currently
in effect in the United States for aircraft noise abatement.
 
  Boeing 757-200 Aircraft
 
     The Boeing 757-200 aircraft is a medium-range aircraft with a seating
capacity of approximately 183 passengers. The engine type utilized on
Continental's 757-224 is anticipated to be the Rolls Royce RB211-535E4B.
 
  Boeing 737-500 Aircraft
 
     The Boeing 737-500 aircraft is a medium-range aircraft with a seating
capacity of approximately 104 passengers. The engine type utilized on
Continental's 737-524 is anticipated to be the CFM International CFM56-3-B2.
 
  Boeing 737-700 Aircraft
 
     The Boeing 737-700 aircraft is a medium-range aircraft with a seating
capacity of approximately 124 passengers. The Boeing 737-700 has not yet entered
commercial airline service, and the initial delivery of such model is scheduled
for November 1997. The engine type utilized on Continental's 737-724 is
anticipated to be the CFM International CFM 56-7B24. Deliveries of the Boeing
737-724 aircraft to Continental are subject to Boeing obtaining certain
approvals of the U.S. Federal Aviation Administration with respect to such
model. See "-- Deliveries of Aircraft".
 
                                       76

<PAGE>   78
 
THE APPRAISALS
 
     The table below sets forth the appraised values and certain additional
information regarding the Aircraft.
 

<TABLE>
<CAPTION>
                   AIRCRAFT                                                      APPRAISED VALUE
  AIRCRAFT           TAIL        MANUFACTURER'S                           ------------------------------
    TYPE            NUMBER       SERIAL NUMBER       DELIVERY MONTH*       AISI         BK         MBA
- -------------      --------      --------------      ---------------      ------      ------      ------
                                                                             (IN MILLIONS OF DOLLARS)
<C>                <C>           <C>                 <C>                  <C>         <C>         <C>
 757-224            118            27560               March 1997         $53.72      $53.25      $59.43
 757-224            119            27561                May 1997           53.80       53.25       59.68
 757-224            120            27562               June 1997           53.97       53.25       60.18
 757-224            121            27563               July 1997           54.05       53.75       60.43
 757-224            122            27564              August 1997          54.13       53.75       60.68
 757-224            126            28966             December 1997         54.47       54.00       61.69
 757-224            123            27565              January 1998         54.55       54.25       61.94
 757-224            127            28967              January 1998         54.55       54.25       61.94
 737-524            638            28899               July 1997           31.09       27.80       27.61
 737-524            639            28900               July 1997           31.09       27.80       27.61
 737-524            640            28901              August 1997          31.14       27.80       27.72
 737-524            641            28902              August 1997          31.14       27.80       27.72
 737-524            642            28903              August 1997          31.14       27.80       27.72
 737-524            643            28904             September 1997        31.19       27.80       27.83
 737-524            644            28905             September 1997        31.19       27.80       27.83
 737-524            645            28906              October 1997         31.24       27.80       27.93
 737-524            646            28907              October 1997         31.24       27.80       27.93
 737-524            647            28908             November 1997         31.29       28.00       28.04
 737-524            648            28909             November 1997         31.29       28.00       28.04
 737-524            649            28910             December 1997         31.34       28.00       28.15
 737-524            650            28911             December 1997         31.34       28.00       28.15
 737-524            651            28912             December 1997         31.34       28.00       28.15
 737-524            652            28913              January 1998         31.39       28.25       28.26
 737-524            653            28914              January 1998         31.39       28.25       28.26
 737-524            654            28915             February 1998         31.43       28.25       28.36
 737-524            655            28916             February 1998         31.43       28.25       28.36
 737-724            701            28762              January 1998         36.83       37.75       36.49
 737-724            702            28763              January 1998         36.83       37.75       36.49
 737-724            703            28764             February 1998         36.89       37.75       36.57
 737-724            704            28765             February 1998         36.89       37.75       36.57
</TABLE>

 
- ---------------
 
* Reflects the scheduled delivery month under Continental's purchase agreement
  with the manufacturer. Aircraft 118 and 119 were delivered in March and May
  1997, respectively. The actual delivery date for the other Aircraft may be
  subject to delay. See "-- Deliveries of Aircraft".
 
     The appraised values set forth in the foregoing chart were determined by
the following three independent aircraft appraisal and consulting firms: AISI,
BK and MBA. Each Appraiser provided its opinion as to the appraised value of
each Aircraft as of February 25, 1997, January 8, 1997 and February 21, 1997,
respectively, and projected as of the scheduled delivery month of each such
Aircraft. As part of this process, all three Appraisers performed "desk-top"
appraisals without any physical inspection of the Aircraft. The appraisals are
based on various assumptions and methodologies, which vary among the appraisals.
The Appraisers have delivered letters summarizing their respective appraisals,
copies of which are annexed to this Prospectus as Appendix II. For a discussion
of the assumptions and methodologies used in each of the appraisals, reference
is hereby made to such summaries.
 
     An appraisal is only an estimate of value, is not indicative of the price
at which an aircraft may be purchased from the manufacturer and should not be
relied upon as a measure of realizable value; the proceeds
 
                                       77

<PAGE>   79
 
realized upon a sale of any Aircraft may be less than the appraised value
thereof. The value of the Aircraft in the event of the exercise of remedies
under the applicable Indenture will depend on market and economic conditions,
the availability of buyers, the condition of the Aircraft and other similar
factors. Accordingly, there can be no assurance that the proceeds realized upon
any such exercise with respect to the Equipment Notes and the Aircraft pursuant
to the applicable Indenture would be as appraised or sufficient to satisfy in
full payments due on the Equipment Notes issued thereunder or the Certificates.
 
DELIVERIES OF AIRCRAFT
 
     The Aircraft are scheduled for delivery under Continental's purchase
agreement with Boeing from March 1997 to February 1998. See the table under
"-- The Appraisals" for the scheduled month of delivery of each Aircraft. Under
such purchase agreement, delivery of an Aircraft may be delayed due to
"Excusable Delay", which is defined to include, among other things, acts of God,
governmental acts or failures to act, strikes or other labor troubles, inability
to procure materials, or any other cause beyond Boeing's control or not
occasioned by Boeing's fault or negligence. In addition, the Boeing 737-700
aircraft model has not yet received the necessary U.S. Federal Aviation
Administration approvals, which Boeing is required to obtain under its purchase
agreement with Continental. Boeing has advised Continental that it expects to
receive such approvals by no later than October 1997, although no assurance can
be given that this will occur. The first of the four Boeing 737-724 aircraft
included in the Aircraft is scheduled for delivery in January 1998.
 
     The Note Purchase Agreement provides that the Delivery Period will expire
on March 31, 1998, subject to extension, in the event that the Equipment Notes
relating to all of the Aircraft (or Substitute Aircraft in lieu thereof) have
not been purchased by the Trustees on or prior to such date due to any reason
beyond the control of Continental and not occasioned by Continental's fault or
negligence, to the earlier of (i) the purchase by the Trustees of Equipment
Notes relating to the last Aircraft (or a Substitute Aircraft in lieu thereof)
and (ii) June 30, 1998.
 
     If delivery of any Aircraft is delayed by more than 30 days after the month
scheduled for delivery or beyond June 30, 1998, Continental has the right to
replace such Aircraft with a Substitute Aircraft, subject to certain conditions.
See "-- Substitute Aircraft". If delivery of any Aircraft is delayed beyond the
Delivery Period Termination Date and Continental does not exercise its right to
replace such Aircraft with a Substitute Aircraft, there will be unused Deposits
that will be distributed to Certificateholders together with accrued and unpaid
interest thereon and a premium. See "Description of the Deposit
Agreements -- Unused Deposits".
 
SUBSTITUTE AIRCRAFT
 
     If the delivery date for any Aircraft is delayed (i) more than 30 days
after the month scheduled for delivery or (ii) beyond June 30, 1998, Continental
may identify for delivery a Substitute Aircraft therefor meeting the following
conditions: (i) a Substitute Aircraft must be a Boeing 757-200, 737-500 or
737-700 aircraft manufactured after the Issuance Date, (ii) one or more
Substitute Aircraft of the same or different types may be substituted for one or
more Aircraft of the same or different types so long as after giving effect
thereto the maximum principal amount of Equipment Notes of each Series issued in
respect of the Substitute Aircraft under the Mandatory Economic Terms would not
exceed the maximum principal amount of the Equipment Notes of each Series that
could have been issued under the Mandatory Economic Terms in respect of the
replaced Aircraft and (iii) Continental will be obligated to obtain written
confirmation from each Rating Agency that substituting such Substitute Aircraft
for the replaced Aircraft will not result in a withdrawal, suspension or
downgrading of the ratings of any Class of Certificates.
 
                       DESCRIPTION OF THE EQUIPMENT NOTES
 
     The statements under this caption are summaries and do not purport to be
complete. The summaries make use of terms defined in and reference is made to
all of the provisions of the Equipment Notes, the Indentures, the Leases, the
Participation Agreements, the Trust Agreements and the Note Purchase Agreement.
Except as otherwise indicated, the following summaries relate to the Equipment
Notes, the Indenture, the Lease, the Participation Agreement, and the Trust
Agreement that may be applicable to each
 
                                       78

<PAGE>   80
 
Aircraft, forms of which are filed as exhibits to the Registration Statement and
are available as set forth under the heading "Available Information".
 
     Under the Note Purchase Agreement, Continental will have the option of
entering into a leveraged lease financing or a debt financing with respect to
each Aircraft. The Note Purchase Agreement provides for the relevant parties to
enter into either (i) with respect to each Leased Aircraft, a Participation
Agreement, a Lease and an Indenture (among other documents) relating to the
financing of such Aircraft and (ii) with respect to each Owned Aircraft, a
Participation Agreement and an Owned Aircraft Indenture relating to the
financing of such Owned Aircraft. The description of such agreements in this
Offering Circular is based on the forms of such agreements annexed to the Note
Purchase Agreement. Requests for the Note Purchase Agreement, including the
forms of such agreements annexed thereto, should be addressed to the Trustees.
 
     Continental has obtained commitments of certain companies to act as the
Owner Participant with respect to the leveraged leases for all of the Aircraft
and, in certain cases, is seeking alternative commitments on more favorable
terms. The existing commitments are subject to satisfaction of certain
conditions with respect to each Aircraft and, in certain cases, Continental may
elect to terminate such commitments with respect to certain Aircraft.
Accordingly, Continental may select one or more other Owner Participants for
some or all of such Aircraft or finance such Aircraft as Owned Aircraft rather
than Leased Aircraft. Such Owner Participants may request revisions to the forms
of the Participation Agreement, the Lease and the Leased Aircraft Indenture that
are contemplated by the Note Purchase Agreement, so that the terms of such
agreements applicable to any particular Leased Aircraft may differ from the
description of such agreements contained in this Prospectus. However, under the
Note Purchase Agreement, the terms of such agreements are required to (i)
contain the Mandatory Documents Terms and (ii) not vary the Mandatory Economic
Terms. In addition, Continental will be obligated (i) to certify to the Trustees
that any such modifications do not materially and adversely affect the
Certificateholders and (ii) to obtain written confirmation from each Rating
Agency that the use of versions of such agreements modified in any material
respect would not result in a withdrawal, suspension or downgrading of the
ratings of any Class of Certificates. See "Description of the New
Certificates -- Obligation to Purchase Equipment Notes". Each Owner Participant
will be required to satisfy certain requirements, including having a minimum
combined capital and surplus or net worth.
 
GENERAL
 
     The Equipment Notes will be issued in three series with respect to each
Aircraft. The Equipment Notes with respect to each Leased Aircraft will be
issued under a separate Leased Aircraft Indenture between First Security Bank,
National Association, as Owner Trustee of a trust for the benefit of the Owner
Participant who will be the beneficial owner of such Aircraft, and Wilmington
Trust Company, as Leased Aircraft Trustee. The Equipment Notes with respect to
each Owned Aircraft will be issued under a separate Owned Aircraft Indenture
between Continental and Wilmington Trust Company, as Owned Aircraft Trustee.
 
     The related Owner Trustee will lease each Leased Aircraft to Continental
pursuant to a separate Lease between such Owner Trustee and Continental with
respect to such Leased Aircraft. Under each Lease, Continental will be obligated
to make or cause to be made rental and other payments to the related Leased
Aircraft Trustee on behalf of the related Owner Trustee, which rental and other
payments will be at least sufficient to pay in full when due all payments
required to be made on the Equipment Notes issued with respect to such Leased
Aircraft. The Equipment Notes issued with respect to the Leased Aircraft will
not, however, be direct obligations of, or guaranteed by, Continental.
Continental's rental obligations under each Lease and Continental's obligations
under the Equipment Notes issued with respect to each Owned Aircraft will be
general obligations of Continental.
 
SUBORDINATION
 
     Series B Equipment Notes issued in respect of any Aircraft will be
subordinated in right of payment to Series A Equipment Notes issued in respect
of such Aircraft and Series C Equipment Notes issued in respect of such Aircraft
will be subordinated in right of payment to such Series B Equipment Notes. On
each Equipment Note payment date, (i) payments of interest and principal due on
Series A Equipment Notes
 
                                       79

<PAGE>   81
 
issued in respect of any Aircraft will be made prior to payments of interest and
principal due on Series B Equipment Notes issued in respect of such Aircraft and
(ii) payments of interest and principal due on Series B Equipment Notes issued
in respect of any Aircraft will be made prior to payments of interest and
principal due on Series C Equipment Notes issued in respect of such Aircraft.
 
PRINCIPAL AND INTEREST PAYMENTS
 
     Subject to the provisions of the Intercreditor Agreement, interest paid on
the Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth on the cover page of this Prospectus with respect to Certificates issued
by such Trust (subject to change as provided in the Registration Rights
Agreement) until the final expected Regular Distribution Date for such Trust.
Subject to the provisions of the Intercreditor Agreement, principal paid on the
Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust in scheduled amounts on the dates set forth
herein until the final expected Regular Distribution Date for such Trust.
 
     Interest is payable on the unpaid principal amount of each Equipment Note
at the rate applicable to such Equipment Note on April 1 and October 1 in each
year, commencing on October 1, 1997, or, if later, the first such date to occur
after initial issuance thereof. Such interest is computed on the basis of a
360-day year of twelve 30-day months. Under certain circumstances described in
"The Exchange Offer -- Terms of the Exchange Offer-General", the interest rates
for the Equipment Notes may be increased to the extent described therein.
 
     Scheduled principal payments on the Equipment Notes will be made on April 1
and October 1 in certain years, commencing April 1, 1998. See "Description of
the New Certificates -- Pool Factors" for a discussion of the scheduled payments
of principal of the Equipment Notes and possible revisions thereto.
 
     If any date scheduled for any payment of principal, premium (if any) or
interest with respect to the Equipment Notes is not a Business Day, such payment
will be made on the next succeeding Business Day without any additional
interest.
 
REDEMPTION
 
     If an Event of Loss occurs with respect to any Aircraft and such Aircraft
is not replaced by Continental under the related Lease (in the case of a Leased
Aircraft) or under the related Owned Aircraft Indenture (in the case of an Owned
Aircraft), the Equipment Notes issued with respect to such Aircraft will be
redeemed, in whole, in each case at a price equal to the aggregate unpaid
principal amount thereof, together with accrued interest thereon to, but not
including, the date of redemption, but without premium, on a Special
Distribution Date. (Indentures, Section 2.10(a))
 
     If Continental exercises its right to terminate a Lease under Section 9 of
such Lease, the Equipment Notes relating to the applicable Leased Aircraft will
be redeemed, in whole, on a Special Distribution Date at a price equal to the
aggregate unpaid principal amount thereof, together with accrued interest
thereon to, but not including, the date of redemption, plus, in the case of any
series of Equipment Notes, if such redemption is made prior to the Premium
Termination Date applicable to such Series, a Make-Whole Premium. (Leased
Aircraft Indentures, Section 2.10(b)). See "-- The Leases -- Lease Termination".
 
     All of the Equipment Notes issued with respect to a Leased Aircraft may be
redeemed prior to maturity as part of a refunding or refinancing thereof under
Section 11 of the applicable Participation Agreement, and all of the Equipment
Notes issued with respect to the Owned Aircraft may be redeemed prior to
maturity at any time at the option of Continental, in each case at a price equal
to the aggregate unpaid principal thereof, together with accrued interest
thereon to, but not including, the date of redemption, plus, in the case of any
series of Equipment Notes, if such redemption is made prior to the Premium
Termination Date applicable to such Series, a Make-Whole Premium. (Indentures,
Section 2.11) If notice of such a redemption shall have been given in connection
with a refinancing of Equipment Notes with respect to a Leased Aircraft, such
notice
 
                                       80

<PAGE>   82
 
may be revoked not later than three days prior to the proposed redemption date.
(Leased Aircraft Indentures, Section 2.12)
 
     If, with respect to a Leased Aircraft, (x) one or more Lease Events of
Default shall have occurred and be continuing, (y) in the event of a bankruptcy
proceeding involving Continental, (i) during the Section 1110 Period, the
trustee in such proceeding or Continental does not agree to perform its
obligations under the related Lease or (ii) at any time after agreeing to
perform such obligations, such trustee or Continental ceases to perform such
obligations such that the stay period applicable under the U.S. Bankruptcy Code
comes to an end or (z) the Equipment Notes with respect to such Aircraft have
been accelerated or the Leased Aircraft Trustee with respect to such Equipment
Notes takes action or notifies the applicable Owner Trustee that it intends to
take action to foreclose the lien of the related Leased Aircraft Indenture or
otherwise commence the exercise of any significant remedy under such Indenture
or the related Lease, then in each case all, but not less than all, of the
Equipment Notes issued with respect to such Leased Aircraft may be purchased by
the Owner Trustee or Owner Participant on the applicable purchase date at a
price equal to the aggregate unpaid principal thereof, together with accrued and
unpaid interest thereon to, but not including, the date of purchase, but without
any premium (provided that a Make-Whole Premium shall be payable if such
Equipment Notes are to be purchased pursuant to clause (x) when a Lease Event of
Default shall have occurred and been continuing for less than 120 days). (Leased
Aircraft Indentures, Section 2.13) Continental as owner of the Owned Aircraft
has no comparable right under the Owned Aircraft Indentures to purchase the
Equipment Notes under such circumstances.
 
     "Make-Whole Premium" 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 Premium, "Treasury Yield" means,
at the date of determination with respect to any Equipment Note, the interest
rate (expressed as a semiannual 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 semiannual 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 in 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 Premium 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.
 
     "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.
 
                                       81

<PAGE>   83
 
SECURITY
 
     The Equipment Notes issued with respect to each Leased Aircraft will be
secured by (i) an assignment by the related Owner Trustee to the related Leased
Aircraft Trustee of such Owner Trustee's rights, except for certain limited
rights, under the Lease with respect to the related Aircraft, including the
right to receive payments of rent thereunder, (ii) a mortgage to such Leased
Aircraft Trustee of such Aircraft, subject to the rights of Continental under
such Lease, and (iii) an assignment to such Leased Aircraft Trustee of certain
of such Owner Trustee's rights under the purchase agreement between Continental
and the related manufacturer. Unless and until an Indenture Default with respect
to a Leased Aircraft has occurred and is continuing, the Leased Aircraft Trustee
may not exercise the rights of the Owner Trustee under the related Lease, except
the Owner Trustee's right to receive payments of rent due thereunder. The
assignment by the Owner Trustee to the Leased Aircraft Trustee of its rights
under the related Lease will exclude certain rights of such Owner Trustee and
the related Owner Participant, including the rights of the Owner Trustee and the
Owner Participant with respect to indemnification by Continental for certain
matters, insurance proceeds payable to such Owner Trustee in its individual
capacity or to such Owner Participant under public liability insurance
maintained by Continental under such Lease or by such Owner Trustee or such
Owner Participant, insurance proceeds payable to such Owner Trustee in its
individual capacity or to such Owner Participant under certain casualty
insurance maintained by such Owner Trustee or such Owner Participant under such
Lease and certain reimbursement payments made by Continental to such Owner
Trustee. (Leased Aircraft Indenture, Granting Clause) The Equipment Notes are
not cross-collateralized, and, consequently, the Equipment Notes issued in
respect of any one Aircraft are not secured by any of the other Aircraft or
replacement aircraft therefor (as described in "--The Leases--Events of Loss")
or the Leases related thereto.
 
     The Equipment Notes issued with respect to each Owned Aircraft are secured
by (i) a mortgage to the Owned Aircraft Trustee of such Aircraft and (ii) an
assignment to the Owned Aircraft Trustee of certain of Continental's rights
under its purchase agreement with the related manufacturer.
 
     Funds, if any, held from time to time by the Loan Trustee with respect to
any Aircraft, including funds held as the result of an Event of Loss to such
Aircraft or, in the case of a Leased Aircraft, termination of the Lease, if any,
relating thereto, will be invested and reinvested by such Loan Trustee, at the
direction of the related Owner Trustee in the case of the Leased Aircraft or
Continental in the case of the Owned Aircraft (except in the case of certain
Indenture Defaults), in investments described in the related Indenture. (Leased
Aircraft Indentures, Section 5.09; Owned Aircraft Indentures, Section 6.06)
 
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
 
     The following tables set forth examples of loan to Aircraft value ratios
for the Equipment Notes issued in respect of Aircraft as of the Regular
Distribution Dates that occur after the scheduled date of original issuance of
such Equipment Notes, assuming that the Equipment Notes in the maximum principal
amount are issued in respect of each such Aircraft. These examples were utilized
by Continental in preparing the Assumed Amortization Schedule, although such
schedule may not be applicable in the case of any particular Aircraft. See
"Description of the New Certificates -- Pool Factors". The LTV was obtained by
dividing (i) the outstanding balance (assuming no payment default) of such
Equipment Notes determined immediately after giving effect to the payments
scheduled to be made on each such Regular Distribution Date by (ii) the assumed
value (the "Assumed Aircraft Value") of the Aircraft securing such Equipment
Notes.
 
                                       82

<PAGE>   84
 
     The following tables are based on the assumption that the value of each
Aircraft set forth opposite the initial Regular Distribution Date included in
each table depreciates by approximately 2% of the initial appraised value per
year until the fifteenth year after the year of delivery of such Aircraft and by
approximately 4% of the initial appraised value per year thereafter. Other rates
or methods of depreciation would result in materially different loan to Aircraft
value ratios, and no assurance can be given (i) that the depreciation rates and
method assumed for the purposes of the tables are the ones most likely to occur
or (ii) as to the actual future value of any Aircraft. Thus the tables should
not be considered a forecast or prediction of expected or likely loan to
Aircraft value ratios, but simply a mathematical calculation based on one set of
assumptions.
 

<TABLE>
<CAPTION>
                                                     BOEING 757-224                          BOEING 737-524
                                          ------------------------------------    ------------------------------------
                                           EQUIPMENT                               EQUIPMENT
                                             NOTE         ASSUMED      LOAN TO       NOTE         ASSUMED      LOAN TO
                                          OUTSTANDING     AIRCRAFT      VALUE     OUTSTANDING     AIRCRAFT      VALUE
                  DATE                      BALANCE        VALUE        RATIO       BALANCE        VALUE        RATIO
                  ----                    -----------    ----------    -------    -----------    ----------    -------
                                          (MILLIONS)     (MILLIONS)               (MILLIONS)     (MILLIONS)
<S>                                       <C>            <C>           <C>        <C>            <C>           <C>
April 1, 1998...........................    $36.324        $54.050      67.20%      $16.878        $27.800       60.71%
April 1, 1999...........................     35.729         52.969      67.45        16.878         27.244       61.95
April 1, 2000...........................     34.843         51.888      67.15        16.548         26.688       62.00
April 1, 2001...........................     32.523         50.807      64.01        15.168         26.132       58.05
April 1, 2002...........................     29.609         49.726      59.54        13.866         25.576       54.22
April 1, 2003...........................     27.960         48.645      57.48        12.764         25.020       51.02
April 1, 2004...........................     26.184         47.564      55.05        11.547         24.464       47.20
April 1, 2005...........................     24.971         46.483      53.72        10.285         23.908       43.02
April 1, 2006...........................     24.377         45.402      53.69        10.285         23.352       44.04
April 1, 2007...........................     22.976         44.321      51.84         9.432         22.796       41.37
April 1, 2008...........................     18.196         43.240      42.08         8.711         22.240       39.17
April 1, 2009...........................     15.915         42.159      37.75         8.156         21.684       37.62
April 1, 2010...........................     12.274         41.078      29.88         5.678         21.128       26.88
April 1, 2011...........................      8.350         39.997      20.88         5.678         20.572       27.60
April 1, 2012...........................      4.124         38.916      10.60         4.239         20.016       21.18
April 1, 2013...........................      0.000          0.000       0.00         2.608         19.460       13.40
April 1, 2014...........................      0.000          0.000       0.00         1.531         18.348        8.35
</TABLE>

 

<TABLE>
<CAPTION>
                                                     BOEING 737-524                          BOEING 737-724
                                          ------------------------------------    ------------------------------------
                                           EQUIPMENT                               EQUIPMENT
                                             NOTE         ASSUMED      LOAN TO       NOTE         ASSUMED      LOAN TO
                                          OUTSTANDING     AIRCRAFT      VALUE     OUTSTANDING     AIRCRAFT      VALUE
                  DATE                      BALANCE        VALUE        RATIO       BALANCE        VALUE        RATIO
                  ----                    -----------    ----------    -------    -----------    ----------    -------
                                          (MILLIONS)     (MILLIONS)               (MILLIONS)     (MILLIONS)
<S>                                       <C>            <C>           <C>        <C>            <C>           <C>
April 1, 1998...........................    $18.400        $28.040      65.62%      $23.028        $36.830       62.52%
April 1, 1999...........................     18.005         27.479      65.52        22.725         36.093       62.96
April 1, 2000...........................     17.276         26.918      64.18        22.320         36.357       63.13
April 1, 2001...........................     16.657         26.358      63.20        21.915         34.620       63.30
April 1, 2002...........................     15.753         25.797      61.07        20.585         33.884       60.75
April 1, 2003...........................     14.424         25.236      57.16        19.106         33.147       57.64
April 1, 2004...........................     13.457         24.675      54.54        17.176         32.410       53.00
April 1, 2005...........................     12.629         24.114      52.37        15.462         31.674       48.82
April 1, 2006...........................     11.867         23.554      50.38        14.593         30.937       47.17
April 1, 2007...........................     10.883         22.993      47.33        13.352         30.201       44.21
April 1, 2008...........................      9.883         22.432      44.06        12.512         29.464       42.46
April 1, 2009...........................      8.835         21.871      40.39        11.563         28.727       40.25
April 1, 2010...........................      7.735         21.310      36.29        10.773         27.991       38.49
April 1, 2011...........................      6.245         20.750      30.10         9.382         27.254       34.42
April 1, 2012...........................      4.312         20.189      21.36         7.029         26.518       26.51
April 1, 2013...........................      2.229         19.628      11.36         4.407         25.781       17.09
April 1, 2014...........................      0.000          0.000       0.00         1.724         24.308        7.09
</TABLE>

 
                                       83

<PAGE>   85
 
LIMITATION OF LIABILITY
 
     The Equipment Notes issued with respect to the Leased Aircraft will not be
direct obligations of, or guaranteed by, Continental, the Owner Participant or
the Owner Trustees in their individual capacity. None of the Owner Trustees, the
Owner Participants or the Leased Aircraft Trustees, or any affiliates thereof,
will be personally liable to any holder of an Equipment Note or, in the case of
the Owner Trustees and the Owner Participants, to the Leased Aircraft Trustees
for any amounts payable under the Equipment Notes or, except as provided in each
Leased Aircraft Indenture, for any liability under such Leased Aircraft
Indenture. All payments of principal of, premium, if any, and interest on the
Equipment Notes issued with respect to any Leased Aircraft (other than payments
made in connection with an optional redemption or purchase of Equipment Notes
issued with respect to a Leased Aircraft by the related Owner Trustee or the
related Owner Participant) will be made only from the assets subject to the lien
of the Indenture with respect to such Leased Aircraft or the income and proceeds
received by the related Leased Aircraft Trustee therefrom (including rent
payable by Continental under the Lease with respect to such Leased Aircraft).
 
     The Equipment Notes issued with respect to the Owned Aircraft will be
direct obligations of Continental.
 
     Except as otherwise provided in the Indentures, each Owner Trustee and each
Loan Trustee, in its individual capacity, will not be answerable or accountable
under the Indentures or under the Equipment Notes under any circumstances except
for its own willful misconduct or gross negligence. None of the Owner
Participants will have any duty or responsibility under any of the Leased
Aircraft Indentures or the Equipment Notes to the Leased Aircraft Trustees or to
any holder of any Equipment Note.
 
INDENTURE DEFAULTS, NOTICE AND WAIVER
 
     Indenture Defaults under each Indenture will include: (a) in the case of a
Leased Aircraft Indenture, the occurrence of any Lease Event of Default under
the related Lease (other than the failure to make certain indemnity payments and
other payments to the related Owner Trustee or Owner Participant unless a notice
is given by such Owner Trustee that such failure shall constitute an Indenture
Default), (b) the failure by the related Owner Trustee (other than as a result
of a Lease Default or Lease Event of Default), in the case of a Leased Aircraft
Indenture, or Continental, in the case of an Owned Aircraft Indenture, to pay
any interest or principal or premium, if any, when due, under such Indenture or
under any Equipment Note issued thereunder that continues for more than 10
Business Days, in the case of principal, interest or Make-Whole Premium, and, in
all other cases, ten Business Days after the relevant Owner Trustee or Owner
Participant receives written demand from the related Loan Trustee or holder of
an Equipment Note, (c) the failure by the related Owner Participant or the
related Owner Trustee (in its individual capacity), in the case of a Leased
Aircraft Indenture, or Continental, in the case of an Owned Aircraft Indenture,
to discharge certain liens that continues after notice and specified cure
periods, (d) any representation or warranty made by the related Owner Trustee or
Owner Participant in the related Aircraft Operative Agreements, or certain
related documents furnished to the Loan Trustee pursuant thereto being false or
incorrect in any material respect when made that continues to be material and
adverse to the interests of the Loan Trustee or Note Holders and remains
unremedied after notice and specified cure periods, (e) failure by Continental
or the related Owner Trustee or Owner Participant to perform or observe any
covenant or obligation for the benefit of the Loan Trustee or holders of
Equipment Notes under such Indenture or certain related documents that continues
after notice and specified cure periods, (f) the registration of the related
Aircraft ceasing to be effective as a result of the Owner Participant (in the
case of a Leased Aircraft) or Continental (in the case of an Owned Aircraft) not
being a citizen of the United States, as defined in the Transportation Code
(subject to a cure period), (g) with respect to the Owned Aircraft, the lapse or
cancellation of insurance required under the Owned Aircraft Indenture or (h) the
occurrence of certain events of bankruptcy, reorganization or insolvency of the
related Owner Trustee or Owner Participant (in the case of a Leased Aircraft) or
Continental (in the case of the Owned Aircraft). (Leased Aircraft Indentures,
Section 4.02; Owned Aircraft Indenture, Section 5.01) There will not be
cross-default provisions in the Indentures or in the Leases (unless, in the case
of a Lease, otherwise agreed between an Owner Participant and Continental).
Consequently, events resulting in an Indenture Default under any particular
Indenture may or may not result in an Indenture Default
 
                                       84

<PAGE>   86
 
occurring under any other Indenture, and a Lease Event of Default under any
particular Lease may or may not constitute a Lease Event of Default under any
other Lease.
 
     If Continental fails to make any semiannual basic rental payment due under
any Lease, within a specified period after such failure the applicable Owner
Trustee may furnish to the Leased Aircraft Trustee the amount due on the
Equipment Notes issued with respect to the related Leased Aircraft, together
with any interest thereon on account of the delayed payment thereof, in which
event the Leased Aircraft Trustee and the holders of outstanding Equipment Notes
issued under such Indenture may not exercise any remedies otherwise available
under such Indenture or such Lease as the result of such failure to make such
rental payment, unless such Owner Trustee has previously cured three or more
immediately preceding semiannual basic rental payment defaults or, in total, six
or more previous semiannual basic rental payment defaults (or, in the case of
certain Owner Participants, six or more immediately preceding semiannual basic
rental payment defaults or, in total, eight or more previous semiannual basic
rental payment defaults). The applicable Owner Trustee also may cure any other
default by Continental in the performance of its obligations under any Lease
that can be cured with the payment of money. (Leased Aircraft Indentures,
Section 4.03)
 
     The holders of a majority in principal amount of the outstanding Equipment
Notes issued with respect to any Aircraft, by notice to the Loan Trustee, may on
behalf of all the holders waive any existing default and its consequences under
the Indenture with respect to such Aircraft, except a default in the payment of
the principal of or premium or interest on any such Equipment Notes or a default
in respect of any covenant or provision of such Indenture that cannot be
modified or amended without the consent of each holder of Equipment Notes
affected thereby. (Leased Aircraft Indentures, Section 4.08; Owned Aircraft
Indenture, Section 5.06)
 
REMEDIES
 
     If an Indenture Default occurs and is continuing under an Indenture, the
related Loan Trustee or the holders of a majority in principal amount of the
Equipment Notes outstanding under such Indenture may, subject to the applicable
Owner Participant's or Owner Trustee's right to cure, as discussed above,
declare the principal of all such Equipment Notes issued thereunder immediately
due and payable, together with all accrued but unpaid interest thereon, provided
that in the event of a reorganization proceeding involving Continental
instituted under Chapter 11 of the U.S. Bankruptcy Code, if no other Lease Event
of Default and no other Indenture Default (other than the failure to pay the
outstanding amount of the Equipment Notes which by such declaration shall have
become payable) exists at any time after the consummation of such proceeding,
such declaration will be automatically rescinded without any further action on
the part of any holder of Equipment Notes. The holders of a majority in
principal amount of Equipment Notes outstanding under such Indenture may rescind
any such declaration at any time before the judgment or decree for the payment
of the money so due shall be entered if (i) there has been paid to the related
Loan Trustee an amount sufficient to pay all principal, interest, and premium,
if any, on any such Equipment Notes, to the extent such amounts have become due
otherwise than by such declaration of acceleration and (ii) all other Indenture
Defaults and incipient Indenture Defaults under such Indenture have been cured.
(Leased Aircraft Indentures, Section 4.04(b); Owned Aircraft Indenture, Section
5.02(b))
 
     Each Indenture will provide that if an Indenture Default under such
Indenture has occurred and is continuing, the related Loan Trustee may exercise
certain rights or remedies available to it under such Indenture or under
applicable law, including (if, in the case of a Leased Aircraft, the
corresponding Lease has been declared in default) one or more of the remedies
under such Indenture or, in the case of a Leased Aircraft, such Lease with
respect to the Aircraft subject to such Lease. If an Indenture Default arises
solely by reason of one or more events or circumstances which constitute a Lease
Event of Default, the related Leased Aircraft Trustee's right to exercise
remedies under a Leased Aircraft Indenture is subject, with certain exceptions,
to its having proceeded to exercise one or more of the dispossessory remedies
under the Lease with respect to such Leased Aircraft; provided that the
requirement to exercise one or more of such remedies under such Lease shall not
apply in circumstances where such exercise has been involuntarily stayed or
prohibited by applicable law or court order for a continuous period in excess of
60 days or such other period as may be specified in Section 1110(a)(1)(A) of the
U.S. Bankruptcy Code (plus an additional period, if any, resulting
 
                                       85

<PAGE>   87
 
from (i) the trustee or debtor-in-possession in such proceeding agreeing to
perform its obligations under such Lease with the approval of the applicable
court and its continuous performance of such Lease under Section 1110(a)(1)(A-B)
of the U.S. Bankruptcy Code or such Leased Aircraft Trustee's consent to an
extension of such period, (ii) such Leased Aircraft Trustee's failure to give
any requisite notice, or (iii) Continental's assumption of such Lease with the
approval of the relevant court and its continuous performance of the Lease so
assumed). See "-- The Leases -- Lease Events of Default". Such remedies may be
exercised by the related Leased Aircraft Trustee to the exclusion of the related
Owner Trustee, subject to certain conditions specified in such Indenture, and of
Continental, subject to the terms of such Lease. Any Aircraft sold in the
exercise of such remedies will be free and clear of any rights of those parties,
including the rights of Continental under the Lease with respect to such
Aircraft; provided that no exercise of any remedies by the related Leased
Aircraft Trustee may affect the rights of Continental under any Lease unless a
Lease Event of Default has occurred and is continuing. (Leased Aircraft
Indentures, Section 4.04; Leases, Section 15) The Owned Aircraft Indentures will
not contain such limitations on the Owned Aircraft Trustee's ability to exercise
remedies upon an Indenture Default under an Owned Aircraft Indenture.
 
     If a bankruptcy proceeding involving Continental under the U.S. Bankruptcy
Code occurs, all of the rights of the Owner Trustee as lessor under a particular
Lease will be exercised by the Owner Trustee in accordance with the terms
thereof unless (i) during the Section 1110 Period the trustee in such proceeding
or Continental does not agree to perform its obligations under such Lease, (ii)
at any time after agreeing to perform such obligations, such trustee or
Continental ceases to perform such obligations or (iii) the related Loan Trustee
takes action, or notifies the Owner Trustee that such Loan Trustee intends to
take action, to foreclose the lien of the related Leased Aircraft Indenture in
accordance with the provisions of the immediately preceding paragraph. The Owner
Trustee's exercise of such rights shall be subject to certain limitations and,
in no event, reduce the amount or change the time of any payment in respect of
the Equipment Notes or adversely affect the validity or enforceability of the
lien under the related Leased Aircraft Indenture.
 
     If the Equipment Notes issued in respect of one Aircraft are in default,
the Equipment Notes issued in respect of the other Aircraft may not be in
default, and, if not, no remedies will be exercisable under the applicable
Indentures with respect to such other Aircraft.
 
     Section 1110 of the U.S. Bankruptcy Code provides that the right of
lessors, conditional vendors and holders of security interests with respect to
"equipment" (as defined in Section 1110 of the U.S. Bankruptcy Code) to take
possession of such equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected by (a) the automatic stay provision of the U.S. Bankruptcy Code, which
provision enjoins repossessions by creditors for the duration of the
reorganization period, (b) the provision of the U.S. Bankruptcy Code allowing
the trustee in reorganization to use property of the debtor during the
reorganization period, (c) Section 1129 of the U.S. Bankruptcy Code (which
governs the confirmation of plans of reorganization in Chapter 11 cases) and (d)
any power of the bankruptcy court to enjoin a repossession. Section 1110
provides, however, that the right of a lessor, conditional vendor or holder of a
security interest to take possession of an aircraft in the event of an event of
default may not be exercised for 60 days following the date of commencement of
the reorganization proceedings (unless specifically permitted by the bankruptcy
court) and may not be exercised at all if, within such 60-day period (or such
longer period consented to by the lessor, conditional vendor or holder of a
security interest), the trustee in reorganization agrees to perform the debtor's
obligations that become due on or after such date and cures all existing
defaults (other than defaults resulting solely from the financial condition,
bankruptcy, insolvency or reorganization of the debtor). "Equipment" is defined
in Section 1110 of the U.S. Bankruptcy Code, in part, as "an aircraft, aircraft
engine, propeller, appliance, or spare part (as defined in section 40102 of
title 49 of the U.S. Code) that is subject to a security interest granted by,
leased to, or conditionally sold to a debtor that is a citizen of the United
States (as defined in section 40102 of title 49 of the U.S. Code) holding an air
carrier operating certificate issued by the Secretary of Transportation pursuant
to chapter 447 of title 49 of the U.S. Code for aircraft capable of carrying 10
or more individuals or 6,000 pounds or more of cargo".
 
                                       86

<PAGE>   88
 
     It is a condition to the Trustee's obligation to purchase Equipment Notes
with respect to each Aircraft that outside counsel to Continental, which is
expected to be Hughes Hubbard & Reed LLP, provide its opinion to the Trustees
that (x) if such Aircraft is a Leased Aircraft, the Owner Trustee, as lessor
under the Lease for such Aircraft, and the Leased Aircraft Trustee, as assignee
of such Owner Trustee's rights under such Lease pursuant to the related Leased
Aircraft Indenture, will be entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the airframe and engines comprising such
Aircraft or (y) if such Aircraft is an Owned Aircraft, the Owned Aircraft
Trustee will be entitled to the benefits of Section 1110 with respect to the
airframe and engines comprising such Owned Aircraft, in each case so long as
Continental continues to be a "citizen of the United States" as defined in
Section 40102 of title 49 of the U.S. Code holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to chapter 447 of
title 49 of the U.S. Code for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo. For a description of certain
limitations on the Loan Trustee's exercise of rights contained in the Indenture,
see "-- Indenture Defaults, Notice and Waiver".
 
     The opinion of Hughes Hubbard & Reed LLP will not address the possible
replacement of an Aircraft after an Event of Loss in the future, the
consummation of which is conditioned upon the contemporaneous delivery of an
opinion of counsel to the effect that the related Loan Trustee will be entitled
to Section 1110 benefits with respect to such replacement unless there is a
change in law or court interpretation that results in Section 1110 not being
available. See "-- The Leases -- Events of Loss". The opinion of Hughes Hubbard
& Reed LLP will also not address the availability of Section 1110 with respect
to any possible sublessee of a Leased Aircraft subleased by Continental or to
any possible lessee of an Owned Aircraft if it is leased by Continental.
 
     If an Indenture Default under any Indenture occurs and is continuing, any
sums held or received by the related Loan Trustee may be applied to reimburse
such Loan Trustee for any tax, expense or other loss incurred by it and to pay
any other amounts due to such Loan Trustee prior to any payments to holders of
the Equipment Notes issued under such Indenture. (Indentures, Section 3.03)
 
     In the event of bankruptcy, insolvency, receivership or like proceedings
involving an Owner Participant, it is possible that, notwithstanding that the
applicable Leased Aircraft is owned by the related Owner Trustee in trust, such
Leased Aircraft and the related Lease and Equipment Notes might become part of
such proceeding. In such event, payments under such Lease or on such Equipment
Notes might be interrupted and the ability of the related Leased Aircraft
Trustee to exercise its remedies under the related Leased Aircraft Indenture
might be restricted, although such Leased Aircraft Trustee would retain its
status as a secured creditor in respect of the related Lease and the related
Leased Aircraft.
 
MODIFICATION OF INDENTURES AND LEASES
 
     Without the consent of holders of a majority in principal amount of the
Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and any related Lease, Participation Agreement or Trust Agreement may
not be amended or modified, except to the extent indicated below.
 
     Subject to certain limitations, certain provisions of any Leased Aircraft
Indenture, and of the Lease, the Participation Agreement, and the Trust
Agreement related thereto, may be amended or modified by the parties thereto
without the consent of any holders of the Equipment Notes outstanding under such
Indenture. In the case of each Lease, such provisions include, among others,
provisions relating to (i) the return to the related Owner Trustee of the
related Leased Aircraft at the end of the term of such Lease (except to the
extent that such amendment would affect the rights or exercise of remedies under
the Lease) and (ii) the renewal of such Lease and the option of Continental at
the end of the term of such Lease to purchase the related Leased Aircraft so
long as the same would not adversely affect the Note Holders. (Leased Aircraft
Indentures, Section 9.01(a)) In addition, any Indenture may be amended without
the consent of the holders of Equipment Notes to, among other things, cure any
defect or inconsistency in such Indenture or the Equipment Notes issued
thereunder, provided that such change does not adversely affect the interests of
any such holder. (Leased Aircraft Indentures, Section 9.01(c); Owned Aircraft
Indenture, Section 10.01)
 
                                       87

<PAGE>   89
 
     Without the consent of the holder of each Equipment Note outstanding under
any Indenture affected thereby, no amendment or modification of such Indenture
may among other things (a) reduce the principal amount of, or premium, if any,
or interest payable on, any Equipment Notes issued under such Indenture or
change the date on which any principal or premium, if any, or interest is due
and payable, (b) permit the creation of any security interest with respect to
the property subject to the lien of such Indenture, except as provided in such
Indenture, or deprive any holder of an Equipment Note issued under such
Indenture of the benefit of the lien of such Indenture upon the property subject
thereto or (c) reduce the percentage in principal amount of outstanding
Equipment Notes issued under such Indenture necessary to modify or amend any
provision of such Indenture or to waive compliance therewith. (Leased Aircraft
Indentures, Section 9.01(b); Owned Aircraft Indenture, Section 10.01(a))
 
OWNER PARTICIPANT'S RIGHT TO RESTRUCTURE
 
     Certain Owner Participants will have the right, subject to certain
conditions, to restructure the applicable leveraged lease transaction using a
"cross-border lease", a tax lease or a head-lease/sublease structure and any
other type of transaction. In no event, however, shall any such restructuring
(i) change the terms and conditions of the rights and obligations of any holder
of Equipment Notes under the relevant Aircraft Operative Agreements or any
holder of Certificates or (ii) expose any such holder to any additional risks.
As a precondition to any such restructuring, the Owner Participant will be
obligated to deliver to the Leased Aircraft Trustee an appropriate officer's
certificate as to the satisfaction of the foregoing conditions and obtain a
written confirmation from the Rating Agencies prior to the implementation of
such restructuring to the effect that such restructuring will not adversely
affect the ratings of the Certificates.
 
INDEMNIFICATION
 
     Continental will be required to indemnify each Loan Trustee, each Owner
Participant, each Owner Trustee, each Liquidity Provider, the Subordination
Agent, the Escrow Agent and each Trustee, but not the holders of Certificates,
for certain losses, claims and other matters. Continental will be required under
certain circumstances to indemnify each Owner Participant against the loss of
depreciation deductions and certain other benefits allowable for certain income
tax purposes with respect to the related Leased Aircraft. Each Owner Participant
will be required to indemnify the related Loan Trustee and the holders of the
Equipment Notes issued with respect to the Leased Aircraft in which such Owner
Participant has an interest for certain losses that may be suffered as a result
of the failure of such Owner Participant to discharge certain liens or claims on
or against the assets subject to the lien of the related Indenture.
 
THE LEASES AND CERTAIN PROVISIONS OF THE OWNED AIRCRAFT INDENTURES
 
     Each Leased Aircraft will be leased to Continental by the relevant Owner
Trustee under the relevant lease agreement (each, a "Lease"). Each Owned
Aircraft will be owned by Continental.
 
     The Note Purchase Agreement provides for two sets of leveraged leased
agreements, one set intended to be applicable to a transaction involving any
Owner Participant (the "Standard Agreements") and another set intended to be
used by a particular Owner Participant that has engaged in a significant number
of previous aircraft financings with Continental (the "Special Agreements").
Certain differences between the Standard Agreements and the Special Agreements
are noted below.
 
  Lease Term Rentals and Payments
 
     Each Leased Aircraft will be leased separately by the relevant Owner
Trustee to Continental for a term commencing on the date on which the Aircraft
is acquired by the Owner Trustee and expiring on a date not earlier than the
latest maturity date of the relevant Equipment Notes, unless terminated prior to
the originally scheduled expiration date as permitted by the applicable Lease.
The semiannual basic rent payment under each Lease will be payable by
Continental on each related Lease Payment Date (or, if such day is not a
Business Day, on the next Business Day), and will be assigned by the Owner
Trustee under the corresponding Leased Aircraft Indenture to provide the funds
necessary to make payments of principal and interest due from
 
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the Owner Trustee on the Equipment Notes issued under such Indenture. In certain
cases, the semiannual basic rent payments under the Leases may be adjusted, but
each Lease provides that under no circumstances will rent payments by
Continental be less than the scheduled payments on the related Equipment Notes.
In addition, the amount of basic rent will be increased in an amount necessary
to pay additional interest due on the Equipment Notes on the relevant Lease
Payment Date as a result of any increase in the rate of interest on the
Equipment Notes as required by the terms of the Registration Rights Agreement.
See "The Exchange Offer -- Terms of the Exchange Offer -- General". Any balance
of each such semiannual basic rent payment under each Lease, after payment of
amounts due on the Equipment Notes issued under the Indenture corresponding to
such Lease, will be paid over to the Owner Trustee. (Leases, Section 3; Leased
Aircraft Indentures, Section 3.01)
 
     "Lease Payment Date" means, with respect to each Lease, April 1 or October
1 during the term of such Lease.
 
     Semiannual payments of interest on the Equipment Notes issued by
Continental under an Owned Aircraft Indenture will be payable each April 1 and
October 1 commencing on October 1, 1997 or, if later, the first such date after
issuance thereof. Semiannual payments of principal under the Equipment Notes
issued by Continental under an Owned Aircraft Indenture will be payable on April
1 and October 1 in certain years commencing on April 1, 1998. The amount of a
semiannual payment of interest or principal will be increased in an amount equal
to any increase in the amount of interest due on such Equipment Notes on the
relevant payment date as a result of any increase in the rate of interest on
such Equipment Notes as required by the terms of the Registration Rights
Agreement. (Owned Aircraft Indenture, Section 2.02)
 
  Net Lease; Maintenance
 
     Under the terms of each Lease, Continental's obligations in respect of each
Leased Aircraft will be those of a lessee under a "net lease". Accordingly,
Continental will be obligated under each Lease, among other things and at its
expense, to keep each Aircraft duly registered and insured, to pay all costs of
operating the Aircraft and to maintain, service, repair and overhaul the
Aircraft so as to keep it in as good an operating condition as when delivered to
Continental, ordinary wear and tear excepted, and in such condition as required
to maintain the airworthiness certificate for the Aircraft in good standing at
all times. (Leases, Sections 7.1, 8.1 and 11.1 and Annexes C and D) The Owned
Aircraft Indenture imposes comparable maintenance, service and repair
obligations on Continental with respect to the Owned Aircraft. (Owned Aircraft
Indenture, Section 4.02)
 
  Possession, Sublease and Transfer
 
     Each Aircraft may be operated by Continental or, subject to certain
restrictions, by certain other persons. Normal interchange and pooling
agreements with respect to any Engine are permitted. Subleases, in the case of
Leased Aircraft, and leases, in the case of Owned Aircraft, are also permitted
to U.S. air carriers and foreign air carriers that have their principal
executive office in certain specified countries or, in the case of the Special
Agreements, that are listed in the applicable Lease, subject to a reasonably
satisfactory legal opinion that, among other things, such country would
recognize (in the case of the Leased Aircraft) Owner Trustee's title to, and the
Loan Trustee's lien in respect of, the applicable Aircraft. In addition, a
sublessee or lessee may not be subject to insolvency or similar proceedings at
the commencement of such sublease or lease. (Leases, Section 7, Owned Aircraft
Indenture, Section 4.02) Permitted foreign air carriers are not limited to those
based in a country that is a party to the Convention on the International
Recognition of Rights in Aircraft (Geneva 1948) (the "Convention"). It is
uncertain to what extent the relevant Loan Trustee's security interest would be
recognized if an Aircraft is registered or located in a jurisdiction not a party
to the Convention. Moreover, in the case of an Indenture Event of Default, the
ability of the related Loan Trustee to realize upon its security interest in an
Aircraft could be adversely affected as a legal or practical matter if such
Aircraft were registered or located outside the United States.
 
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<PAGE>   91
 
  Registration
 
     Continental is required to keep each Aircraft duly registered under the
Transportation Code with the FAA, except (in the case of a Leased Aircraft) if
the relevant Owner Trustee or the relevant Owner Participant fails to meet the
applicable citizenship requirements, and to record each Lease (in the case of a
Leased Aircraft) and Indenture and certain other documents under the
Transportation Code. (Leases, Section 7; Owned Aircraft Indenture, Section
4.02(e)) Such recordation of the Indenture and other documents with respect to
each Aircraft will give the relevant Loan Trustee a first-priority, perfected
security interest in such Aircraft whenever it is located in the United States
or any of its territories and possessions. The Convention provides that such
security interest will also be recognized, with certain limited exceptions, in
those jurisdictions that have ratified or adhere to the Convention.
 
     So long as no Lease Event of Default exists, Continental has the right to
register the Leased Aircraft subject to such Lease in a country other than the
United States at its own expense in connection with a permitted sublease of the
Aircraft to permitted foreign air carriers, subject to certain conditions set
forth in the related Participation Agreement. These conditions include a
requirement that the lien of the applicable Indenture continue as a first
priority security interest in the applicable Aircraft. (Leases, Section 7.1.2;
Participation Agreements, Section 7.6.11 or, in the case of the Special
Agreements, Section 8.7.12) The Owned Aircraft Indentures contain comparable
provisions with respect to registration of the Owned Aircraft in connection with
a permitted lease of the Owned Aircraft. (Owned Aircraft Indenture, Section
4.02(e))
 
  Liens
 
     Continental is required to maintain each Aircraft free of any liens, other
than the rights of the relevant Loan Trustee, the holders of the related
Equipment Notes, Continental and, with respect to a Leased Aircraft, the Owner
Participant and Owner Trustee arising under the applicable Indenture, the Lease
(in the case of a Leased Aircraft) or the other operative documents related
thereto, and other than certain limited liens permitted under such documents,
including but not limited to (i) liens for taxes either not yet due or being
contested in good faith by appropriate proceedings; (ii) materialmen's,
mechanics' and other similar liens arising in the ordinary course of business
and securing obligations that either are not yet delinquent (in the case of the
Standard Agreements, for more than 60 days) or are being contested in good faith
by appropriate proceedings; (iii) judgment liens so long as such judgment is
discharged or vacated within 60 days (30 days in the case of the Special
Agreements) or the execution of such judgment is stayed pending appeal and
discharged, vacated or reversed within 60 days (30 days in the case of the
Special Agreements) after expiration of such stay; and (iv) any other lien as to
which Continental has provided a bond or other security adequate in the
reasonable opinion of the Owner Trustee; provided that in the case of each of
the liens described in the foregoing clauses (i), (ii) and (iii), such liens and
proceedings do not involve any material risk of the sale, forfeiture or loss of
such Aircraft or the interest of any Participant therein or impair the lien of
the relevant Indenture. (Leases, Section 6; Owned Aircraft Indenture, Section
4.01)
 
  Replacement of Parts; Alterations
 
     Continental is obligated to replace all parts at its expense that may from
time to time be incorporated or installed in or attached to any Aircraft and
that may become lost, damaged beyond repair, worn out, stolen, seized,
confiscated or rendered permanently unfit for use. Continental or any permitted
lessee or sublessee has the right, at its own expense, to make such alterations,
modifications and additions with respect to each Aircraft as it deems desirable
in the proper conduct of its business and to remove parts which it deems to be
obsolete or no longer suitable or appropriate for use, so long as such
alteration, modification, addition or removal does not materially diminish the
fair market value, utility, or remaining useful life of the related Aircraft,
Airframe or Engine or invalidate the Aircraft's airworthiness certificate.
(Leases, Section 8.1 and Annex C; Owned Aircraft Indenture, Section 4.04(d))
 
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<PAGE>   92
 
  Insurance
 
     Continental is required to maintain, at its expense (or at the expense of a
permitted lessee, in the case of the Owned Aircraft, or a permitted sublessee,
in the case of a Leased Aircraft), all-risk aircraft hull insurance covering
each Aircraft, at all times in an amount not less than the stipulated loss value
of the Aircraft (which exceeds the aggregate outstanding principal amount of the
Equipment Notes related to such Aircraft, together with accrued interest
thereon). However, after giving effect to self-insurance permitted as described
below, the amount payable under such insurance may be less than such amounts
payable with respect to the Equipment Notes. In the event of a loss involving
insurance proceeds in excess of $3,500,000 per occurrence ($3,000,000 per
occurrence in the case of the Special Agreements and $5,000,000 per occurrence
in the case of Boeing 757-224 aircraft), such proceeds up to the stipulated loss
value of the relevant Aircraft will be payable to the applicable Loan Trustee,
for so long as the relevant Indenture shall be in effect. In the event of a loss
involving insurance proceeds of up to $3,500,000 per occurrence ($3,000,000 per
occurrence in the case of the Special Agreements and $5,000,000 per occurrence
in the case of Boeing 757-224 aircraft) such proceeds will be payable directly
to Continental so long as an Indenture Event of Default does not exist with
respect to the Owned Aircraft Indenture or (in the case of a Leased Aircraft)
the Owner Trustee has not notified the insurance underwriters that a Lease Event
of Default exists. So long as the loss does not constitute an Event of Loss,
insurance proceeds will be applied to repair or replace the property. (Leases,
Sections 11 and Annex D; Owned Aircraft Indenture, Section 4.06)
 
     In addition, Continental is obligated to maintain comprehensive airline
liability insurance at its expense (or at the expense of a permitted lessee, in
the case of an Owned Aircraft, or a permitted sublessee, in the case of a Leased
Aircraft), including, without limitation, passenger liability, baggage
liability, cargo and mail liability, hangarkeeper's liability and contractual
liability insurance with respect to each Aircraft. Such liability insurance must
be underwritten by insurers of nationally or internationally recognized
responsibility. The amount of such liability insurance coverage per occurrence
may not be less than the amount of comprehensive airline liability insurance
from time to time applicable to aircraft owned or leased and operated by
Continental of the same type and operating on similar routes as such Aircraft.
(Leases, Section 11.1 and Annex D, Owned Aircraft Indenture, Section 4.06)
 
     Continental is also required to maintain war-risk, hijacking or allied
perils insurance if it (or any permitted sublessee or lessee) operates any
Aircraft, Airframe or Engine in any area of recognized hostilities or if
Continental (or any permitted sublessee or lessee) maintains such insurance with
respect to other aircraft operated on the same routes or areas on or in which
the Aircraft is operated. (Leases, Annex D, Owned Aircraft Indenture, Section
4.06)
 
     Continental may self-insure in such amounts as are then self-insured with
respect to similar owned or leased aircraft in its fleet, but the amount of such
self-insurance in the aggregate may not exceed 50% of the largest replacement
value of any single aircraft in Continental's fleet or 1 1/2% of the average
aggregate insurable value (during the preceding calendar year) of all aircraft
on which Continental carries insurance, whichever is less, unless an insurance
broker of national standing shall certify that the standard among all other
major U.S. airlines is a higher level of self-insurance, in which case
Continental may self-insure the Aircraft to such higher level. In addition,
Continental may self-insure to the extent of any applicable deductible per
Aircraft that does not exceed industry standards for major U.S. airlines.
(Leases, Section 11.1 and Annex D, Owned Aircraft Indenture, Section 4.06) Self
insurance permitted under the Special Agreements is more limited.
 
     In respect of each Aircraft, Continental is required to name as additional
insured parties the relevant Loan Trustee and holders of the Equipment Notes and
(in the case of the Leased Aircraft) the relevant Owner Participant and Owner
Trustee, in its individual capacity and as owner of such Aircraft, and in some
cases certain other parties under all liability, hull and property and war risk,
hijacking and allied perils insurance policies required with respect to such
Aircraft. In addition, the insurance policies maintained under the Leases and
the Owned Aircraft Indenture will be required to provide that, in respect of the
interests of such additional insured persons, the insurance shall not be
invalidated or impaired by any act or omission of Continental or any other
person and to insure the respective interests of such additional insured
persons,
 
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regardless of any breach or violation of any representation, warranty,
declaration, term or condition contained in such policies by Continental, any
permitted sublessee or any other person. (Leases, Annex D, Owned Aircraft
Indenture, Section 4.06)
 
  Lease Termination
 
     Unless a Lease Event of Default shall have occurred and be continuing,
Continental may terminate any Lease on any Lease Payment Date occurring after
the fifth anniversary (or, in the case of the Special Agreements, the tenth
anniversary) of the date on which such Lease commenced, if it makes a good faith
determination that the Leased Aircraft subject to such Lease is economically
obsolete or surplus to its requirements. In the case of the Special Agreements,
such determination must be made on a nondiscriminatory basis with respect to the
Aircraft subject to such Special Agreements and all similar aircraft operated by
Continental which could also be terminated. Continental is required to give
notice of its intention to exercise its right of termination described in this
paragraph at least 90 days (in the case of the Special Agreements, six months)
prior to the proposed date of termination, which notice may be withdrawn up to
ten Business Days (in the case of the Special Agreements, 25 days) prior to such
proposed date; provided that Continental may give only five (in the case of the
Special Agreements, three) such termination notices. In such a situation, unless
the Owner Trustee elects to retain title to such Aircraft, Continental is
required to use commercially reasonable efforts to sell such Aircraft as an
agent for such Owner Trustee, and Owner Trustee will sell such Aircraft on the
date of termination to the highest cash bidder. If such sale occurs, the
Equipment Notes related thereto are required to be prepaid. If the net proceeds
to be received from such sale are less than the termination value for such
Aircraft (which is set forth in a schedule to each Lease), Continental is
required to pay to the applicable Owner Trustee an amount equal to the excess,
if any, of the applicable termination value for such Aircraft over such net
proceeds. Upon payment of termination value for such Aircraft and an amount
equal to the Make-Whole Premium, if any, payable on such date of payment,
together with certain additional amounts, the lien of the relevant Indenture
will be released, the relevant Lease will terminate, and the obligation of
Continental thereafter to make scheduled rent payments under such Lease will
cease. (Leases, Section 9; Leased Aircraft Indentures, Section 2.10(b))
 
     The Owner Trustee has the option to retain title to the Leased Aircraft if
Continental has given a notice of termination under the Lease. In such event,
such Owner Trustee will pay to the applicable Loan Trustee an amount sufficient
to prepay the outstanding Equipment Notes issued with respect to such Aircraft
(including the Make-Whole Premiums), in which case the lien of the relevant
Indenture will be released, the relevant Lease will terminate and the obligation
of Continental thereafter to make scheduled rent payments under such Lease will
cease. (Leases, Section 9; Leased Aircraft Indentures, Sections 2.06 and
2.10(b))
 
  Events of Loss
 
     If an Event of Loss occurs with respect to the Airframe or the Airframe and
Engines of an Aircraft, Continental must elect within 45 days (in the case of
the Special Agreements, 20 days) after such occurrence either to make payment
with respect to such Event of Loss or to replace such Airframe and any such
Engines. Not later than the first Business Day following the earliest of (i) the
120th day (in the case of the Special Agreements, the 60th day) following the
date of occurrence of such Event of Loss, and (ii) the fourth Business Day (in
the case of the Special Agreements, the second Business Day) following the
receipt of the insurance proceeds in respect of such Event of Loss, Continental
must either (i) pay to the applicable Owner Trustee (in the case of a Leased
Aircraft) the stipulated loss value of such Aircraft, together with certain
additional amounts, or to the Owned Aircraft Trustee (in the case of the Owned
Aircraft) the outstanding principal amount of and unpaid interest on the
Equipment Notes together with certain additional amounts (if any) but, in any
case, without any Make-Whole Premium or (ii) unless any Lease Event of Default
or failure to pay basic rent under the relevant Lease (in the case of a Leased
Aircraft), an Indenture Event of Default or failure to pay principal or interest
under the Owned Aircraft Indenture (in the case of the Owned Aircraft) or
certain bankruptcy defaults shall have occurred and be continuing, substitute an
airframe (or airframe and one or more engines, as the case may be) for the
Airframe, or Airframe and Engine(s), that suffered such Event
 
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of Loss. (Leases, Sections 10.1.1 and 10.1.2; Leased Aircraft Indentures,
Section 2.10(a); Owned Aircraft Indenture, Sections 2.10 and 4.05(a))
 
     If Continental elects to replace an Airframe (or Airframe and one or more
Engines, as the case may be) that suffered such Event of Loss, it shall, in the
case of a Leased Aircraft, convey to the related Owner Trustee title to an
airframe (or airframe and one or more engines, as the case may be), and such
replacement airframe or airframe and engines must be the same model as the
Airframe or Airframe and Engines to be replaced or an improved model, with 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 or Airframe and Engines to be replaced, assuming that such Airframe and
such Engines had been maintained in accordance with the related Lease.
Continental is also required to provide to the relevant Loan Trustee and (in the
case of a Leased Aircraft) the relevant Owner Trustee and Owner Participant
reasonably acceptable opinions of counsel to the effect, among other things,
that (i) certain specified documents have been duly filed under the
Transportation Code and (ii) such Owner Trustee and Leased Aircraft Trustee (as
assignee of lessor's rights and interests under the Lease), in the case of a
Leased Aircraft, or the Owned Aircraft Trustee, in the case of an Owned
Aircraft, will be entitled to receive the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to any such replacement airframe (unless, as a
result of a change in law or court interpretation, such benefits are not then
available). (Leases, Sections 10.1.3 and 10.3; Owned Aircraft Indenture, Section
4.05(c))
 
     If Continental elects not to replace such Airframe, or Airframe and
Engine(s), then upon payment of the outstanding principal amount of the
Equipment Notes issued with respect to such Aircraft (in the case of an Owned
Aircraft) or the stipulated loss value for such Aircraft (in the case of a
Leased Aircraft), together with all additional amounts then due and unpaid with
respect to such Aircraft, which must be at least sufficient to pay in full as of
the date of payment thereof the aggregate unpaid principal amount under such
Equipment Notes together with accrued but unpaid interest thereon and all other
amounts due and owing in respect of such Equipment Notes, the lien of the
Indenture and (in the case of a Leased Aircraft) the Lease relating to such
Aircraft shall terminate with respect to such Aircraft, the obligation of
Continental thereafter to make the scheduled rent payments (in the case of a
Leased Aircraft) or interest and principal payments (in the case of an Owned
Aircraft) with respect thereto shall cease and (in the case of a Leased
Aircraft) the related Owner Trustee shall transfer all of its right, title and
interest in and to the related Aircraft to Continental. The stipulated loss
value and other payments made under the Leases or the Owned Aircraft Indenture,
as the case may be, by Continental shall be deposited with the applicable Loan
Trustee. Amounts in excess of the amounts due and owing under the Equipment
Notes issued with respect to such Aircraft will be distributed by such Loan
Trustee to the applicable Owner Trustee or to Continental, as the case may be.
(Leases, Section 10.1.2; Leased Aircraft Indentures, Sections 2.06 and 3.02;
Owned Aircraft Indenture, Sections 2.10 and 4.05(a)(ii))
 
     If an Event of Loss occurs with respect to an Engine alone, Continental
will be required to replace such Engine within 60 days after the occurrence of
such Event of Loss with another engine, free and clear of all liens (other than
certain permitted liens). Such replacement engine shall be the same make and
model as the Engine to be replaced, or an improved model, suitable for
installation and use on the Airframe, and having a value, utility and remaining
useful life (without regard to hours or cycles remaining until overhaul) at
least equal to the Engine to be replaced, assuming that such Engine had been
maintained in accordance with the relevant Lease or the Owned Aircraft
Indenture, as the case may be, immediately prior to the occurrence of the Event
of Loss. (Leases, Section 10.2; Owned Aircraft Indenture, Section 4.05(a)(i))
 
     An Event of Loss with respect to an Aircraft, Airframe or any Engine means
any of the following events with respect to such property: (i) the destruction
of such property, damage to such property beyond economic repair or rendition of
such property permanently unfit for normal use; (ii) 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 a constructive or
compromised total loss; (iii) any theft, hijacking or disappearance of such
property for a period of 180 days (in the case of the Special Agreements, 90
days) or more; (iv) any seizure, condemnation, confiscation, taking or
requisition of title to such property by any non-U.S. governmental entity or
purported non-U.S. governmental entity (other than the country of registration
of the relevant Aircraft), in the case of the Standard
 
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Agreements, for a period exceeding 180 days (exceeding 90 days in the case of a
requisition of title) or, if earlier, at the end of the term of such Lease (in
the case of a Leased Aircraft) or the final maturity of the Equipment Notes (in
the case of an Owned Aircraft); (v) in the case of any Leased Aircraft, any
seizure, condemnation, confiscation, taking or requisition of use of such
property by any U.S. government entity that continues until the 30th day after
the last day of the term of the relevant Lease (unless the Owner Trustee shall
have elected not to treat such event as an Event of Loss) or, in the case of the
Special Agreements, certain specified shorter periods; or (vi) as a result of
any law, rule, regulation, order or other action by the FAA or any governmental
entity, the use of such property in the normal course of Continental's business
of passenger air transportation is prohibited for 180 days, unless Continental,
prior to the expiration of such 180 day period, shall have undertaken and shall
be diligently carrying forward steps which are necessary or desirable to permit
the normal use of such property by Continental, but in any event if such use
shall have been prohibited for a period of two consecutive years (360 days in
the case of the Special Agreements), provided that (in the case of the Standard
Agreements) no Event of Loss shall be deemed to have occurred if such
prohibition has been applicable to Continental's entire U.S. registered fleet of
similar property and Continental, prior to the expiration of such two-year
period, shall have conformed at least one unit of such property in its fleet to
the requirements of any such law, rule, regulation, order or other action and
commenced regular commercial use of the same and shall be diligently carrying
forward, in a manner which does not discriminate against applicable property in
so conforming such property, steps which are necessary or desirable to permit
the normal use of such property by Continental, but in any event if such use
shall have been prohibited for a period of three years or, in the case of the
Leased Aircraft, such use shall be prohibited at the expiration of the term of
the relevant Lease. (Leases, Annex A; Owned Aircraft Indenture, Annex A)
 
  Renewal and Purchase Options
 
     At the end of the term of each Lease after final maturity of the related
Equipment Notes and subject to certain conditions, Continental will have certain
options to renew such Lease for additional limited periods. In addition,
Continental will have the right at the end of the term of each Lease to purchase
the Aircraft subject thereto for an amount to be calculated in accordance with
the terms of such Lease. (Leases, Section 17)
 
  Events of Default under the Leases
 
     Lease Events of Default under each Lease include, among other things, (i)
failure by Continental to make any payment of basic rent, stipulated loss value
or termination value under such Lease within ten Business Days (in the case of
the Special Agreements, five Business Days) after the same shall have become
due, or failure by Continental to pay any other amount due under such Lease or
under any other related operative document within ten Business Days (in the case
of the Special Agreements, five Business Days) from and after the date of any
written demand therefor from the Owner Trustee; (ii) failure by Continental to
make any excluded payment (as defined) within ten Business Days (in the case of
the Special Agreements, five Business Days) after written notice that such
failure constitutes a Lease Event of Default is given by the relevant Owner
Participant to Continental and the relevant Loan Trustee; (iii) failure by
Continental to carry and maintain insurance on and in respect of the Aircraft,
Airframe and Engines, in accordance with the provisions of such Lease; (iv) in
the case of the Special Agreements, failure by Continental to maintain its
corporate existence, except as permitted by the relevant Lease, the winding up,
liquidation or dissolution of Continental, failure to maintain the registration
of the Aircraft with the FAA or with a permitted foreign registry, failure to
record the Indenture or maintain the Indenture of record as a first-priority,
perfected mortgage (subject to permitted liens) or operation of the Aircraft in
any area excluded by insurance coverage required by such Lease or in any
recognized or threatened area of hostilities unless fully covered by war-risk
insurance, as required by Section 11 of such Lease (subject to certain
exceptions); (v) in the case of the Special Agreements, breach of the covenants
in such Lease pertaining to possession, interchange and pooling of Engines and
subleasing or breach of certain prohibitions against attempted assignments by
Continental of its obligations under such Lease and against the merger of
Continental with any other person, except as expressly permitted by such Lease;
(vi) failure by Continental to perform or observe any other covenant or
agreement to be performed or observed by it under such Lease or the related
Participation Agreement or any other related operative document (other than the
related tax indemnity agreement between Continental and
 
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the Owner Participant), and such failure shall continue unremedied for a period
of 30 days (or, in the case of the Special Agreements, such other shorter
applicable period) after written notice of such failure by the applicable Owner
Trustee or Loan Trustee unless (in the case of the Standard Agreements), such
failure is capable of being corrected and Continental 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 180 days after receipt of such notice; (vii) any representation or warranty
made by Continental in such Lease or the related Participation Agreement or in
any other related operative document (other than in the related tax indemnity
agreement between Continental and the Owner Participant) shall prove to have
been untrue or inaccurate in any material respect at the time made, such
representation or warranty is material at the time in question and the same
shall remain uncured (to the extent of the adverse impact thereof) for more than
30 days after the date of written notice thereof to Continental; and (viii) the
occurrence of certain voluntary events of bankruptcy, reorganization or
insolvency of Continental or the occurrence of involuntary events of bankruptcy,
reorganization or insolvency which shall continue undismissed, unvacated or
unstayed for a period of 90 days (in the case of the Special Agreements, 60
days). (Leases, Section 14)
 
     Indenture Events of Default under the Owned Aircraft Indenture are
discussed above under "-- Indenture Defaults, Notice and Waiver".
 
  Remedies Exercisable upon Events of Default under the Lease
 
     If a Lease Event of Default has occurred and is continuing, the applicable
Owner Trustee may (or, so long as the Indenture shall be in effect, the
applicable Loan Trustee may, subject to the terms of the Indenture) exercise one
or more of the remedies provided in such Lease with respect to the related
Aircraft. These remedies include the right to repossess and use or operate such
Aircraft, to rescind or terminate such Lease, to sell or re-lease such Aircraft
free and clear of Continental's rights, except as set forth in the Lease, and
retain the proceeds, and to require Continental to pay, as liquidated damages,
any due and unpaid basic rent plus an amount, at such Owner Trustee's (or,
subject to the terms of the relevant Leased Aircraft Indenture, the Leased
Aircraft Trustee's) option, either (i) the excess of the present value of all
unpaid rent during the remainder of the term of such Lease over the present
value of the fair market rental value of such Aircraft for the remainder of the
term of such Lease, or (ii) the excess of the stipulated loss value of such
Aircraft over the fair market sales value of such Aircraft or, if such Aircraft
has been sold, the net sales proceeds from the sale of such Aircraft. (Leases,
Section 15; Leased Aircraft Indentures, Section 4.04) The Leases for the Special
Agreements provide a different formula for determining liquidated damages. If
the Loan Trustee has validly terminated such Lease, the Loan Trustee may not
sell or lease or otherwise afford the use of such Aircraft to Continental or any
of its affiliates. (Leased Aircraft Indentures, Sections 4.03 and 4.04(a))
 
     Remedies under the Owned Aircraft Indentures are discussed above under
"-- Remedies".
 
  Transfer of Owner Participant Interests
 
     Subject to certain restrictions, each Owner Participant may transfer all or
any part of its interest in the related Leased Aircraft. (Participation
Agreements, Section 10.1.1)
 
                                       95

<PAGE>   97
 
                  CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
 
EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES
 
     The following summary describes the principal U.S. federal income tax
consequences to Certificateholders of the exchange of the Old Certificates for
New Certificates. This summary is intended to address the beneficial owners of
Certificates that are citizens or residents of the United States, corporations,
partnerships or other entities created or organized in or under the laws of the
United States or any State, or estates or trusts the income of which is subject
to U.S. federal income taxation regardless of its source that will hold the
Certificates as capital assets.
 
     The exchange of Old Certificates for New Certificates (the "Exchange")
pursuant to the Exchange Offer will not be a taxable event for U.S. federal
income tax purposes. As a result, a holder of an Old Certificate whose Old
Certificate is accepted in an Exchange Offer will not recognize gain or loss on
the Exchange. A tendering holder's tax basis in the New Certificates will be the
same as such holder's tax basis in its Old Certificates. A tendering holder's
holding period for the New Certificates received pursuant to the Exchange Offer
will include its holding period for the Old Certificates surrendered therefor.
 
     ALL HOLDERS OF OLD CERTIFICATES ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES
OF THE EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES AND OF THE OWNERSHIP
AND DISPOSITION OF NEW CERTIFICATES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF
THEIR OWN PARTICULAR CIRCUMSTANCES.
 
                              ERISA CONSIDERATIONS
 
IN GENERAL
 
     ERISA imposes certain requirements on employee benefit plans subject to
ERISA ("ERISA Plans"), and on those persons who are fiduciaries with respect to
ERISA Plans. Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including, but not limited to, the requirement of investment
prudence and diversification and the requirement that an ERISA Plan's
investments be made in accordance with the documents governing the Plan.
 
     Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of an ERISA Plan (as well as those plans that
are not subject to ERISA but which are subject to Section 4975 of the Code, such
as individual retirement accounts (together with ERISA Plans, "Plans") and
certain persons (referred to as "parties in interest" or "disqualified persons")
having certain relationships to such Plans, unless a statutory or administrative
exemption is applicable to the transaction. A party in interest or disqualified
person who engages in a prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code.
 
     The Department of Labor has promulgated a regulation, 29 CFR Section
2510.3-101 (the "Plan Asset Regulation"), describing what constitutes the assets
of a Plan with respect to the Plan's investment in an entity for purposes of
ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan
invests (directly or indirectly) in a Certificate, the Plan's assets will
include both the Certificate and an undivided interest in each of the underlying
assets of the corresponding Trust, including the Equipment Notes held by such
Trust, unless it is established that equity participation in the Trust by
benefit Plan investors (including but not limited to Plans and entities whose
underlying assets include plan assets by reason of an employee benefit plan's
investment in the entity) is not "significant" within the meaning of the Plan
Asset Regulation. In this regard, the extent to which there is equity
participation in a particular Trust by, or on behalf of, employee benefit plans
will not be monitored. If the assets of a Trust are deemed to constitute the
assets of a Plan, transactions involving the assets of such Trust could be
subject to the prohibited transaction provisions of ERISA and Section 4975 of
the Code unless a statutory or administrative exemption is applicable to the
transaction.
 
                                       96

<PAGE>   98
 
     The fiduciary of a Plan that proposes to purchase and hold any Certificates
should consider, among other things, whether such purchase and holding may
involve (i) the direct or indirect extension of credit to a party in interest or
a disqualified person, (ii) the sale or exchange of any property between a Plan
and a party in interest or a disqualified person, and (iii) the transfer to, or
use by or for the benefit of, a party in interest or a disqualified person, of
any Plan assets. Such parties in interest or disqualified persons could include,
without limitation, Continental and its affiliates, the Initial Purchasers, the
Trustees, the Escrow Agent, the Depositary, the Owner Trustees and the Liquidity
Provider. In addition, whether or not the assets of a Trust are deemed to be
Plan assets under the Plan Asset Regulation, if Certificates are purchased by a
Plan and Certificates of a subordinate Class are held by a party in interest or
a disqualified person with respect to such Plan, the exercise by the holder of
the subordinate Class of Certificates of its right to purchase the senior
Classes of Certificates upon the occurrence and during the continuation of a
Triggering Event could be considered to constitute a prohibited transaction
unless a statutory or administrative exemption were applicable. Depending on the
identity of the Plan fiduciary making the decision to acquire or hold
Certificates on behalf of a Plan, PTCE 91-38 (relating to investments by bank
collective investment funds), PTCE 84-14 (relating to transactions effected by a
"qualified professional asset manager"), PTCE 95-60 (relating to investments by
an insurance company general account), PTCE 96-23 (relating to transactions
directed by an in-house professional asset manager) or PTCE 90-1 (relating to
investments by insurance company pooled separate accounts) (collectively, the
"Class Exemptions") could provide an exemption from the prohibited transaction
provisions of ERISA and Section 4975 of the Code. However, there can be no
assurance that any of these Class Exemptions or any other exemption will be
available with respect to any particular transaction involving the Certificates.
 
     Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the provisions of Section 4975
of the Code, may nevertheless be subject to state or other federal laws that are
substantially similar to the foregoing provisions of ERISA and the Code.
Fiduciaries of any such plans should consult with their counsel before
purchasing any Certificates.
 
     Any Plan fiduciary which proposes to cause a Plan to purchase any
Certificates should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code to such an investment, and to confirm that such
purchase and holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement of ERISA.
 
CLASS A CERTIFICATES
 
     In addition to the Class Exemptions referred to above, an individual
exemption may apply to the purchase, holding and secondary market sale of Class
A Certificates by Plans, provided that certain specified conditions are met. In
particular, the Department of Labor has issued individual administrative
exemptions to the Initial Purchasers which are substantially the same as the
administrative exemption issued to The First Boston Corporation, Prohibited
Transaction Exemption 89-90 (54 Fed. Reg. 42,597 (1989), as amended (the
"Underwriter Exemption"). The Underwriter Exemption generally exempts from the
application of certain, but not all, of the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Code certain transactions relating
to the initial purchase, holding and subsequent secondary market sale of pass-
through certificates which represent an interest in a trust that holds equipment
notes secured by leases and certain other assets, provided that certain
conditions set forth in the Underwriter Exemption are satisfied.
 
     The Underwriter Exemption sets forth a number of general and specific
conditions which must be satisfied for a transaction involving the initial
purchase, holding or secondary market sale of certificates representing a
beneficial ownership interest in a trust to be eligible for exemptive relief
thereunder. In particular, the Underwriter Exemption requires that the
acquisition of certificates by a Plan be on terms that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an unrelated
party; the rights and interests evidenced by the certificates not be
subordinated to the rights and interests evidenced by other certificates of the
same trust estate; the certificates at the time of acquisition by the Plan be
rated in one of the three highest generic rating categories by Moody's, Standard
& Poor's, Duff & Phelps Inc. or Fitch
 
                                       97

<PAGE>   99
 
Investors Service, Inc.; and the investing Plan be an accredited investor as
defined in Rule 501(a)(1) of Regulation D of the Commission under the Securities
Act.
 
     In addition, the trust corpus generally must be invested in qualifying
receivables, such as the Equipment Notes, but may not in general include a
pre-funding account. The Underwriter Exemption may also be available where all
of the otherwise eligible assets of the trust are identified at the time of the
acquisition of certificates by a Plan even though such assets, for
administrative or other reasons, are not transferred to the trust at that time.
 
     In order to comply with the investment restrictions set forth in the
Underwriter Exemption, an investment in a Certificate will evidence both an
interest in the respective Original Trust as well as an interest in the Deposits
held in escrow by an Escrow Agent for the benefit of the Certificateholder.
Pursuant to the terms of the Escrow Agreement, the proceeds from the Offering of
the Certificates of each Class were paid over by the Initial Purchasers to the
Depositary on behalf of the Escrow Agent (for the benefit of such
Certificateholders as the holders of the Escrow Receipts) and do not constitute
property of the Original Trusts. Under the terms of each Escrow Agreement, the
Escrow Agent entered into the Deposit Agreements with the Depositary and was
irrevocably instructed to effect withdrawals upon the receipt of appropriate
notice from the relevant Trustee so as to enable such Trustee to purchase the
identified Equipment Notes on the terms and conditions set forth in the Note
Purchase Agreement. Interest on the Deposits relating to each Trust will be paid
to the Certificateholders of such Trust as Receiptholders through a Paying Agent
appointed by the Escrow Agent. Pending satisfaction of such conditions and
withdrawal of such Deposits, the Escrow Agent's rights with respect to the
Deposits will remain plan assets subject to the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the Code.
 
     There can be no assurance that the Department of Labor would agree that the
Underwriter Exemption is applicable to Class A Certificates in these
circumstances. In particular, the Department of Labor might assert that the
escrow arrangement is tantamount to a pre-funding of the Original Trusts
rendering the Underwriter Exemption inapplicable to the Original Trusts,
although such issue should not exist with respect to the Successor Trusts. The
Department of Labor is currently considering an amendment to the Underwriter
Exemption to permit pre-funding arrangements with respect to a limited portion
of the assets to be acquired by a trust. In addition, even if all of the
conditions of the Underwriter Exemption are satisfied with respect to the Class
A Certificates, no assurance can be given that the Underwriter Exemption would
apply with respect to all transactions involving the Class A Certificates or the
assets of the Class A Trust. In particular, it appears that the Underwriter
Exemption would not apply to the purchase by Class B Certificateholders or Class
C Certificateholders of Class A Certificates in connection with the exercise of
their rights upon the occurrence and during the continuance of a Triggering
Event. Therefore, the fiduciary of a Plan considering the purchase of a Class A
Certificate should consider the availability of the exemptive relief provided by
the Underwriter Exemption, as well as the availability of any other exemptions
with respect to transactions to which the Underwriter Exemption may not apply.
 
CLASS B AND CLASS C CERTIFICATES
 
     The Underwriter Exemption does not apply to the Class B or Class C
Certificates. The Class B and Class C Certificates may not be acquired with the
assets of a Plan, except that such Certificates may be acquired with the assets
of an insurance company general account that may be deemed to constitute Plan
assets, provided that the conditions of PTCE 95-60 are satisfied at the time of
the acquisition (and during the holding) of such Certificates. Holders of Class
B Certificates or Class C Certificates that tender Old Certificates in exchange
for New Certificates will be deemed to have represented and warranted that
either (i) no Plan assets have been used to acquire and hold such Certificate or
(ii) the acquisition and holding of such Certificate is exempt from the
prohibited transaction restrictions of ERISA and the Code pursuant to PTCE
95-60.
 
                                       98

<PAGE>   100
 
                              PLAN OF DISTRIBUTION
 
     Each broker-dealer that receives New Certificates for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, starting on the Expiration Date and ending on the close of business
180 days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until such date all broker-dealers effecting transactions
in the New Certificates may be required to deliver a prospectus.
 
     The Company will not receive any proceeds from any sale of New Certificates
by broker-dealers. New Certificates received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Certificates or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Certificates. Any
broker-dealer that resells New Certificates that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Certificates may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Certificates and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
 
     Starting on the Expiration Date, the Company will promptly send additional
copies of this Prospectus and any amendment or supplement to this Prospectus to
any broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed to pay all expenses incident to the Exchange Offer other than
commissions or concessions of any brokers or dealers, fees of counsel to the
Holders and certain transfer taxes, and will indemnify the Holders of the New
Certificates (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
 
                                 LEGAL MATTERS
 
     The validity of the New Certificates will be passed upon for Continental by
Hughes Hubbard & Reed LLP, New York, New York. Hughes Hubbard & Reed LLP will
rely on the opinion of Richards, Layton & Finger, Wilmington, Delaware, counsel
for Wilmington Trust Company, as Trustee, as to certain matters of Delaware law
relating to the Pass Through Trust Agreements.
 
                                    EXPERTS
 
     The consolidated financial statements of Continental Airlines, Inc.
appearing in Continental Airlines, Inc.'s Annual Report (Form 10-K) for the year
ended December 31, 1996 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
 
     The references to AISI, BK and MBA, and to their respective appraisal
reports, dated as of February 25, 1997 in the case of AISI, January 8, 1997 in
the case of BK and February 21, 1997 in the case of MBA, are included herein in
reliance upon the authority of each such firm as an expert with respect to the
matters contained in its appraisal report.
 
                                       99

<PAGE>   101
 
                          APPENDIX I -- INDEX OF TERMS
 

<TABLE>
<CAPTION>
                                         PAGE
                                        ------
<S>                                     <C>
ABN AMRO..............................       2
Adjusted Expected Distributions.........27, 74
Adjusted Treasury Yield...............      66
Administration Expenses...............      74
Aeroflot..............................       6
Aggregate LTV Collateral Amount.........28, 75
Air Partners..........................      38
Aircraft..............................       2
Aircraft Operative Agreements.........      62
AISI..................................      14
Alitalia..............................       6
America West..........................       6
Appraisal.............................      75
Appraised Current Market Value..........28, 75
Appraised Value.......................      61
Appraisers............................      14
Assumed Aggregate Aircraft Value......      15
Assumed Aircraft Value................      82
Assumed Amortization Schedule.........      55
Average Life Date.....................      81
average yield.........................      38
BK....................................      14
Boeing................................      34
Book-Entry Confirmation...............      46
Book-Entry Transfer Facility..........      46
Business Day..........................      54
Cash Collateral Account...............      25
Cede..................................      30
Certificate Account...................      53
Certificate Owners....................      30
Certificateholders....................      17
Certificates..........................       1
City..................................      36
Class A Certificates..................      10
Class A Trust.........................       1
Class B Certificates..................      10
Class B Trust.........................       1
Class C-I Certificates................      10
Class C-I Trust.......................       1
Class C-II Trust......................       1
Class Exemptions......................      97
Class C Certificates..................      10
Class C Trusts........................       1
Class C-II Certificates...............      10
Class C-II Premium....................      66
CMI...................................       6
Code..................................      31
Commission............................       3
Company...............................       1
Continental...........................       1
Controlling Party.....................      29
Convention............................      89
CSFB Business Unit....................      67
Current Distribution Date.............      26
</TABLE>

 

<TABLE>
<CAPTION>
                                         PAGE
                                        ------
<S>                                     <C>
default...............................      58
Delivery Period.......................       2
Delivery Period Termination Date......       2
Deposit...............................       2
Deposit Agreement.....................       2
Deposit Make-Whole Premium............      66
Depositary............................       2
Distribution Date.....................      26
Downgrade Drawing.....................      25
DTC...................................      30
DTC Participants......................      30
EDGAR.................................       5
eligible guarantor....................      47
Eligible Institution..................      47
EMB...................................      34
Equipment.............................      86
Equipment Notes.......................       2
ERISA.................................      31
ERISA Plans...........................      96
Escrow Agent..........................       2
Escrow Agreement......................       2
Escrow Receipts.......................      11
Exchange..............................      96
Exchange Act..........................       5
Exchange Agent........................       9
Exchange Offer........................       1
Exchange Offer No-Action Letters......       3
Excusable Delay.......................      78
Expected Distributions..................26, 73
Expiration Date.......................      45
Express...............................       6
Exxon Capital Letter..................       3
FAA...................................      38
Final Distributions...................      29
Final Drawing.........................      26
Final Maturity Date...................      52
$500 Million Dollar Credit Facility...      35
Global Certificates...................      64
H.15(519).............................      81
holder................................      46
Holdings..............................       5
IAH Bonds.............................      36
Indenture Default.....................      56
Indentures............................      12
Indirect participants.................      64
ING...................................       2
Initial Purchasers....................       4
Intercreditor Agreement...............      26
Interest Drawings.....................      24
Issuance Date.........................      18
Lease.................................      88
Lease Event of Default................      56
Lease Payment Date....................      89
Leased Aircraft.......................       2
</TABLE>

 
                                       I-1

<PAGE>   102
 

<TABLE>
<CAPTION>
                                         PAGE
                                        ------
<S>                                     <C>
Leased Aircraft Indenture.............      12
Leased Aircraft Trustee...............      12
Letter of Transmittal.................       1
Liquidity Event of Default............      71
Liquidity Expenses....................      73
Liquidity Facility....................      24
Liquidity Obligations.................      24
Liquidity Providers...................       2
Loan Trustees.........................      12
LTV Appraisals........................      28
LTV Collateral Amount...................28, 75
LTV Ratio...............................28, 75
LTVs..................................      15
Make-Whole Premium....................      81
Mandatory Document Terms..............      62
Mandatory Economic Terms..............      61
Maximum Available Commitment..........      24
MBA...................................      14
Minimum Sale Price....................      30
Morgan Stanley Letter.................       3
most recent H.15(519).................      81
net lease.............................      89
New Certificates......................       1
New Trustee...........................       3
NOLs..................................      36
Non-Extension Drawing.................      25
Non-Performing Equipment Notes........      27
Note Holders..........................      62
Note Purchase Agreement...............      12
NYSE..................................      48
Old Certificates......................       1
Original Trustee......................       3
Original Trusts.......................       3
Owned Aircraft........................       2
Owned Aircraft Indenture..............      12
Owned Aircraft Trustee................      12
Owner Participant.....................      23
Owner Trustee.........................       2
participants..........................      64
Participating Broker-Dealer...........       4
Participation Agreement...............      20
Pass Through Trust Agreements.........       1
Paying Agent..........................      11
Paying Agent Account..................      53
Performing Equipment Note.............      25
Plan Asset Regulation.................      96
</TABLE>

 

<TABLE>
<CAPTION>
                                         PAGE
                                        ------
<S>                                     <C>
Plans.................................      96
Pool Balance..........................      54
Pool Factor...........................      54
Predelivery Deposit Revolver..........      35
Premium Termination Date..............      21
PTC Event of Default..................      17
PTCE..................................      31
Receiptholder.........................      68
Registration Event....................      45
Registration Statement................       5
Regular Distribution Dates............      52
Remaining Weighted Average Life.......      81
Replacement Facility..................      70
Required Amount.......................      24
Scheduled Payments....................      52
Section 382...........................      37
Section 1110 Period...................      25
Securities Act........................       1
Series A Equipment Notes..............       2
Series B Equipment Notes..............       2
Series C Equipment Notes..............       2
Shearman & Sterling Letter............       3
Shelf Registration Statement..........      45
SOP 90-7..............................      34
Special Agreements....................      88
Special Distribution Date.............      53
Special Payment.......................      53
Special Payments Account..............      53
Standard Agreements...................      88
Stated Interest Rates.................      24
Stated Portion........................      24
Subordination Agent...................      11
Successor Trust.......................       3
Termination Notice....................      71
Threshold Rating......................      70
ticket tax............................      38
Transfer Date.........................       3
Transportation Code...................      59
Treasury Yield........................      81
Triggering Event......................      18
Trust Property........................      11
Trustee...............................       1
Trusts................................       1
Underwriter Exemption.................      97
universal bank........................      67
Virgin................................       6
</TABLE>

 
                                       I-2

<PAGE>   103
 
                        APPENDIX II -- APPRAISAL LETTERS
 
[AIRCRAFT INFORMATION SERVICES, INC. LOGO]
 
25 February 1997
 
Continental Airlines
2929 Allen Parkway, Suite 1588
Houston, TX 77019
 
Subject: AISI Report No.: A7D00lBVO
         AISI Sight Unseen New Aircraft Current Market Value Appraisal, Eight
         B757-200,
         Eighteen B737-500 and Four B737-700 Aircraft.
 
Dear Gentlemen:
 
     In response to your request, Aircraft Information Services, Inc. (AISI) is
pleased to offer Continental Airlines our opinion of the sight unseen current
market value of various new aircraft to be delivered from the manufacturer to
Continental Airlines between March 1997 and February 1998 as listed and defined
in Table I.
 
1. METHODOLOGY AND DEFINITIONS
 
The method used by AISI in its valuation of the Aircraft was based both on a
review of information and Aircraft specifications supplied by Continental
Airlines and also on a review of present and past market conditions, various
expert opinions (such as aircraft brokers and financiers) and information
contained in AISI's databases that help determine aircraft availability and
price data and thus arrive at the appraised values for the new aircraft to be
delivered to Continental Airlines.
 
The historical standard term of reference for commercial aircraft value has been
"half-life fair market value" of an "average" aircraft. However, "fair market
value" could mean a fair value in the given market or a value in a hypothetical
"fair" or balanced market, and the two definitions are not equivalent. Recently,
the term "base value" has been created to describe the theoretical balanced
market condition and to avoid the potentially misleading term "fair market
value" which has now become synonymous with the term "current market value" or a
"fair" value in the actual current market. AISI value definitions are consistent
with those of the International Society of Transport Aircraft Trading (ISTAT) of
01 January 1994; AISI is a member of that organization and employs an ISTAT
Certified Senior Aircraft Appraiser.
 
AISI defines a "base value" as that of a transaction between equally willing and
informed buyer and seller, neither under compulsion to buy or sell, for a single
unit cash transaction with no hidden value or liability, and with supply and
demand of the sale item roughly in balance.
 
AISI defines a "current market value" or "fair market value" as that value which
reflects the real market conditions, whether at, above or below the base value
conditions. Definitions of aircraft condition, buyer/seller qualifications and
type of transaction remain unchanged from that of base value. Current market
value takes into consideration the status of the economy in which the aircraft
is used, the status of supply and demand for the particular aircraft type, the
value of recent transactions and the opinions of informed buyers and sellers.
Current market value assumes that there is no short term time constraint to buy
or sell.
 
2. MARKET ANALYSIS B737-500, B737-700 & B757-200
 
B737-500
 
The B737-500 is a twin engine, narrowbody, stage 3, two man crew domestic
aircraft, the smallest of the B737-300/400/500 family, typically seating 108
passengers, dual class. With the same fuel capacity as the large B737-300 and
- -400 but lighter empty weight, the B737-500 full passenger range is considerably
greater; approximately 1,800 nautical miles at low MTOW's up to 3,000 nautical
miles at higher MTOW's.

<PAGE>   104
 
25 February 1997                      [AIRCRAFT INFORMATION SERVICES, INC. LOGO]
AISI File No. A70001BVO
Page -2-
There are 308 aircraft in the B737-500 fleet, making it the smallest fleet of
the B737-300/400/500 family, but 33 airlines operate the -500, distributed
worldwide. 148 of the fleet are operated on a form of lease, either financial or
operational.
 
The aircraft was first delivered in 1989, and we would anticipate termination of
production prior to year 2000. Major competitors included hushkitted B737-200's
and DC-9 variants, the MD-87, the Fokker 100, the Airbus A319 and soon the
replacement B737-600 and the new MD-95.
 
The B737-500 market has been reasonably strong and values have held steady in
the face of demand which, while strong is not as strong as for the larger
B737-300 and -400. For the short term we see no significant reduction in
B737-500 values. Long term however, the aircraft, like the B737-300/400, faces
significant competition from newer more advanced aircraft, and we expect the
B737-500 to be significantly more vulnerable than its larger variants, to either
competition or an economic downturn.
 
Another factor tending to lower values long term is the major manufacturers
policy of deep discounts of list prices to battle for market share -- which
softens market values of all newer 100-160 seat aircraft. The B737-500 has even
more limited appeal than the B737-300 as a converted freighter, and none have
yet been converted.
 
B737-700
 
The B737-700 is a twin engine, narrowbody, stage 3, two man crew aircraft
typically seating 128 passengers in mixed class configuration. Typical range
with full passengers at low MTOW is approximately 2,500 nautical miles, while at
high MTOW the range increases to approximately 3,200 nautical miles, sufficient
for transcontinental domestic operations. The aircraft is part of the new Boeing
B737-600/700/800 family, replacing the present B737-500/300/400, respectively.
The aircraft has a larger wing, a higher cruise speed, longer range, and higher
initial cruise altitude capability than its predecessor, the B737-300, while
operating at higher gross weights, with the same size passenger cabin and more
powerful CFM56-7B variants of the same engine.
 
The B737-700 has a respectable firm order of 176 aircraft, with 93 ordered by
leasing companies, but the customer base is still quite small at 6 airlines.
This reflects the high percentage of leasing company orders and the probable
initial operator count is more like 20 airlines.
 
The major competitors to the B737-700 are the MD-90 and the Airbus A320 even
though these aircraft types are larger then the B737-700. The B737-700 also must
compete with its larger variant the B737-800 and the earlier B737-300/400/500
variants. In some markets it must also compete with the older B737-200A.
 
The first B737-700 is currently in flight test, with delivery scheduled for
October 1997. AISI analysis of the market for the new B737 family indicates that
the present strong demand for narrowbody stage 3 domestic aircraft has
stabilized and will continue at least until the next major economic downturn.
There are expected to be some B737-300 users who put insufficient value in the
advantages of the B737-700 over the B737-300 to support any significant price
differential between the two. Due to small size and relatively high cost, we
expect the future potential for freighter conversion to be confined to the older
B737 variants for domestic small package carrier market; it will be several
years before market growth and B737-700 values reductions coincide to make a
B737-700F practical.
 
Boeing in recent head-to-head B737-600/700/800 competition with Airbus A319 and
A320 aircraft has shown a willingness to offer aircraft at drastically reduced
prices; Airbus has generally matched or exceeded Boeing's discounts. This
willingness to discount, combined with significant increases in production
rates, produces an artificial softening of market prices of all new and newer
100 to 160 seat stage III narrowbody domestic aircraft.

<PAGE>   105
 
25 February 1997                      [AIRCRAFT INFORMATION SERVICES, INC. LOGO]
AISI File No. A70001BVO
Page -3-
B757-200
 
The B757-200 is a twin engine, narrowbody, stage 3, two man crew aircraft
typically seating 186 passengers in mixed class configuration. Typical range
with full passengers at low MTOW is approximately 2,900 nautical miles, while at
high MTOW the range increases to approximately 4,000 nautical miles. The B757
has a relatively large fleet of 648 aircraft, of which 272 are Pratt & Whitney
powered and 376 are Rolls Royce powered. 17 airlines operate Pratt powered
aircraft, while 42 operate the more popular Rolls powered variant. 340 aircraft
are operated on some form of lease arrangement. A variant of the aircraft is
qualified for Extended Twin Engine Overwater Operation (ETOP) giving the
aircraft significant flexibility for use in both domestic and limited
international markets. The aircraft was first produced in 1982, and we do not
anticipate termination of production in the foreseeable future.
 
The B757-200 occupies a unique place in the family of commercial aircraft in
that it does not have a direct competitor. Its closest narrowbody competitors,
the MD-83 and A321 neither have the range to compete with the B757, and the
MD-83 has considerably smaller passenger capacity. Airbus has considered
increasing the size and weights of the A321, but a new larger wing would be
required for the A321 to be truly competitive with the B757. The closest
widebody competitors, the B767-200 and A310-200/300, are considerably larger
aircraft and cost considerably more per plane mile to operate. For the
foreseeable future, it appears Airbus is content to permit the B757 to remain
unchallenged at the top of the larger, long range, narrowbody market. Boeing,
realizing it has a significant market in which it is uncontested, has now
initiated studies to increase the size and weights of the B757-200 creating the
B757-300. This will further distance the B757 family from its narrowbody
competitors and place it closer to the smallest widebody competitors, over whom
it enjoys considerable plane mile operating cost advantages.
 
AISI analysis of the market for the B757-200 indicates that demand had
stabilized in late 1995 and through 1996 but has now increased and will continue
at least until the next major economic downturn; orders and backlog for new
aircraft have declined but availability of newer B757 aircraft is tight; a
production rate decrease in 3rd quarter 1996 will be reversed early in 1997.
Current market purchase prices and lease rates for newer used B757-200 aircraft
are now generally stable, although there is some reduction in prices for the
oldest, least capable aircraft. We expect increased production rates and
availability from leasing companies to hold prices steady in the face of
moderately increasing demand.
 
3. VALUATION
 
Following is AISI's opinion of the current market value for the subject aircraft
on their respective delivery dates. Valuations are presented in Table I subject
to the assumptions, definitions and disclaimers herein.

<PAGE>   106
 
                 CONTINENTAL AIRLINES -- AISI FILE # A7D001BVO
                                25 FEBRUARY 1997
 
                                    TABLE I
 

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
                                                                                                     1997 MILLION
                                                                                                      USDOLLARS
       MANUFACTURER'S                 AIRCRAFT TAIL                  MANUFACTURER'S               NEW CURRENT MARKET
       DELIVERY DATE                      NUMBER                     SERIAL NUMBER                      VALUE
- -------------------------------------------------------------------------------------------------------------------------
<C>                            <C>                            <C>                            <C>
                                      B757-200, RB211-535E4 Engines, 230,0001b MTOW
- -------------------------------------------------------------------------------------------------------------------------
                      Mar-97               118                           27560                          53.72
- -------------------------------------------------------------------------------------------------------------------------
                      Apr-97               119                           27561                          53.80
- -------------------------------------------------------------------------------------------------------------------------
                      Jun-97               120                           27562                          53.97
- -------------------------------------------------------------------------------------------------------------------------
                      Jul-97               121                           27563                          54.05
- -------------------------------------------------------------------------------------------------------------------------
                      Aug-97               122                           27564                          54.13
- -------------------------------------------------------------------------------------------------------------------------
                      Dec-97               126                           28966                          54.47
- -------------------------------------------------------------------------------------------------------------------------
                      Jan-98               123                           27565                          54.55
- -------------------------------------------------------------------------------------------------------------------------
                      Jan-98               127                           28967                          54.55
- -------------------------------------------------------------------------------------------------------------------------
 
                                       B737-500, CFM56-3B1 Engines, 129,5001b MTOW
- -------------------------------------------------------------------------------------------------------------------------
                      Jul-97               638                           28899                          31.09
- -------------------------------------------------------------------------------------------------------------------------
                      Jul-97               639                           28900                          31.09
- -------------------------------------------------------------------------------------------------------------------------
                      Aug-97               640                           28901                          31.14
- -------------------------------------------------------------------------------------------------------------------------
                      Aug-97               641                           28902                          31.14
- -------------------------------------------------------------------------------------------------------------------------
                      Aug-97               642                           28903                          31.14
- -------------------------------------------------------------------------------------------------------------------------
                      Sep-97               643                           28904                          31.19
- -------------------------------------------------------------------------------------------------------------------------
                      Sep-97               644                           28905                          31.19
- -------------------------------------------------------------------------------------------------------------------------
                      Oct-97               645                           28906                          31.24
- -------------------------------------------------------------------------------------------------------------------------
                      Oct-97               646                           28907                          31.24
- -------------------------------------------------------------------------------------------------------------------------
                      Nov-97               647                           28908                          31.29
- -------------------------------------------------------------------------------------------------------------------------
                      Nov-97               648                           28909                          31.29
- -------------------------------------------------------------------------------------------------------------------------
                      Dec-97               649                           28910                          31.34
- -------------------------------------------------------------------------------------------------------------------------
                      Dec-97               650                           28911                          31.34
- -------------------------------------------------------------------------------------------------------------------------
                      Dec-97               651                           28912                          31.34
- -------------------------------------------------------------------------------------------------------------------------
                      Jan-98               652                           28913                          31.39
- -------------------------------------------------------------------------------------------------------------------------
                      Jan-98               653                           28914                          31.39
- -------------------------------------------------------------------------------------------------------------------------
                      Feb-98               654                           28915                          31.43
- -------------------------------------------------------------------------------------------------------------------------
                      Feb-98               655                           28916                          31.43
- -------------------------------------------------------------------------------------------------------------------------
 
                                      B737-500, CFM56-7B24 Engines, 133,0001b MTOW
- -------------------------------------------------------------------------------------------------------------------------
                      Jan-98               701                           28762                          36.83
- -------------------------------------------------------------------------------------------------------------------------
                      Jan-98               702                           28763                          36.83
- -------------------------------------------------------------------------------------------------------------------------
                      Feb-98               703                           28764                          36.89
- -------------------------------------------------------------------------------------------------------------------------
                      Feb-98               704                           28765                          36.89
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   107
25 February 1997                      [AIRCRAFT INFORMATION SERVICES, INC. LOGO]
AISI File No. A70001BVO
Page -4-

 
Unless otherwise agreed by Aircraft Information Services, Inc. (AISI) in
writing, this report shall be for the sole use of the client/addressee. This
report is offered as a fair and unbiased assessment of the subject aircraft.
AISI has no past, present, or anticipated future interest in the subject
aircraft. The conclusions and opinions expressed in this report are based on
published information, information provided by others, reasonable
interpretations and calculations thereof and are given in good faith. Such
conclusions and opinions are judgments that reflect conditions and values which
are current at the time of this report. The values and conditions reported upon
are subject to any subsequent change. AISI shall not be liable to any party for
damages arising out of reliance or alleged reliance on this report, or for any
parties action or failure to act as a result of reliance or alleged reliance on
this report.
 
Sincerely,
 
AIRCRAFT INFORMATION SERVICES. INC.
 
       /s/ FRED E. BEARDEN
- ------------------------------------
Fred E. Bearden
President
FB/JDM/jm

<PAGE>   108
 
                           [BK ASSOCIATES, INC. LOGO]
                            1295 Northern Boulevard
                           Manhasset, New York 11030
                      (516) 365-6272 - Fax (516) 365-6287
 
                                January 8, 1997
 
CONTINENTAL AIRLINES
2929 Allen Parkway
Houston, TX 77019
 
Gentlemen:
 
In response to your request, BK Associates, Inc. is pleased to provide this
opinion on the fair market value (FMV) as of January 1997 on each of eight
B757-224, four B737-724 and 18 B737-524 aircraft (Aircraft), which will be
delivered to Continental Airlines between March 1997 and February 1998. The B757
aircraft are each powered by two Rolls-Royce RB211-535E4B engines, the B737-724
by CFM International CFM56-7B24 and the B737-524 by CFM International CFM56-3Bl
engines. We understand that, while they are being delivered as "standard"
aircraft with 230,000 pounds takeoff weight, the B757s have the physical
specifications of high gross weight and Extended Twin Overwater Operations
(ETOPS) and can be re-certified as such without physical changes to the
aircraft. The Aircraft are further identified in the conclusion to this letter.
 
     Set forth below is a summary of the methodology, considerations and
assumptions utilized in this appraisal.
 
CURRENT FAIR MARKET VALUE
 
According to the International Society of Transport Aircraft Trading's (ISTAT)
definition of FMV, to which BK Associates subscribes, the quoted FMV is the
Appraiser's opinion of the most likely trading price that may be generated for
an aircraft under the market circumstances that are perceived to exist at the
time in question. The FMV assumes that the aircraft is valued for its highest
and best use, that the parties to the hypothetical sale transaction are willing,
able, prudent and knowledgeable, and under no unusual pressure for a prompt
sale, and that the transaction would be negotiated in an open and unrestricted
market on an arm's length basis, for cash or equivalent consideration, and given
an adequate amount of time for effective exposure to prospective buyers, which
BK Associates considers to be 12 to 18 months.
 
BASE VALUE
 
Base value is the Appraiser's opinion of the underlying economic value of an
aircraft in an open, unrestricted, stable market environment with a reasonable
balance of supply and demand, and assumes full consideration of its "highest and
best use". An aircraft's base value is founded in the historical trend of values
and in the projection of future value trends and presumes an arm's length, cash
transaction between willing, able and knowledgeable parties, acting prudently,
with an absence of duress and with a reasonable period of time available for
marketing.
 
VALUE METHODOLOGY
 
Fair market valuations are determined based upon one of three methods:
comparable recent sales, replacement cost or rate of return to investor. In this
appraisal, BK used the comparable sales method, which is the most common method,
in determining the base values of the Aircraft. This method uses industry data
to ascertain the prices realized in recent sales of comparable models. The fair
market value of the base Aircraft is based on BK's familiarity with the aircraft
type, its earnings potential in commercial service, its knowledge of its
capabilities and the uses to which it will be put worldwide, its knowledge of
the marketing of used aircraft, and the factors affecting the fair market value
of such aircraft, and on its knowledge of the asking, offered and transaction
prices for similar competitive, and alternative equipment, as well as
transactions and negotiations

<PAGE>   109
 
Continental Airlines, Inc.                            [BK ASSOCIATES, INC. LOGO]
January 8, 1997
Page 2
involving basically identical aircraft. These realizations, however, which
reflect the market supply and demand at the time of sale, are subject to minor
adjustments for other conditions existing at the time of the appraisal. In this
respect, we consider the market for B757 and B737 aircraft to be in reasonable
balance at this time, and thus, the FMV is equal to the base value. In addition,
values were adjusted for engine type and maximum gross takeoff weights (MGTOW).
In arriving at the current fair market value, BK considered the impact of many
factors affecting the market for used aircraft, including: the current demand
for and availability of aircraft, the projected demand for lift, the suitability
and operating economies of the aircraft, regulatory factors, and recent sales
experience.
 
LIMITING CONDITIONS AND ASSUMPTIONS
 
BK has neither inspected the Aircraft nor their maintenance records but relied
upon information supplied by you and from BK's own database. In determining the
fair market value of a used aircraft, the following assumptions apply to the
base aircraft:
 
          1. Unless it is new, the aircraft has half-time remaining to its next
             major overhauls or scheduled shop visit on its airframe, engines,
             landing gear and auxiliary power unit.
 
          2. The aircraft is in compliance under a Federal Aviation
             Administration approved airline maintenance program, with all
             airworthiness directives, mandatory modifications and applicable
             service bulletins currently up to industry standard.
 
          3. The interior of the aircraft is in a standard configuration for its
             specific type, with the buyer furnished equipment and options of
             the types and models generally accepted and utilized in the
             industry.
 
          4. The aircraft is in current flight operations.
 
          5. The aircraft is sold for cash without seller financing.
 
          6. The Aircraft is in average or better condition.
 
          7. There is no accident damage.

<PAGE>   110
 
Continental Airlines, Inc.                            [BK ASSOCIATES, INC. LOGO]
January 8, 1997
Page 3
CONCLUSIONS
 
Based on the above methodology, considerations and assumptions, and since they
are all new and not yet in service, it is our opinion that the current fair
market value of each aircraft are as follows:
 

<TABLE>
<CAPTION>
 MODEL    DATE OF DELIVERY   SERIAL NUMBER   CFMV (EACH)
 -----    ----------------   -------------   -----------
<S>       <C>                <C>             <C>
B757-224       03/97             27560       53,250,000
B757-224       04/97             27561       53,250,000
B757-224       06/97             27562       53,250,000
B757-224       07/97             27563       53,750,000
B757-224       08/97             27564       53,750,000
B757-224       12/97             28966       54,000,000
B757-224       01/98             27565       54,250,000
B757-224       01/98             28967       54,250,000
 
B737-524       07/97             28899       27,800,000
B737-524       07/97             28900       27,800,000
B737-524       08/97             28901       27,800,000
B737-524       08/97             28902       27,800,000
B737-524       08/97             28903       27,800,000
B737-524       09/97             28904       27,800,000
B737-524       09/97             28905       27,800,000
B737-524       10/97             28906       27,800,000
B737-524       10/97             28907       27,800,000
B737-524       11/97             28908       28,000,000
B737-524       11/97             28909       28,000,000
B737-524       12/97             28910       28,000,000
B737-524       12/97             28911       28,000,000
B737-524       12/97             28912       28,000,000
B737-524       01/98             28913       28,250,000
B737-524       01/98             28914       28,250,000
B737-524       02/98             28915       28,250,000
B737-524       02/98             28916       28,250,000
 
B737-724       01/98             28762       37,750,000
B737-724       01/98             28763       37,750,000
B737-724       02/98             28764       37,750,000
B737-724       02/98             28765       37,750,000
</TABLE>


<PAGE>   111
 
Continental Airlines, Inc.                            [BK ASSOCIATES, INC. LOGO]
January 8, 1997
Page 4
BK Associates, Inc. has no present or contemplated future interest in the
Aircraft, nor any interest that would preclude our making a fair and unbiased
estimate. This appraisal represents the opinion of BK Associates, Inc. and
reflects our best judgment based on the information available to us at the time
of preparation and the time and budget constraints imposed by the client. It is
not given as a recommendation, or as an inducement, for any financial
transaction and further, BK Associates, Inc. assumes no responsibility or legal
liability for any action taken or not taken by the addressee, or any other
party, with regard to the appraised equipment. By accepting this appraisal, the
addressee agrees that BK Associates, Inc. shall bear no such responsibility or
legal liability. This appraisal is prepared for the use of the addressee and
shall not be provided to other parties without the express consent of the
addressee.
 
                                            Sincerely yours,
 
                                            BK ASSOCIATES, INC.
 
                                                    /s/ JOHN F. KEITZ
                                            ------------------------------------
                                            John F. Keitz
                                            President
                                            ISTAT Senior Certified Appraiser
JFK/kf

<PAGE>   112
 
[MORTEN BEYER AND ASSOCIATES LOGO]
                                                               February 21, 1997
 
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
 
Gentlemen:
 
     Pursuant to your request, Morten Beyer & Associates (MBA) has set forth its
opinion regarding the value of thirty aircraft (as described in Schedule I
herein) being delivered new from the manufacturer to Continental Airlines during
1997 and 1998. More specifically, our mandate is to render our opinion on this
date as to the value of the aircraft on their delivery dates.
 
     There are several terms used to describe the "value" of an aircraft. MBA
uses the definitions of various value terms as promulgated by the International
Society of Transport Aircraft Trading (ISTAT), a not-for-profit organization of
some 500 members who have an interest in the commercial aviation industry. The
membership consists of management level personnel from banks, leasing companies,
airlines, appraisers, brokers, manufacturers, etc. ISTAT has also established
standards for appraisal practice and a code of ethics for those members who want
to be certified by the Society as appraisers. To attain certification members
must meet rigid educational and experience requirements and must successfully
complete written examinations. Both Morten Beyer and Robert Minnich of MBA are
ISTAT Certified Senior Appraisers.
 
     ISTAT defines Current Market Value (CMV) as the most likely trading price
that may be generated for an aircraft under the market conditions that are
perceived to exist at the time in question. Market Value (MV) assumes that the
aircraft is valued for its highest, best use, that the parties to the
hypothetical sales transaction are willing, able, prudent and knowledgeable, and
under no unusual pressure for a prompt sale, and that the transactions would be
negotiated in an open and unrestricted market on an arm's length basis, for cash
or equivalent consideration and given an adequate amount of time for effective
exposure to prospective buyers. Fair Market Value is synonymous to MV and
Current Fair Market Value is synonymous with CMV because the criteria typically
used in those documents that use the term "fair" reflect the same criteria set
forth in the above definition of Market Value.
 
     Base Value (BV) contains the same elements as MV except the market
conditions are always assumed to be in a reasonable state of equilibrium. Base
values are related to long term trends, and may or may not reflect the actual
value of the aircraft in question. Base values are founded in the historical
values of aircraft and are usually used for analysis of historic values or for
future value projections.
 
     The values set forth herein are Current Market Values. CMVs are provided
for each aircraft, identified by assigned manufacturer's serial numbers and FAA
registration numbers taking into account the expected month of delivery to
Continental.
 
     The delivery period for the aircraft that are the subject of this report
terminates in February, 1998. As of the date of this report, we see no events
that may cause us to revise valuations. However, unforeseen

<PAGE>   113
 
circumstances can occur with little or no warning, and if something does occur,
MBA would revise its market valuations accordingly.
 
     All of the aircraft included in this appraisal are new aircraft with
delivery dates starting in March 1997. The types of aircraft that are the
subject of this report are all considered to be effective competitors in the
industry for years to come, and they all meet or exceed Stage III noise level
standards. The Boeing 737-500 was first built in 1989, and there are currently
319 in service with 28 operators and another 56 on order. It is the truncated
version of the 737-300/400 series and offers a lower cost per aircraft mile.
Because of its smaller capacity, its unit costs as measured by the cost per
available seat mile are higher. Although we consider the aircraft to be a
competitive one, it suffers from the fact that aircraft that are smaller
versions of larger aircraft have historically not been as efficient as aircraft
that are originally designed as smaller machines.
 
     The Boeing 737-700 is Boeing's newest entry into the advanced technology
market to compete with Airbus A319/320/321 series machines. The aircraft has not
yet entered service. There are 208 unfilled orders. We expect that this aircraft
will be very popular with the airlines and will have a long production run.
 
     The Boeing 757 was first built in 1982 and was originally thought to be the
replacement for the Boeing 727 series aircraft. Orders started slowly, but as
time passed the aircraft became very popular because of its outstanding economic
and operational characteristics. At the present time there are 669 of these
aircraft in service with 62 operators. An additional 109 aircraft are on order.
 
     This report has been prepared for the exclusive use of Continental and
shall not be provided to other parties by MBA without the express consent of
Continental.
 
     MBA certifies that this report has been independently prepared and that if
fully and accurately reflects MBA's opinion, as of the date of this report, of
the values set forth herein. MBA further certifies that it does not have, and
does not expect to have, any financial interest in the subject or similar
aircraft.
 
     This report represents MBA's opinion as to the subject aircraft, and is
intended to be advisory only, in nature. Therefore, MBA assumes no
responsibility or legal liability for any actions taken, or not taken, by
Continental or any other party with regard to the subject aircraft.
 
     By accepting this report, all parties agree that MBA shall bear no such
responsibility or legal liability.
 
                                            Sincerely,
 
                                                   /s/ MORTEN S. BEYER
                                            ------------------------------------
                                            Morten S. Beyer
                                            President
 
[MORTEN BEYER AND ASSOCIATES LOGO]
 
                                        2

<PAGE>   114
 
                     PROJECTED AIRCRAFT VALUES AT DELIVERY
 
                              CONTINENTAL AIRLINES
 
Boeing 757-200
 

<TABLE>
<CAPTION>
                                                     MAR       APR       JUN       JUL       AUG       DEC       JAN
                                                      97        97        97        97        97        97        98
<S>                                                 <C>       <C>       <C>       <C>       <C>       <C>       <C>
# of Aircraft                                         1 ea      1 ea      1 ea      1 ea      1 ea      1 ea      2 ea
Current Mkt Val ($mm)                               59.431    59.682    60.182    60.433    60.683    61.685    61.936
Serial Numbers                                       27560     27561     27562     27563     27564     28966     27565
                                                                                                                 27567
Tail #s                                                118       119       120       121       122       126       123
                                                                                                                   127
</TABLE>

 
Boeing 737-500
 

<TABLE>
<CAPTION>
                                           JUL       AUG       SEP       OCT       NOV       DEC       JAN       FEB
                                            97        97        97        97        97        97        98        98
<S>                                       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
# of Aircraft                               2 ea      3 ea      2 ea      2 ea      2 ea      3 ea      2 ea      2 ea
Current Mkt Val ($mm)                     27.610    27.718    27.826    27.932    28.040    28.148    28.256    28.364
Serial Numbers                             28899     28901     28904     28906     28908     28910     28913     28915
                                           28900     28902     28905     28907     28909     28911     28914     28961
                                                     28903                                   28912
Tail #s                                      638       640       643       645       647       649       652       654
                                             639       641       644       646       648       650       653       655
                                                       642                                     651
</TABLE>

 
Boeing 737-700
 

<TABLE>
<CAPTION>
                                           JAN       FEB
                                            98        98
<S>                                       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
# of Aircraft                               2 ea      2 ea
Current Mkt Val ($mm)                     36.491    36.573
Serial Numbers                             28762     28764
                                           28763     28765
Tail #s                                      701       703
                                             702       704
</TABLE>

 
[MORTEN BEYER AND ASSOCIATES LOGO]
 
                                        3

<PAGE>   115
 
======================================================
 
NO OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR THE
ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THEREOF.
 
                             ---------------------
 
                               TABLE OF CONTENTS
 

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Available Information.................     5
Reports to Certificateholders.........     5
Incorporation of Certain Documents by
  Reference...........................     5
Prospectus Summary....................     6
Risk Factors..........................    34
Use of Proceeds.......................    43
Ratios of Earnings to Fixed Charges...    43
The Exchange Offer....................    43
Description of the New Certificates...    50
Description of the Deposit
  Agreements..........................    65
Description of the Escrow
  Agreements..........................    68
Description of the Liquidity
  Facilities..........................    68
Description of the Intercreditor
  Agreement...........................    72
Description of the Aircraft and the
  Appraisals..........................    76
Description of the Equipment Notes....    78
Certain U.S. Federal Income Tax
  Consequences........................    96
ERISA Considerations..................    96
Plan of Distribution..................    99
Legal Matters.........................    99
Experts...............................    99
Index of Terms........................   I-1
Appraisal Letters.....................  II-2
</TABLE>

 
======================================================
 
======================================================
 
                           CONTINENTAL AIRLINES, INC.
 
                               OFFER TO EXCHANGE
                   PASS THROUGH CERTIFICATES, SERIES 1997-1,
 
                      WHICH HAVE BEEN REGISTERED UNDER THE
                      SECURITIES ACT OF 1933, AS AMENDED,
 
                          FOR ANY AND ALL OUTSTANDING
                    PASS THROUGH CERTIFICATES, SERIES 1997-1
 
                                   PROSPECTUS
 
May                                                                       , 1997
 
======================================================

<PAGE>   116
 

                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     The Company's Certificate of Incorporation and Bylaws provide that the
Company will indemnify each of its directors and officers to the full extent
permitted by the laws of the State of Delaware and may indemnify certain other
persons as authorized by the Delaware General Corporation Law (the "GCL").
Section 145 of the GCL provides as follows:
 
     "(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
 
     (b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
 
     (c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
 
     (d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by a majority vote of the board of directors who
are not parties to such action, suit or proceeding, even though less than a
quorum, or (2) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (3) by the stockholders.
 
     (e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative, or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of undertaking by or on behalf
of such
 
                                      II-1

<PAGE>   117
 
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this section. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
 
     (f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
 
     (g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
 
     (h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent for such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
 
     (i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
 
     (j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
 
     (k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees)".
 
     The Certificate of Incorporation and Bylaws also limit the personal
liability of directors to the Company and its stockholders for monetary damages
resulting from certain breaches of the directors' fiduciary duties. The bylaws
of the Company provide as follows:
 
     "No Director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the. . . GCL, or (iv) for any
transaction from which the Director derived any improper personal benefit. If
the GCL is amended to authorize corporate action further eliminating or limiting
the personal liability of Directors, then
 
                                      II-2

<PAGE>   118
 
the liability of Directors of the Corporation shall be eliminated or limited to
the full extent permitted by the GCL, as so amended".
 
     The Company maintains directors' and officers' liability insurance.
 
ITEM 21. EXHIBITS.
 

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                             DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
           4.1           -- Form of New 7.461% Continental Airlines Pass Through
                            Certificate Series 1997-1A-0 (included in Exhibit 4.5)
           4.2           -- Form of New 7.461% Continental Airlines Pass Through
                            Certificate Series 1997-1B-0 (included in Exhibit 4.6)
           4.3           -- Form of New 7.420% Continental Airlines Pass Through
                            Certificate Series 1997-1C-I-0 (included in Exhibit 4.7)
           4.4           -- Form of New 7.420% Continental Airlines Pass Through
                            Certificate Series 1997-1C-II-0 (included in Exhibit 4.8)
           4.5           -- Pass Through Trust Agreement, dated as of March 21, 1997,
                            between Continental Airlines, Inc., and Wilmington Trust
                            Company, as Trustee, made with respect to the formation
                            of Continental Airlines Pass Through Trust, Series
                            1997-1A-0 and the issuance of 7.461% Continental Airlines
                            Pass Through Trust, Series 1997-1A-0 Pass Through
                            Certificates representing fractional undivided interests
                            in the Trust
           4.6           -- Pass Through Trust Agreement, dated as of March 21, 1997,
                            between Continental Airlines, Inc., and Wilmington Trust
                            Company, as Trustee, made with respect to the formation
                            of Continental Airlines Pass Through Trust, Series
                            1997-1B-0 and the issuance of 7.461% Continental Airlines
                            Pass Through Trust, Series 1997-1B-0 Pass Through
                            Certificates representing fractional undivided interests
                            in the Trust
           4.7           -- Pass Through Trust Agreement, dated as of March 21, 1997,
                            between Continental Airlines, Inc., and Wilmington Trust
                            Company, as Trustee, made with respect to the formation
                            of Continental Airlines Pass Through Trust, Series
                            1997-1C-I-0 and the issuance of 7.420% Continental
                            Airlines Pass Through Trust, Series 1997-1C-I-0 Pass
                            Through Certificates representing fractional undivided
                            interests in the Trust
           4.8           -- Pass Through Trust Agreement, dated as of March 21, 1997,
                            between Continental Airlines, Inc., and Wilmington Trust
                            Company, as Trustee, made with respect to the formation
                            of Continental Airlines Pass Through Trust, Series
                            1997-1C-II-0 and the issuance of 7.420% Continental
                            Airlines Pass Through Trust, Series 1997-1C-II-0 Pass
                            Through Certificates representing fractional undivided
                            interests in the Trust
           4.9           -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1A-0, as Borrower and ABN AMRO Bank
                            N.V., Chicago Branch as Liquidity Provider
           4.10          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1A-0, as Borrower and ING Bank N.V. as
                            Liquidity Provider
</TABLE>

 
                                      II-3

<PAGE>   119

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                             DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
           4.11          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1B-0, as Borrower and ABN AMRO Bank
                            N.V., Chicago Branch as Liquidity Provider
           4.12          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1B-0, as Borrower and ING Bank N.V. as
                            Liquidity Provider
           4.13          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1C-I-0, as Borrower and ABN AMRO Bank
                            N.V., Chicago Branch as Liquidity Provider
           4.14          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1C-I-0, as Borrower and ING Bank N.V.
                            as Liquidity Provider
           4.15          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1C-II-0, as Borrower and ABN AMRO Bank
                            N.V., Chicago Branch as Liquidity Provider
           4.16          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1C-II-0, as Borrower and ING Bank N.V.
                            as Liquidity Provider
           4.17          -- Intercreditor Agreement dated as of March 21, 1997, among
                            Wilmington Trust Company, as Trustee under the
                            Continental Airlines Pass Through Trust 1997-1A-0,
                            Continental Airlines Pass Through Trust 1997-1B-0,
                            Continental Airlines Pass Through Trust 1997-1-C-I-0 and
                            Continental Pass Through Trust 1997-1C-II-0, ING Bank
                            N.V. and ABN AMRO Bank N.V., as Class A Liquidity
                            Provider, Class B Liquidity Provider, Class C Liquidity
                            Provider, and Wilmington Trust Company, as Subordination
                            Agent and Trustee
           4.18          -- Exchange and Registration Rights Agreement, dated as of
                            March 21, 1997, among Continental Airlines, Inc.,
                            Wilmington Trust Company, as Trustee under Continental
                            Airlines Pass Through Trust, Series 1997-1A-O,
                            Continental Airlines Pass Through Trust, Series
                            1997-1B-O, Continental Airlines Pass Through Trust,
                            Series 1997-1C-I-O, Continental Airlines Pass Through
                            Trust, Series 1997-1C-II-O, and Credit Suisse First
                            Boston Corporation, Morgan Stanley & Co. Incorporated,
                            Chase Securities Inc. and Goldman, Sachs & Co.
           4.19          -- Deposit Agreement (Class A) dated as of March 21, 1997
                            between First Security Bank, National Association as
                            Escrow Agent under the Escrow and Paying Agent Agreement,
                            and Credit Suisse First Boston, New York Branch, as
                            Depositary
           4.20          -- Deposit Agreement (Class B) dated as of March 21, 1997
                            between First Security Bank, National Association as
                            Escrow Agent under the Escrow and Paying Agent Agreement,
                            and Credit Suisse First Boston, New York Branch, as
                            Depositary
           4.21          -- Deposit Agreement (Class C-I) dated as of March 21, 1997
                            between First Security Bank, National Association as
                            Escrow Agent under the Escrow and Paying Agent Agreement,
                            and Credit Suisse First Boston, New York Branch, as
                            Depositary
</TABLE>

 
                                      II-4

<PAGE>   120

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                             DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
           4.22          -- Deposit Agreement (Class C-II) dated as of March 21, 1997
                            between First Security Bank, National Association as
                            Escrow Agent under the Escrow and Paying Agent Agreement,
                            and Credit Suisse First Boston, New York Branch, as
                            Depositary
           4.23          -- Escrow and Paying Agent Agreement (Class A) dated as of
                            March 21, 1997 among First Security Bank, National
                            Association as Escrow Agent; Credit Suisse First Boston
                            Corporation, Morgan Stanley & Co. Incorporated, Chase
                            Securities Inc. and Goldman, Sachs & Co., as Initial
                            Purchasers under the Certificate Purchase Agreement;
                            Wilmington Trust Company, not in its individual capacity,
                            but solely as Pass Through Trustee for and on behalf of
                            Continental Airlines Pass Through Trust 1997-1A-0 as Pass
                            Through Trustee; and Wilmington Trust Company as Paying
                            Agent
           4.24          -- Escrow and Paying Agent Agreement (Class B) dated as of
                            March 21, 1997 among First Security Bank, National
                            Association as Escrow Agent; Credit Suisse First Boston
                            Corporation, Morgan Stanley & Co. Incorporated, Chase
                            Securities Inc. and Goldman, Sachs & Co., as Initial
                            Purchasers under the Certificate Purchase Agreement;
                            Wilmington Trust Company, not in its individual capacity,
                            but solely as Pass Through Trustee for and on behalf of
                            Continental Airlines Pass Through Trust 1997-1B-0 as Pass
                            Through Trustee; and Wilmington Trust Company as Paying
                            Agent
           4.25          -- Escrow and Paying Agent Agreement (Class C-I) dated as of
                            March 21, 1997 among First Security Bank, National
                            Association as Escrow Agent; Credit Suisse First Boston
                            Corporation, Morgan Stanley & Co. Incorporated, Chase
                            Securities Inc. and Goldman, Sachs & Co., as Initial
                            Purchasers under the Certificate Purchase Agreement;
                            Wilmington Trust Company, not in its individual capacity,
                            but solely as Pass Through Trustee for and on behalf of
                            Continental Airlines Pass Through Trust 1997-1C-I-0 as
                            Pass Through Trustee; and Wilmington Trust Company as
                            Paying Agent
           4.26          -- Escrow and Paying Agent Agreement (Class C-II) dated as
                            of March 21, 1997 among First Security Bank, National
                            Association as Escrow Agent; Credit Suisse First Boston
                            Corporation, Morgan Stanley & Co. Incorporated, Chase
                            Securities Inc. and Goldman, Sachs & Co., as Initial
                            Purchasers under the Certificate Purchase Agreement;
                            Wilmington Trust Company, not in its individual capacity,
                            but solely as Pass Through Trustee for and on behalf of
                            Continental Airlines Pass Through Trust 1997-1C-II-0 as
                            Pass Through Trustee; and Wilmington Trust Company as
                            Paying Agent
           4.27          -- Note Purchase Agreement dated as of March 21, 1997 among
                            Continental Airlines, Inc., Wilmington Trust Company as
                            Pass Through Trustee under each of the Pass Through Trust
                            Agreements, Wilmington Trust Company, as Subordination
                            Agent, First Security Bank, National Association, as
                            Escrow Agent and Wilmington Trust Company as Paying Agent
           5.1           -- Opinion of Hughes Hubbard & Reed LLP relating to validity
                            of New Certificates
          12.1           -- Computation of Ratio of Earnings to Fixed Charges
          23.1           -- Consent of Ernst & Young LLP
          23.2           -- Consent of Hughes Hubbard & Reed LLP (included in its
                            opinion filed as exhibit 5.1)
          23.3           -- Consent of Aircraft Information Services, Inc.
          23.4           -- Consent of BK Associates, Inc.
          23.5           -- Consent of Morten Beyer and Associates, Inc.
</TABLE>

 
                                      II-5

<PAGE>   121

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                             DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
          24.1           -- Powers of Attorney
          25.1           -- Statement of Eligibility of Wilmington Trust Company for
                            the 1997-1A Pass Through Certificates, on Form T-1
          25.2           -- Statement of Eligibility of Wilmington Trust Company for
                            the 1997-1B Pass Through Certificates, on Form T-1
          25.3           -- Statement of Eligibility of Wilmington Trust Company for
                            the 1997-1-C-I Pass Through Certificates, on Form T-1
          25.4           -- Statement of Eligibility of Wilmington Trust Company for
                            the 1997-1-C-II Pass Through Certificates, on Form T-1
          99.1           -- Form of Letter of Transmittal
          99.2           -- Form of Notice of Guaranteed Delivery
          99.3           -- Form of Letter to Brokers, Dealers, Commercial Banks,
                            Trust Companies and Other Nominees
          99.4           -- Form of Letter to Clients
</TABLE>

 
ITEM 22. UNDERTAKINGS.
 
The undersigned Registrant hereby undertakes:
 
     (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
 
          (i) To include any prospectus required by Section 10(a)(3) of the
     Securities Act of 1933;
 
          (ii) To reflect in the prospectus any facts or events arising after
     the effective date of the registration (or the most recent post-effective
     amendment thereof) which, individually or in the aggregate, represent a
     fundamental change in the information set forth in the registration
     statement. Notwithstanding the foregoing, any increase or decrease in
     volume of securities offered (if the total dollar value of securities
     offered would not exceed that which was registered) and any deviation from
     the low or high and of the estimated maximum offering range may be
     reflected in the form of prospectus filed with the Commission pursuant to
     Rule 424(b) if, in the aggregate, the changes in volume and price represent
     no more than 20 percent change in the maximum aggregate offering price set
     forth in the "Calculation of Registration Fee" table in the effective
     registration statement;
 
          (iii) To include any material information with respect to the plan of
     distribution not previously disclosed in the registration statement or any
     material change to such information in the registration statement;
     provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply
     if the information required to be included in a post-effective amendment by
     those paragraphs is contained in periodic reports filed by the registrant
     pursuant to section 13 or section 15(d) of the Securities Exchange Act of
     1934 that are incorporated by reference in the registration statement.
 
     (2) That, for the purpose of determining any liability under the Securities
Act, each such posteffective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
 
     (3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
 
     The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plans annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
 
                                      II-6

<PAGE>   122
 
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
 
     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by any such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether or not
such indemnification is against public policy as expressed in the Securities Act
of 1933 and will be governed by the final adjudication of such issue.
 
     The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
 
     The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
 
                                      II-7

<PAGE>   123
 

                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on May 27, 1997.
 
                                            CONTINENTAL AIRLINES, INC.
 
                                            By:    /s/ JEFFERY A. SMISEK
 
                                             -----------------------------------
                                                      Jeffery A. Smisek
                                              Executive Vice President, General
                                                     Counsel and Secretary
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on May 27, 1997.
 

<TABLE>
<CAPTION>
                      SIGNATURE                                              TITLE
                      ---------                                              -----
<C>                                                      <S>
 
                          *                              Chairman of the Board and Chief Executive
- -----------------------------------------------------      Officer (Principal Executive Officer) and
                  Gordon M. Bethune                        Director
 
                          *                              Executive Vice President and Chief Financial
- -----------------------------------------------------      Officer (Principal Financial Officer)
                 Lawrence W. Kellner
 
                          *                              Vice President and Controller (Principal
- -----------------------------------------------------      Accounting Officer)
                  Michael P. Bonds
 
                          *                              Director
- -----------------------------------------------------
               Thomas J. Barrack, Jr.
 
                          *                              President, Chief Operating Officer and
- -----------------------------------------------------      Director
                Gregory D. Brenneman
 
                          *                              Director
- -----------------------------------------------------
                Lloyd M. Bentsen, Jr.
 
                          *                              Director
- -----------------------------------------------------
                   David Bonderman
 
                          *                              Director
- -----------------------------------------------------
                    Patrick Foley
 
                          *                              Director
- -----------------------------------------------------
               Douglas H. McCorkindale
 
                          *                              Director
- -----------------------------------------------------
                 George G.C. Parker
 
                          *                              Director
- -----------------------------------------------------
                  Richard W. Pogue
</TABLE>

 
                                      II-8

<PAGE>   124

<TABLE>
<CAPTION>
                      SIGNATURE                                              TITLE
                      ---------                                              -----
<C>                                                      <S>
 
                          *                              Director
- -----------------------------------------------------
                William S. Price III
 
                          *                              Director
- -----------------------------------------------------
                   Donald L. Sturm
 
                          *                              Director
- -----------------------------------------------------
                Karen Hastie Williams
 
                          *                              Director
- -----------------------------------------------------
                 Charles A. Yamarone
 
             *By: /s/ SCOTT R. PETERSON
     ------------------------------------------------
           Scott R. Peterson, Attorney-In-Fact
</TABLE>

 
                                      II-9

<PAGE>   125
 

                                 EXHIBIT INDEX
 

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                             DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
           4.1           -- Form of New 7.461% Continental Airlines Pass Through
                            Certificate Series 1997-1A-0 (included in Exhibit 4.5)
           4.2           -- Form of New 7.461% Continental Airlines Pass Through
                            Certificate Series 1997-1B-0 (included in Exhibit 4.6)
           4.3           -- Form of New 7.420% Continental Airlines Pass Through
                            Certificate Series 1997-1C-I-0 (included in Exhibit 4.7)
           4.4           -- Form of New 7.420% Continental Airlines Pass Through
                            Certificate Series 1997-1C-II-0 (included in Exhibit 4.8)
           4.5           -- Pass Through Trust Agreement, dated as of March 21, 1997,
                            between Continental Airlines, Inc., and Wilmington Trust
                            Company, as Trustee, made with respect to the formation
                            of Continental Airlines Pass Through Trust, Series
                            1997-1A-0 and the issuance of 7.461% Continental Airlines
                            Pass Through Trust, Series 1997-1A-0 Pass Through
                            Certificates representing fractional undivided interests
                            in the Trust
           4.6           -- Pass Through Trust Agreement, dated as of March 21, 1997,
                            between Continental Airlines, Inc., and Wilmington Trust
                            Company, as Trustee, made with respect to the formation
                            of Continental Airlines Pass Through Trust, Series
                            1997-1B-0 and the issuance of 7.461% Continental Airlines
                            Pass Through Trust, Series 1997-1B-0 Pass Through
                            Certificates representing fractional undivided interests
                            in the Trust
           4.7           -- Pass Through Trust Agreement, dated as of March 21, 1997,
                            between Continental Airlines, Inc., and Wilmington Trust
                            Company, as Trustee, made with respect to the formation
                            of Continental Airlines Pass Through Trust, Series
                            1997-1C-I-0 and the issuance of 7.420% Continental
                            Airlines Pass Through Trust, Series 1997-1C-I-0 Pass
                            Through Certificates representing fractional undivided
                            interests in the Trust
           4.8           -- Pass Through Trust Agreement, dated as of March 21, 1997,
                            between Continental Airlines, Inc., and Wilmington Trust
                            Company, as Trustee, made with respect to the formation
                            of Continental Airlines Pass Through Trust, Series
                            1997-1C-II-0 and the issuance of 7.420% Continental
                            Airlines Pass Through Trust, Series 1997-1C-II-0 Pass
                            Through Certificates representing fractional undivided
                            interests in the Trust
           4.9           -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1A-0, as Borrower and ABN AMRO Bank
                            N.V., Chicago Branch as Liquidity Provider
           4.10          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1A-0, as Borrower and ING Bank N.V. as
                            Liquidity Provider
           4.11          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1B-0, as Borrower and ABN AMRO Bank
                            N.V., Chicago Branch as Liquidity Provider
           4.12          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1B-0, as Borrower and ING Bank N.V. as
                            Liquidity Provider
</TABLE>


<PAGE>   126

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                             DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
           4.13          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1C-I-0, as Borrower and ABN AMRO Bank
                            N.V., Chicago Branch as Liquidity Provider
           4.14          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1C-I-0, as Borrower and ING Bank N.V.
                            as Liquidity Provider
           4.15          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1C-II-0, as Borrower and ABN AMRO Bank
                            N.V., Chicago Branch as Liquidity Provider
           4.16          -- Revolving Credit Agreement, dated March 21, 1997, between
                            Wilmington Trust Company, as Subordination Agent, as
                            agent and trustee for the Continental Airlines Pass
                            Through Trust 1997-1C-II-0, as Borrower and ING Bank N.V.
                            as Liquidity Provider
           4.17          -- Intercreditor Agreement dated as of March 21, 1997, among
                            Wilmington Trust Company, as Trustee under the
                            Continental Airlines Pass Through Trust 1997-1A-0,
                            Continental Airlines Pass Through Trust 1997-1B-0,
                            Continental Airlines Pass Through Trust 1997-1-C-I-0 and
                            Continental Pass Through Trust 1997-1C-II-0, ING Bank
                            N.V. and ABN AMRO Bank N.V., as Class A Liquidity
                            Provider, Class B Liquidity Provider, Class C Liquidity
                            Provider, and Wilmington Trust Company, as Subordination
                            Agent and Trustee
           4.18          -- Exchange and Registration Rights Agreement, dated as of
                            March 21, 1997, among Continental Airlines, Inc.,
                            Wilmington Trust Company, as Trustee under Continental
                            Airlines Pass Through Trust, Series 1997-1A-O,
                            Continental Airlines Pass Through Trust, Series
                            1997-1B-O, Continental Airlines Pass Through Trust,
                            Series 1997-1C-I-O, Continental Airlines Pass Through
                            Trust, Series 1997-1C-II-O, and Credit Suisse First
                            Boston Corporation, Morgan Stanley & Co. Incorporated,
                            Chase Securities Inc. and Goldman, Sachs & Co.
           4.19          -- Deposit Agreement (Class A) dated as of March 21, 1997
                            between First Security Bank, National Association as
                            Escrow Agent under the Escrow and Paying Agent Agreement,
                            and Credit Suisse First Boston, New York Branch, as
                            Depositary
           4.20          -- Deposit Agreement (Class B) dated as of March 21, 1997
                            between First Security Bank, National Association as
                            Escrow Agent under the Escrow and Paying Agent Agreement,
                            and Credit Suisse First Boston, New York Branch, as
                            Depositary
           4.21          -- Deposit Agreement (Class C-I) dated as of March 21, 1997
                            between First Security Bank, National Association as
                            Escrow Agent under the Escrow and Paying Agent Agreement,
                            and Credit Suisse First Boston, New York Branch, as
                            Depositary
           4.22          -- Deposit Agreement (Class C-II) dated as of March 21, 1997
                            between First Security Bank, National Association as
                            Escrow Agent under the Escrow and Paying Agent Agreement,
                            and Credit Suisse First Boston, New York Branch, as
                            Depositary
</TABLE>


<PAGE>   127

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                             DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
           4.23          -- Escrow and Paying Agent Agreement (Class A) dated as of
                            March 21, 1997 among First Security Bank, National
                            Association as Escrow Agent; Credit Suisse First Boston
                            Corporation, Morgan Stanley & Co. Incorporated, Chase
                            Securities Inc. and Goldman, Sachs & Co., as Initial
                            Purchasers under the Certificate Purchase Agreement;
                            Wilmington Trust Company, not in its individual capacity,
                            but solely as Pass Through Trustee for and on behalf of
                            Continental Airlines Pass Through Trust 1997-1A-0 as Pass
                            Through Trustee; and Wilmington Trust Company as Paying
                            Agent
           4.24          -- Escrow and Paying Agent Agreement (Class B) dated as of
                            March 21, 1997 among First Security Bank, National
                            Association as Escrow Agent; Credit Suisse First Boston
                            Corporation, Morgan Stanley & Co. Incorporated, Chase
                            Securities Inc. and Goldman, Sachs & Co., as Initial
                            Purchasers under the Certificate Purchase Agreement;
                            Wilmington Trust Company, not in its individual capacity,
                            but solely as Pass Through Trustee for and on behalf of
                            Continental Airlines Pass Through Trust 1997-1B-0 as Pass
                            Through Trustee; and Wilmington Trust Company as Paying
                            Agent
           4.25          -- Escrow and Paying Agent Agreement (Class C-I) dated as of
                            March 21, 1997 among First Security Bank, National
                            Association as Escrow Agent; Credit Suisse First Boston
                            Corporation, Morgan Stanley & Co. Incorporated, Chase
                            Securities Inc. and Goldman, Sachs & Co., as Initial
                            Purchasers under the Certificate Purchase Agreement;
                            Wilmington Trust Company, not in its individual capacity,
                            but solely as Pass Through Trustee for and on behalf of
                            Continental Airlines Pass Through Trust 1997-1C-I-0 as
                            Pass Through Trustee; and Wilmington Trust Company as
                            Paying Agent
           4.26          -- Escrow and Paying Agent Agreement (Class C-II) dated as
                            of March 21, 1997 among First Security Bank, National
                            Association as Escrow Agent; Credit Suisse First Boston
                            Corporation, Morgan Stanley & Co. Incorporated, Chase
                            Securities Inc. and Goldman, Sachs & Co., as Initial
                            Purchasers under the Certificate Purchase Agreement;
                            Wilmington Trust Company, not in its individual capacity,
                            but solely as Pass Through Trustee for and on behalf of
                            Continental Airlines Pass Through Trust 1997-1C-II-0 as
                            Pass Through Trustee; and Wilmington Trust Company as
                            Paying Agent
           4.27          -- Note Purchase Agreement dated as of March 21, 1997 among
                            Continental Airlines, Inc., Wilmington Trust Company as
                            Pass Through Trustee under each of the Pass Through Trust
                            Agreements, Wilmington Trust Company, as Subordination
                            Agent, First Security Bank, National Association, as
                            Escrow Agent and Wilmington Trust Company as Paying Agent
           5.1           -- Opinion of Hughes Hubbard & Reed LLP relating to validity
                            of New Certificates
          12.1           -- Computation of Ratio of Earnings to Fixed Charges
          23.1           -- Consent of Ernst & Young LLP
          23.2           -- Consent of Hughes Hubbard & Reed LLP (included in its
                            opinion filed as exhibit 5.1)
          23.3           -- Consent of Aircraft Information Services, Inc.
          23.4           -- Consent of BK Associates, Inc.
          23.5           -- Consent of Morten Beyer and Associates, Inc.
          24.1           -- Powers of Attorney
</TABLE>


<PAGE>   128

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                             DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
          25.1           -- Statement of Eligibility of Wilmington Trust Company for
                            the 1997-1A Pass Through Certificates, on Form T-1
          25.2           -- Statement of Eligibility of Wilmington Trust Company for
                            the 1997-1B Pass Through Certificates, on Form T-1
          25.3           -- Statement of Eligibility of Wilmington Trust Company for
                            the 1997-1-C-I Pass Through Certificates, on Form T-1
          25.4           -- Statement of Eligibility of Wilmington Trust Company for
                            the 1997-1-C-II Pass Through Certificates, on Form T-1
          99.1           -- Form of Letter of Transmittal
          99.2           -- Form of Notice of Guaranteed Delivery
          99.3           -- Form of Letter to Brokers, Dealers, Commercial Banks,
                            Trust Companies and Other Nominees
          99.4           -- Form of Letter to Clients
</TABLE>






<PAGE>   1
                                                                    EXHIBIT 4.5



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

                          PASS THROUGH TRUST AGREEMENT

                           Dated as of March 21, 1997

                                    between

                           CONTINENTAL AIRLINES, INC.

                                      and

                           WILMINGTON TRUST COMPANY,

                                   as Trustee

           Continental Airlines Pass Through Trust, Series 1997-1A-O

           7.461% Initial Pass Through Certificates, Series 1997-1A-O
          7.461% Exchange Pass Through Certificates, Series 1997-1A-O

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



<PAGE>   2

                                                                               2


Reconciliation and tie between Continental Airlines  Pass Through Trust
Agreement, Series 1997-1A-O dated as of March 21, 1997, and the Trust Indenture
Act of 1939.  This reconciliation does not constitute part of the Pass Through
Trust Agreement.



<TABLE>
<CAPTION>
Trust Indenture Act           Pass Through Trust
of 1939 Section               Agreement Section
- -------------------           -----------------
<S>                           <C>
310 (a)(1)                    7.08
    (a)(2)                    7.08
312 (a)                       3.05; 8.01; 8.02
313 (a)                       7.06; 8.03
314 (a)                       8.04(a), (C) & (d) 
    (a)(4)                    8.04(e)
    (c)(1)                    1.02
    (c)(2)                    1.02
    (d)(1)                    7.13; 11.01
    (d)(2)                    7.13; 11.01
    (d)(3)                    2.01
    (e)                       1.02
315 (b)                       7.02
316 (a)(last sentence)        1.04(c)
    (a)(1)(A)                 6.04
    (a)(1)(B)                 6.05
    (b)                       6.06
    (c)                       1.04(e)
317 (a)(1)                    6.03
    (b)                       7.13
318 (a)                       12.06
</TABLE>




<PAGE>   3
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
                                    ARTICLE I

                                   DEFINITIONS

Section 1.01.   Definitions   . . . . . . . . . . . . . . . . . . . . . . .    3
Section 1.02.   Compliance Certificates and Opinions  . . . . . . . . . . .   18
Section 1.03.   Form of Documents Delivered to Trustee  . . . . . . . . . .   19
Section 1.04.   Directions of Certificateholders  . . . . . . . . . . . . .   19

                                   ARTICLE II

        ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES

Section
 2.01.   Issuance of Certificates; Acquisition of Equipment Notes  .   21
Section 2.02.   Withdrawal of Deposits  . . . . . . . . . . . . . . . . . .   23
Section 2.03.   Acceptance by Trustee   . . . . . . . . . . . . . . . . . .   23
Section 2.04.   Limitation of Powers  . . . . . . . . . . . . . . . . . . .   23

                                   ARTICLE III

                                THE CERTIFICATES

Section 3.01.   Title, Form, Denomination and Execution of Certificates   .   24
Section 3.02.   Restrictive Legends   . . . . . . . . . . . . . . . . . . .   27
Section 3.03.   Authentication of Certificates  . . . . . . . . . . . . . .   29
Section 3.04.   Transfer and Exchange   . . . . . . . . . . . . . . . . . .   29
Section 3.05.   Book-Entry Provisions for Restricted Global Certificates
                and Regulation S Global Certificates  . . . . . . . . . . .   31
Section 3.06.   Special Transfer Provisions   . . . . . . . . . . . . . . .   33
Section 3.07.   Mutilated, Destroyed, Lost or Stolen Certificates   . . . .   37
Section 3.08.   Persons Deemed Owners   . . . . . . . . . . . . . . . . . .   38
Section 3.09.   Cancellation  . . . . . . . . . . . . . . . . . . . . . . .   38
Section 3.10.   Temporary Certificates  . . . . . . . . . . . . . . . . . .   38
Section 3.11.   Limitation of Liability for Payments  . . . . . . . . . . .   39
</TABLE>






                                      (i)

<PAGE>   4
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
                                   ARTICLE IV

                 DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

Section 4.01.   Certificate Account and Special Payments Account  . . . . .   39
Section 4.02.   Distributions from Certificate Account and Special
                Payments Account  . . . . . . . . . . . . . . . . . . . . .   40
Section 4.03.   Statements to Certificateholders  . . . . . . . . . . . . .   42
Section 4.04.   Investment of Special Payment Moneys  . . . . . . . . . . .   44

                                    ARTICLE V

                                   THE COMPANY

Section 5.01.   Maintenance of Corporate Existence  . . . . . . . . . . . .   44
Section 5.02.   Consolidation, Merger, etc.   . . . . . . . . . . . . . . .   45

                                   ARTICLE VI

                                     DEFAULT

Section 6.01.   Events of Default   . . . . . . . . . . . . . . . . . . . .   46
Section 6.02.   Incidents of Sale of Equipment Notes  . . . . . . . . . . .   49
Section 6.03.   Judicial Proceedings Instituted by Trustee; Trustee May
                Bring Suit  . . . . . . . . . . . . . . . . . . . . . . . .   50
Section 6.04.   Control by Certificateholders   . . . . . . . . . . . . . .   50
Section 6.05.   Waiver of Past Defaults   . . . . . . . . . . . . . . . . .   51
</TABLE>






                                      (ii)

<PAGE>   5
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
Section 6.06.   Right of Certificateholders to Receive Payments
                Not to Be Impaired  . . . . . . . . . . . . . . . . . . . .   52
Section 6.07.   Certificateholders May Not Bring Suit Except
                Under Certain Conditions  . . . . . . . . . . . . . . . . .   52
Section 6.08.   Remedies Cumulative   . . . . . . . . . . . . . . . . . . .   53

                                   ARTICLE VII

                                   THE TRUSTEE

Section 7.01.   Certain Duties and Responsibilities   . . . . . . . . . . .   53
Section 7.02.   Notice of Defaults  . . . . . . . . . . . . . . . . . . . .   54
Section 7.03.   Certain Rights of Trustee   . . . . . . . . . . . . . . . .   54
Section 7.04.   Not Responsible for Recitals or Issuance of Certificates  .   56
Section 7.05.   May Hold Certificates   . . . . . . . . . . . . . . . . . .   56
Section 7.06.   Money Held in Trust   . . . . . . . . . . . . . . . . . . .   56
Section 7.07.   Compensation and Reimbursement  . . . . . . . . . . . . . .   57
Section 7.08.   Corporate Trustee Required; Eligibility   . . . . . . . . .   58
Section 7.09.   Resignation and Removal; Appointment of Successor   . . . .   59
Section 7.10.   Acceptance of Appointment by Successor  . . . . . . . . . .   61
Section 7.11.   Merger, Conversion, Consolidation or
                Succession to Business  . . . . . . . . . . . . . . . . . .   61
Section 7.12.   Maintenance of Agencies   . . . . . . . . . . . . . . . . .   62
Section 7.13.   Money for Certificate Payments to Be Held in Trust  . . . .   63
Section 7.14.   Registration of Equipment Notes in Name of
                Subordination Agent   . . . . . . . . . . . . . . . . . . .   64
Section 7.15.   Representations and Warranties of Trustee   . . . . . . . .   64
</TABLE>






                                     (iii)

<PAGE>   6
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
Section 7.16.   Withholding Taxes, Information Reporting  . . . . . . . . .   65
Section 7.17.   Trustee's Liens   . . . . . . . . . . . . . . . . . . . . .   67
Section 7.18.   Preferential Collection of Claims   . . . . . . . . . . . .   67

                                  ARTICLE VIII

                CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE

Section 8.01.   The Company to Furnish Trustee with Names and
                Addresses of Certificateholders   . . . . . . . . . . . . .   67
Section 8.02.   Preservation of Information; Communications
                to Certificateholders   . . . . . . . . . . . . . . . . . .   68
Section 8.03.   Reports by Trustee  . . . . . . . . . . . . . . . . . . . .   68
Section 8.04.   Reports by the Company  . . . . . . . . . . . . . . . . . .   68

                                   ARTICLE IX

                             SUPPLEMENTAL AGREEMENTS

Section 9.01.   Supplemental Agreements Without Consent
                of Certificateholders   . . . . . . . . . . . . . . . . . .   70
Section 9.02.   Supplemental Agreements with
                Consent of Certificateholders   . . . . . . . . . . . . . .   71
Section 9.03.   Documents Affecting Immunity or Indemnity   . . . . . . . .   73
Section 9.04.   Execution of Supplemental Agreements  . . . . . . . . . . .   73
Section 9.05.   Effect of Supplemental Agreements   . . . . . . . . . . . .   73
Section 9.06.   Conformity with Trust Indenture Act   . . . . . . . . . . .   74
Section 9.07.   Reference in Certificates to Supplemental Agreements  . . .   74
</TABLE>






                                      (iv)

<PAGE>   7
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
                                    ARTICLE X

                AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS

Section 10.01.  Amendments and Supplements to Indentures and
                Financing Documents   . . . . . . . . . . . . . . . . . . .   74

                                   ARTICLE XI

                              TERMINATION OF TRUST

Section 11.01.  Termination of the Trust  . . . . . . . . . . . . . . . . .   75

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

Section 12.01.  Limitation on Rights of Certificateholders  . . . . . . . .   79
Section 12.02.  Certificates Nonassessable and Fully Paid   . . . . . . . .   79
Section 12.03.  Notices   . . . . . . . . . . . . . . . . . . . . . . . . .   79
Section 12.04.  Governing Law   . . . . . . . . . . . . . . . . . . . . . .   81
Section 12.05.  Severability of Provisions  . . . . . . . . . . . . . . . .   81
Section 12.06.  Trust Indenture Act Controls  . . . . . . . . . . . . . . .   81
Section 12.07.  Effect of Headings and Table of Contents  . . . . . . . . .   81
Section 12.08.  Successors and Assigns  . . . . . . . . . . . . . . . . . .   82
Section 12.09.  Benefits of Agreement   . . . . . . . . . . . . . . . . . .   82
Section 12.10.  Legal Holidays  . . . . . . . . . . . . . . . . . . . . . .   82
Section 12.11.  Counterparts  . . . . . . . . . . . . . . . . . . . . . . .   82
Section 12.12.  Intention of Parties  . . . . . . . . . . . . . . . . . . .   82
</TABLE>






                                      (v)

<PAGE>   8



Exhibit A-    Form of Certificate
Exhibit B-    Form of Certificate to Request Removal of Restricted Legend
Exhibit C-    Form of Certificate to be Delivered by an Institutional
              Accredited Investor
Exhibit D-    Form of Assignment and Assumption Agreement
Exhibit E-    Form of Notice to Withholding Agent





                                      (vi)

<PAGE>   9

                          PASS THROUGH TRUST AGREEMENT

     This PASS THROUGH TRUST AGREEMENT, dated as of March 21, 1997 (the
"Agreement"), between CONTINENTAL AIRLINES, INC., a Delaware corporation, and
WILMINGTON TRUST COMPANY, as Trustee, is made with respect to the formation of
Continental Airlines Pass Through Trust, Series 1997-1A-O and the issuance of
7.461% Continental Airlines Pass Through Trust, Series 1997-1A-O Pass Through
Certificates representing fractional undivided interests in the Trust.

                                  WITNESSETH:

     WHEREAS, the Company has obtained commitments from Boeing for the delivery
of certain Aircraft;

     WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions in which the
Company will lease such aircraft (collectively, the "Leased Aircraft") or (ii)
through separate secured loan transactions in which the Company will own such
Aircraft (collectively, the "Owned Aircraft");

     WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting
on behalf of the corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, three series of Equipment Notes in order to
finance a portion of its purchase price of such Leased Aircraft;

     WHEREAS, in the case of each Owned Aircraft, the Company, will issue
pursuant to an Indenture, on a recourse basis, three series of Equipment Notes
to finance a portion of the purchase price of such Owned Aircraft;

     WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the
creation of this Trust with the Trustee;

     WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any



<PAGE>   10

                                                                               2


property other than the Trust Property except for those Certificates to which
an Escrow Receipt has been affixed;

     WHEREAS, the Escrow Agent and the Initial Purchasers  have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Initial Purchasers have delivered to the
Escrow Agent the proceeds from the sale of the Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;

     WHEREAS, the Escrow Agent on behalf of the Certificateholders has
contemporaneously herewith entered into a Deposit Agreement with the Depositary
under which the Deposits referred to therein will be made and from which it
will withdraw funds to allow the Trustee to purchase Equipment Notes from time
to time prior to the Delivery Period Termination Date;

     WHEREAS, pursuant to the terms and conditions of this Agreement and the
Note Purchase Agreement, upon or shortly following delivery of an Aircraft, the
Trustee on behalf of the Trust, using funds withdrawn under the Escrow
Agreement, may purchase an Equipment Note having the same interest rate as, and
final maturity date not later than the final Regular Distribution Date of, the
Certificates issued hereunder and shall hold such Equipment Note in trust for
the benefit of the Certificateholders;

     WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of
Equipment Notes by, the Trustee on behalf of the Trust, the Company has duly
authorized the execution and delivery of this Agreement as the "issuer", as
such term is defined in and solely for purposes of the Securities Act, of the
Certificates to be issued pursuant hereto and as the "obligor", as such term is
defined in and solely for purposes of the Trust Indenture Act of 1939, as
amended, with respect to all such Certificates and is undertaking to perform
certain administrative and ministerial duties hereunder and is also undertaking
to pay the ongoing fees and expenses of the Trustee;

     WHEREAS, all of the conditions and requirements necessary to make this
Agreement, when duly executed and



<PAGE>   11

                                                                               3


delivered, a valid, binding and legal instrument, enforceable in accordance
with its terms and for the purposes herein expressed, have been done, performed
and fulfilled, and the execution and delivery of this Agreement in the form and
with the terms hereof have been in all respects duly authorized; and

     WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended
or supplemented from time to time, will be subject to the provisions of the
Trust Indenture Act of 1939, and shall, to the extent applicable, be governed
by such provisions;

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

                                   ARTICLE I

                                  DEFINITIONS

     Section 1.01.  Definitions.  For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:

     (1) the terms used in this Agreement, including in the recitals to this
  Agreement, that are defined in this Article have the meanings assigned to
  them in this Article, and include the plural as well as the singular;

     (2) all other terms used herein which are defined in the Trust Indenture
  Act, either directly or by reference therein, or by the rules promulgated
  under the Trust Indenture Act, have the meanings assigned to them therein;

     (3) all references in this Agreement to designated "Articles", "Sections",
  "Subsections" and other subdivisions are to the designated Articles,
  Sections, Subsections and other subdivisions of this Agreement;

     (4) the words "herein", "hereof" and "hereunder" and other words of
  similar import refer to this Agreement as a whole and not to any particular
  Article, Section, Subsection or other subdivision; and



<PAGE>   12

                                                                               4


     (5) unless the context otherwise requires, whenever the words "including",
  "include" or "includes" are used herein, it shall be deemed to be followed by
  the phrase "without limitation".

     Affiliate: Means, with respect to any specified Person, any other Person
  directly or indirectly controlling or controlled by or under direct or
  indirect common control with such Person, provided, however, that neither
  America West Airlines, Inc. nor any of its subsidiaries shall be deemed to be
  an "Affiliate" of the Company for purposes of this Agreement. For the
  purposes of this definition, "control" means the power, directly or
  indirectly, to direct the management and policies of such Person, whether
  through the ownership of voting securities or by contract or otherwise, and
  the terms "controlling" and "controlled" have meanings correlative to the
  foregoing.

     Agent Members: Has the meaning specified in Section 3.05.

     Agreement: Has the meaning specified in the initial paragraph hereto.

     Aircraft: Means each of the New Aircraft or Substitute Aircraft in respect
  of which a Participation Agreement is entered into in accordance with the
  Note Purchase Agreement.

     Aircraft Purchase Agreement: Has the meaning specified in the Note
  Purchase Agreement.

     Applicable Delivery Date: Has the meaning specified in Section 2.01(b).

     Applicable Participation Agreement: Has the meaning specified in Section
  2.01(b).

     Assignment and Assumption Agreement: Means the assignment and assumption
  agreement substantially in the form of Exhibit D hereto executed and
  delivered in accordance with Section 11.01.

     Authorized Agent: Means any Paying Agent or Registrar for the
  Certificates.



<PAGE>   13

                                                                               5


     Avoidable Tax: Means a state or local tax (i) upon (w) the Trust, (x) the
  Trust Property, (y) Certificate-holders or (z) the Trustee for which the
  Trustee is entitled to seek reimbursement from the Trust Property, and (ii)
  which would be avoided if the Trustee were located in another state, or
  jurisdiction within a state, within the United States. A tax shall not be an
  Avoidable Tax if the Company or any Owner Trustee shall agree to pay, and
  shall pay, such tax.

     Boeing: Means The Boeing Company.

     Business Day: Means any day other than a Saturday, a Sunday or a day on
  which commercial banks are required or authorized to close in Houston, Texas,
  New York, New York, Salt Lake City, Utah or, so long as any Certificate is
  outstanding, the city and state in which the Trustee or any Loan Trustee
  maintains its Corporate Trust Office or receives and disburses funds.

     Cedel: Means Cedel Bank societe anonyme.

     Certificate: Means any one of the Initial Certificates or Exchange
  Certificates and any such Certificates issued in exchange therefor or
  replacement thereof pursuant to this Agreement.

     Certificate Account: Means the account or accounts created and maintained
  pursuant to Section 4.01(a).

     Certificate Purchase Agreement: Means the Purchase Agreement dated March
  12, 1997 among the Initial Purchasers, the Company and the Depositary, as the
  same may be amended, supplemented or otherwise modified from time to time in
  accordance with its terms.

     Certificateholder or Holder: Means the Person in whose name a Certificate
  is registered in the Register.

     Class C Certificateholder: Has the meaning specified in Section 6.01.

     Company: Means Continental Airlines, Inc., a Delaware corporation, or its
  successor in interest pursuant to Section 5.02, or (only in the context of
  provisions hereof, if any, where such reference is required for purposes of



<PAGE>   14

                                                                               6


  compliance with the Trust Indenture Act) any other "obligor" (within the
  meaning of the Trust Indenture Act) with respect to the Certificates.

     Controlling Party: Has the meaning specified in the Intercreditor
  Agreement.

     Corporate Trust Office: With respect to the Trustee or any Loan Trustee,
  means the office of such trustee in the city at which at any particular time
  its corporate trust business shall be principally administered.

     Cut-off Date: Means the earlier of (a) the Delivery Period Termination
  Date and (b) the date on which a Triggering Event occurs.

     Definitive Certificates: Has the meaning specified in Section 3.01(e).

     Delivery Date: Has the meaning specified in the Note Purchase Agreement.

     Delivery Notice: Has the meaning specified in the Note Purchase Agreement.

     Delivery Period Termination Date: Means the earlier of (a) March 31, 1998,
  or, if the Equipment Notes relating to all of the New Aircraft (or Substitute
  Aircraft in lieu thereof) have not been purchased by the Trust and the Other
  Trusts on or prior to such date due to any reason beyond the control of the
  Company and not occasioned by the Company's fault or negligence, June 30,
  1998 and (b) the date on which Equipment Notes issued with respect to all of
  the New Aircraft (or Substitute Aircraft in lieu thereof) have been purchased
  by the Trust and the Other Trusts in accordance with the Note Purchase
  Agreement.

     Deposits: Has the meaning specified in the Deposit Agreement.

     Deposit Agreement: Means the Deposit Agreement dated as of March 21, 1997
  relating to the Certificates between the Depositary and the Escrow Agent, as
  the same may be amended, supplemented or otherwise modified from time to time
  in accordance with its terms.



<PAGE>   15

                                                                               7


     Depositary: Means Credit Suisse First Boston, a Swiss bank, acting through
  its New York branch.

     Direction: Has the meaning specified in Section 1.04(a).

     Distribution Date: Means any Regular Distribution Date or Special
  Distribution Date as the context requires.

     DTC: Means The Depository Trust Company, its nominees and their respective
  successors.

     Equipment Notes: Means the equipment notes issued under the Indentures.

     ERISA: Means the Employee Retirement Income Security Act of 1974, as
  amended from time to time, or any successor federal statute.

     Escrow Agent: Means, initially, First Security Bank, National Association,
  and any replacement or successor therefor appointed in accordance with the
  Escrow Agreement.

     Escrow Agreement: Means the Escrow and Paying Agent Agreement dated as of
  March 21, 1997 relating to the Certificates, among the Escrow Agent, the
  Escrow Paying Agent, the Trustee and the Initial Purchasers, as the same may
  be amended, supplemented or otherwise modified from time to time in
  accordance with its terms.

     Escrow Paying Agent: Means the Person acting as paying agent under the
  Escrow Agreement.

     Escrow Receipt: Means the receipt substantially in the form annexed to the
  Escrow Agreement representing a fractional undivided interest in the funds
  held in escrow thereunder.

     Euroclear: Means the Euroclear System.

     Event of Default: Means an Indenture Default under any Indenture pursuant
  to which Equipment Notes held by the Trust were issued.

     Exchange Certificates: Means the pass through certificates substantially
  in the form of Exhibit A hereto issued in exchange for the Initial
  Certificates pursuant to



<PAGE>   16

                                                                               8


  the Registration Rights Agreement and authenticated hereunder.

     Exchange Offer: Means the exchange offer which may be made pursuant to the
  Registration Rights Agreement to exchange Initial Certificates for Exchange
  Certificates.

     Exchange Offer Registration Statement: Means the registration statement
  that, pursuant to the Registration Rights Agreement, is filed by the Company
  with the SEC with respect to the exchange of Initial Certificates for
  Exchange Certificates.

     Final Maturity Date: Means October 1, 2016.

     Final Withdrawal: Has the meaning specified in the Escrow Agreement.

     Final Withdrawal Date: Has the meaning specified in the Escrow Agreement.

     Final Withdrawal Notice: Has the meaning specified in Section 2.02.

     Financing Documents: With respect to any Equipment Note, means (i) the
  Indenture and the Participation Agreement relating to such Equipment Note,
  and (ii) in the case of any Equipment Note related to a Leased Aircraft, the
  Lease relating to such Leased Aircraft.

     Fractional Undivided Interest: Means the fractional undivided interest in
  the Trust that is evidenced by a Certificate.

     Global Certificates: Has the meaning specified in Section 3.01(d).

     Global Exchange Certificate: Has the meaning specified in Section 3.01(f).

     Indenture: Means each of the separate trust indentures and mortgages
  relating to the Aircraft, each as specified or described in a Delivery Notice
  delivered pursuant to the Note Purchase Agreement or the related
  Participation Agreement, in each case as the same may be amended,



<PAGE>   17

                                                                               9


  supplemented or otherwise modified from time to time in accordance with
  its terms.

     Indenture Default: With respect to any Indenture, means any Event of
  Default (as such term is defined in such Indenture).

     Initial Certificates: Means the certificates issued and authenticated
  hereunder substantially in the form of Exhibit A hereto other than the
  Exchange Certificates.

     Initial Purchasers: Means, collectively, Credit Suisse First Boston
  Corporation, Morgan Stanley & Co. Incorporated, Chase Securities Inc. and
  Goldman Sachs & Co.

     Institutional Accredited Investor: Means an institutional investor that is
  an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2),
  (3) or (7) of Regulation D under the Securities Act.

     Intercreditor Agreement: Means the Intercreditor Agreement dated as of
  March 21, 1997 among the Trustee, the Other Trustees, the Liquidity
  Providers, the liquidity providers relating to the Certificates issued under
  (and as defined in) each of the Other Pass Through Trust Agreements, and
  Wilmington Trust Company, as Subordination Agent and as trustee thereunder,
  as amended, supplemented or otherwise modified from time to time in
  accordance with its terms.

     Investors: Means the Initial Purchasers together with all subsequent
  beneficial owners of the Certificates.

     Issuance Date: Means the date of the issuance of the Initial Certificates.

     Lease: Means, with respect to each Leased Aircraft, the lease between an
  Owner Trustee, as the lessor, and the Company, as the lessee, referred to in
  the related Indenture, as such lease may be amended, supplemented or
  otherwise modified in accordance with its terms.

     Leased Aircraft: Has the meaning specified in the second recital to this
  Agreement.

     Liquidity Facility: Means, initially, (i) the Revolving Credit Agreement
  dated as of March 21, 1997



<PAGE>   18

                                                                              10


  relating to the Certificates, between ABN Amro Bank N.V. and the
  Subordination Agent, as agent and trustee for the Trustee, and (ii) the
  Revolving Credit Agreement dated as of March 21, 1997 relating to the
  Certificates, between ING Bank N.V. and the Subordination Agent, as agent and
  trustee for the Trustee, and, from and after the replacement of either such
  Agreement pursuant to the Intercreditor Agreement, the replacement liquidity
  facility therefor, in each case as amended, supplemented or otherwise
  modified from time to time in accordance with their respective terms.

     Liquidity Provider: Means, initially, each of ABN Amro Bank N.V. and ING
  Bank N.V., and any replacement or successor therefor appointed in accordance
  with the Intercreditor Agreement.

     Loan Trustee: With respect to any Equipment Note or the Indenture
  applicable thereto, means the bank or trust company designated as trustee
  under such Indenture, together with any successor to such trustee appointed
  pursuant thereto.

     New Aircraft: Has the meaning specified in the Note Purchase Agreement.

     Non-U.S. Person: Means a Person that is not a "U.S. person", as defined in
  Regulation S.

     Note Purchase Agreement: Means the Note Purchase Agreement dated as of
  March 21, 1997 among the Trustee, the Other Trustees, the Company, the Escrow
  Agent, the Escrow Paying Agent and the Subordination Agent, providing for,
  among other things, the purchase of Equipment Notes by the Trustee on behalf
  of the Trust, as the same may be amended, supplemented or otherwise modified
  from time to time, in accordance with its terms.

     Notice of Purchase Withdrawal: Has the meaning specified in the Deposit
  Agreement.

     Offering Circular: Means the Offering Circular dated March 21, 1997
  relating to the offering of the Certificates and the certificates issued
  under the Other Pass Through Trust Agreements.



<PAGE>   19

                                                                              11


     Officer's Certificate: Means a certificate signed, (a) in the case of the
  Company, by (i) the Chairman or Vice Chairman of the Board of Directors, the
  President, any Executive Vice President, any Senior Vice President or the
  Treasurer of the Company, signing alone, or (ii) any Vice President of the
  Company signing together with the Secretary, the Assistant Secretary, the
  Treasurer or any Assistant Treasurer of the Company or, (b) in the case of an
  Owner Trustee or a Loan Trustee, a Responsible Officer of such Owner Trustee
  or such Loan Trustee, as the case may be.

     Opinion of Counsel: Means a written opinion of legal counsel who (a) in
  the case of counsel for the Company may be (i) a senior attorney of the
  Company one of whose principal duties is furnishing advice as to legal
  matters, (ii) Hughes Hubbard & Reed LLP, or (iii) such other counsel
  designated by the Company and reasonably acceptable to the Trustee and (b) in
  the case of counsel for any Owner Trustee or any Loan Trustee may be such
  counsel as may be designated by any of them whether or not such counsel is an
  employee of any of them, and who shall be reasonably acceptable to the
  Trustee.

     Other Pass Through Trust Agreements: Means each of the three other
  Continental Airlines 1997-1 Pass Through Trust Agreements relating to
  Continental Airlines Pass Through Trust, Series 1997-1B-O, Continental
  Airlines Pass Through Trust, Series 1997-1C-I-O, and Continental Airlines
  Pass Through Trust, Series 1997-1C-II-O, dated the date hereof.

     Other Trustees: Means the trustees under the Other Pass Through Trust
  Agreements, and any successor or other trustee appointed as provided therein.

     Other Trusts: Means the Continental Airlines Pass Through Trust, Series
  1997-1B-O, Continental Airlines Pass Through Trust, Series 1997-1C-I-O, and
  Continental Airlines Pass Through Trust, Series 1997-1C-II-O, created on the
  date hereof.

     Outstanding: When used with respect to Certificates, means, as of the date
  of determination, all Certificates theretofore authenticated and delivered
  under this Agreement, except:



<PAGE>   20

                                                                              12


         (i) Certificates theretofore canceled by the Registrar or delivered to
     the Trustee or the Registrar for cancellation;

         (ii) Certificates for which money in the full amount required to make
     the final distribution with respect to such Certificates pursuant to
     Section 11.01 hereof has been theretofore deposited with the Trustee in
     trust for the Holders of such Certificates as provided in Section 4.01
     pending distribution of such money to such Certificateholders pursuant to
     payment of such final distribution; and

         (iii) Certificates in exchange for or in lieu of which other
     Certificates have been authenticated and delivered pursuant to this
     Agreement.

     Owned Aircraft: Has the meaning specified in the second recital to this
  Agreement.

     Owner Participant: With respect to any Equipment Note relating to a Leased
  Aircraft, means the "Owner Participant" as referred to in the Indenture
  pursuant to which such Equipment Note is issued and any permitted successor
  or assign of such Owner Participant; and Owner Participants at any time of
  determination means all of the Owner Participants thus referred to in the
  Indentures.

     Owner Trustee: With respect to any Equipment Note relating to a Leased
  Aircraft, means the "Owner Trustee", as referred to in the Indenture pursuant
  to which such Equipment Note is issued, not in its individual capacity but
  solely as trustee; and Owner Trustees means all of the Owner Trustees party
  to any of the Indentures.

     Participation Agreement: Means each Participation Agreement to be entered
  into by the Trustee pursuant to the Note Purchase Agreement, as the same may
  be amended, supplemented or otherwise modified in accordance with its terms.

     Paying Agent: Means the paying agent maintained and appointed for the
  Certificates pursuant to Section 7.12.

     Permitted Investments: Means obligations of the United States of America
  or agencies or instrumentalities thereof



<PAGE>   21

                                                                              13


  for the payment of which the full faith and credit of the United States of
  America is pledged, maturing in not more than 60 days after the date of
  acquisition thereof or such lesser time as is required for the distribution
  of any Special Payments on a Special Distribution Date.

     Person: Means any person, including any individual, corporation, limited
  liability company, partnership, joint venture, association, joint-stock
  company, trust, trustee, unincorporated organization, or government or any
  agency or political subdivision thereof.

     Pool Balance: Means, as of any date, (i) the original aggregate face
  amount of the Certificates less (ii) the aggregate amount of all payments
  made in respect of such Certificates other than payments made in respect of
  interest or premium thereon or reimbursement of any costs or expenses
  incurred in connection therewith less (iii) the aggregate amount of unused
  Deposits distributed as a Final Withdrawal other than payments in respect of
  interest or premium thereon. The Pool Balance as of any Distribution Date
  shall be computed after giving effect to the payment of principal, if any, on
  the Equipment Notes or other Trust Property held in such Trust and the
  distribution thereof to be made on such Distribution Date and the
  distribution of the Final Withdrawal to be made on such Distribution Date.

     Pool Factor: Means, as of any date, the quotient (rounded to the seventh
  decimal place) computed by dividing (i) the Pool Balance as at such date by
  (ii) the original aggregate face amount of the Certificates. The Pool Factor
  as of any Distribution Date shall be computed after giving effect to the
  payment of principal, if any, on the Equipment Notes or other Trust Property
  and the distribution thereof to be made on such Distribution Date and the
  distribution of the Final Withdrawal to be made on such Distribution Date.

     PTC Event of Default: Means any failure to pay within 10 Business Days of
  the due date thereof: (i) the outstanding Pool Balance on the Final Maturity
  Date or (ii) interest due on the Certificates on any Distribution Date
  (unless the Subordination Agent shall have made an Interest Drawing or
  Drawings (as defined in the Intercreditor Agreement), or a withdrawal or
  withdrawals pursuant to section 3.6(f) of the Intercreditor Agreement,



<PAGE>   22

                                                                              14


  with respect thereto in an aggregate amount sufficient to pay such
  interest and shall have distributed such amount to the Trustee).

     QIB: Means a qualified institutional buyer as defined in Rule 144A.

     Record Date: Means (i) for Scheduled Payments to be distributed on any
  Regular Distribution Date, other than the final distribution, the 15th day
  (whether or not a Business Day) preceding such Regular Distribution Date, and
  (ii) for Special Payments to be distributed on any Special Distribution Date,
  other than the final distribution, the 15th day (whether or not a Business
  Day) preceding such Special Distribution Date.

     Register and Registrar: Mean the register maintained and the registrar
  appointed pursuant to Sections 3.04 and 7.12.

     Registration Event: Means the declaration of the effectiveness by the SEC
  of the Exchange Offer Registration Statement or the Shelf Registration
  Statement.

     Registration Rights Agreement: Means the Exchange and Registration Rights
  Agreement dated as of March 21, 1997, among the Initial Purchasers, the
  Trustee, the Other Trustees and the Company, as amended, supplemented or
  otherwise modified from time to time in accordance with its terms.

     Regular Distribution Date: With respect to distributions of Scheduled
  Payments in respect of the Certificates, means each date designated as a
  Regular Distribution Date in the Certificates issued pursuant to this
  Agreement, until payment of all the Scheduled Payments to be made under the
  Equipment Notes held in the Trust have been made; provided, however, that, if
  any such day shall not be a Business Day, the related distribution shall be
  made on the next succeeding Business Day without additional interest.

     Regulation S: Means Regulation S under the Securities Act or any successor
  regulation thereto.



<PAGE>   23

                                                                              15


     Regulation S Definitive Certificates: Has the meaning specified in Section
  3.01(e).

     Regulation S Global Certificates: Has the meaning specified in Section
  3.01(d).

     Related Pass Through Trust Agreement: Means the Continental Airlines
  1997-1 Pass Through Trust Agreement relating to the Continental Airlines Pass
  Through Trust, Series 1997-1A-S, dated the date hereof, entered into by the
  Company and the institution acting as trustee thereunder, which agreement
  becomes effective upon the execution and delivery of the Assignment and
  Assumption Agreement pursuant to Section 11.01.

     Related Trust: Means the Continental Pass Through Trust, Series 1997-1A-S,
  formed under the Related Pass Through Trust Agreement.

     Related Trustee: Means the trustee under the Related Pass Through Trust
  Agreement.

     Responsible Officer: With respect to the Trustee, any Loan Trustee and any
  Owner Trustee, means any officer in the Corporate Trust Office of the
  Trustee, Loan Trustee or Owner Trustee or any other officer customarily
  performing functions similar to those performed by the persons who at the
  time shall be such officers, respectively, or to whom any corporate trust
  matter is referred because of his knowledge of and familiarity with a
  particular subject.

     Restricted Definitive Certificates: Has the meaning specified in Section
  3.01(e).

     Restricted Global Certificate: Has the meaning specified in Section
  3.01(c).

     Restricted Legend: Has the meaning specified in Section 3.02.

     Restricted Period: Has the meaning specified in Section 3.01(d).

     Rule 144A: Means Rule 144A under the Securities Act and any successor rule
  thereto.



<PAGE>   24

                                                                              16


     Scheduled Payment: With respect to any Equipment Note, means (i) any
  payment of principal or interest on such Equipment Note (other than any such
  payment which is not in fact received by the Subordination Agent within five
  days of the date on which such payment is scheduled to be made) due from the
  obligor thereon or (ii) any payment of interest on the Certificates with
  funds drawn under any Liquidity Facility, which payment represents the
  installment of principal at the stated maturity of such installment of
  principal on such Equipment Note, the payment of regularly scheduled interest
  accrued on the unpaid principal amount of such Equipment Note, or both;
  provided that any payment of principal, premium, if any, or interest
  resulting from the redemption or purchase of any Equipment Note shall not
  constitute a Scheduled Payment.

     SEC: Means the Securities and Exchange Commission, as from time to time
  constituted or created under the United States Securities Exchange Act of
  1934, as amended, or, if at any time after the execution of this instrument
  such Commission is not existing and performing the duties now assigned to it
  under the Trust Indenture Act, then the body performing such duties on such
  date.

     Securities Act: Means the United States Securities Act of 1933, as amended
  from time to time, or any successor thereto.

     Shelf Registration Statement: Means the shelf registration statement which
  may be required to be filed by the Company with the SEC pursuant to any
  Registration Rights Agreement, other than an Exchange Offer Registration
  Statement.

     Special Distribution Date: Means each date on which a Special Payment is
  to be distributed as specified in this Agreement; provided, however, that, if
  any such day shall not be a Business Day, the related distribution shall be
  made on the next succeeding Business Day without additional interest.

     Special Redemption Premium: Means the premium payable by the Company in
  respect of the Final Withdrawal pursuant to the Note Purchase Agreement.



<PAGE>   25

                                                                              17


     Special Payment: Means any payment (other than a Scheduled Payment) in
  respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate
  (as defined in each Indenture) or Special Redemption Premium.

     Special Payments Account: Means the account or accounts created and
  maintained pursuant to Section 4.01(b).

     Subordination Agent: Has the meaning specified in the Intercreditor
  Agreement.

     Substitute Aircraft: Has the meaning specified in the Note Purchase
  Agreement.

     TIN: Has the meaning specified in Section 7.16.

     Transfer Date: Has the meaning specified in Section 11.01.

     Triggering Event: Has the meaning assigned to such term in the
  Intercreditor Agreement.

     Trust: Means the trust created by this Agreement, the estate of which
  consists of the Trust Property.

     Trust Indenture Act: Means the United States Trust Indenture Act of 1939,
  as amended from time to time, or any successor thereto.

     Trust Property: Means (i) the Equipment Notes held as the property of the
  Trust and, subject to the Intercreditor Agreement, all monies at any time
  paid thereon and all monies due and to become due thereunder, (ii) funds from
  time to time deposited in the Certificate Account and the Special Payments
  Account and, subject to the Intercreditor Agreement, any proceeds from the
  sale by the Trustee pursuant to Article VI hereof of any Equipment Note and
  (iii) all rights of the Trust and the Trustee, on behalf of the Trust, under
  the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
  Agreement and the Liquidity Facilities, including, without limitation, all
  rights to receive certain payments thereunder, and all monies paid to the
  Trustee on behalf of the Trust pursuant to the Intercreditor Agreement or the
  Liquidity Facilities, provided, that rights with respect to the Deposits or
  under the Escrow Agreement, except for the right to direct



<PAGE>   26

                                                                              18


  withdrawals for the purchase of Equipment Notes to be held herein, will
  not constitute Trust Property.

     Trustee: Means Wilmington Trust Company, or its successor in interest, and
  any successor or other trustee appointed as provided herein.

     Trustee's Lien: Has the meaning specified in Section 7.17.

     Section 1.02. Compliance Certificates and Opinions.  Upon any application
or request (except with respect to matters set forth in Article II) by the
Company, any Owner Trustee or any Loan Trustee to the Trustee to take any
action under any provision of this Agreement, the Company, such Owner Trustee
or such Loan Trustee, as the case may be, shall furnish to the Trustee (i) an
Officer's Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Agreement relating to such particular application or request,
no additional certificate or opinion need be furnished.

     Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Agreement (other than a certificate provided
pursuant to Section 8.04(e)) shall include:

     (1) a statement that each individual signing such certificate or opinion
  has read such covenant or condition and the definitions in this Agreement
  relating thereto;

     (2) a brief statement as to the nature and scope of the examination or
  investigation upon which the statements or opinions contained in such
  certificate or opinion are based;

     (3) a statement that, in the opinion of each such individual, he has made
  such examination or investigation as is necessary to enable him to express an
  informed opinion as to whether or not such covenant or condition has been
  complied with; and

<PAGE>   27
                                                                              19


     (4) a statement as to whether, in the opinion of each such individual,
  such condition or covenant has been complied with.

     Section 1.03. Form of Documents Delivered to Trustee.  In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters and any such Person may certify or give an opinion as to
such matters in one or several documents.

     Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement or, in respect of the Certificates, this
Agreement, they may, but need not, be consolidated and form one instrument.

     Section 1.04. Directions of Certificateholders.  (a) Any direction,
consent, request, demand, authorization, notice, waiver or other action
provided by this Agreement to be given or taken by Certificateholders (a
"Direction") may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Certificateholders in person or by
an agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required pursuant to this Agreement, to the Company or any Loan Trustee.  Proof
of execution of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement and conclusive
in favor of the Trustee, the Company and any Loan Trustee, if made in the
manner provided in this Section.

     (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds
or administer oaths that the Person executing such instrument acknowledged to
him the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or



<PAGE>   28

                                                                              20


such other officer and where such execution is by an officer of a corporation
or association or a member of a partnership, on behalf of such corporation,
association or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.  The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other reasonable manner which the Trustee deems
sufficient.

     (c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination.  In determining whether the Trustee shall
be protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded.  Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded, and (ii) if any amount of
Certificates so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company or any Affiliate thereof.

     (d) For all purposes of this Agreement, all Initial Certificates and all
Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.

     (e) The Company may at its option, by delivery of an Officer's Certificate
to the Trustee, set a record date to determine the Certificateholders entitled
to give any Direction.  Notwithstanding Section 316(c) of the Trust Indenture
Act, such record date shall be the record date specified in such Officer's
Certificate, which shall be a date not more than 30 days prior to the first
solicitation of Certificateholders in connection therewith.  If such a record
date is fixed, such Direction may be given before or after such record date,
but only the Certificateholders of record at the close of business on such
record date shall be deemed to be Certificateholders for the purposes of
determining whether Certificateholders of the requisite proportion of
Outstanding Certificates have authorized or agreed or consented to such
Direction, and for that purpose



<PAGE>   29

                                                                              21


the Outstanding Certificates shall be computed as of such record date; provided
that no such Direction by the Certificateholders on such record date shall be
deemed effective unless it shall become effective pursuant to the provisions of
this Agreement not later than one year after such record date.

     (f) Any Direction by the Holder of any Certificate shall bind the Holder
of every Certificate issued upon the transfer thereof or in exchange therefor
or in lieu thereof, whether or not notation of such Direction is made upon such
Certificate.

     (g) Except as otherwise provided in Section 1.04(c), Certificates owned by
or pledged to any Person shall have an equal and proportionate benefit under
the provisions of this Agreement, without preference, priority, or distinction
as among all of the Certificates.

                                   ARTICLE II

                       ORIGINAL ISSUANCE OF CERTIFICATES;

                         ACQUISITION OF EQUIPMENT NOTES

     Section 2.01. Issuance of Certificates; Acquisition of Equipment Notes.
(a) The Trustee is hereby directed (i) to execute and deliver the Intercreditor
Agreement, the Registration Rights Agreement, the Escrow Agreement and the Note
Purchase Agreement on or prior to the Issuance Date, each in the form delivered
to the Trustee by the Company and (ii) subject to the respective terms thereof,
to perform its obligations thereunder.  Upon request of the Company and the
satisfaction or waiver of the closing conditions specified in the Certificate
Purchase Agreement, the Trustee shall execute, deliver, authenticate, issue and
sell Certificates in authorized denominations equalling in the aggregate the
amount set forth, with respect to the Trust, in Schedule II to the Certificate
Purchase Agreement evidencing the entire ownership interest in the Trust, which
amount equals the maximum aggregate principal amount of Equipment Notes which
may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.06, 3.07  and 3.10 hereof, the
Trustee shall not execute, authenticate or deliver Certificates in excess of
the aggregate amount specified in this paragraph.



<PAGE>   30

                                                                              22


     (b) On or after the Issuance Date, the Company may deliver from time to
time to the Trustee a Delivery Notice relating to one or more Equipment Notes.
After receipt of a Delivery Notice and in any case no later than one Business
Day prior to a Delivery Date as to which such Delivery Notice relates (the
"Applicable Delivery Date") (or, if the Issuance Date is an Applicable Delivery
Date, on the Issuance Date), the Trustee shall (as and when specified in the
Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and
(B) the payment of all, or a portion, of such Deposit or Deposits in an amount
equal in the aggregate to the purchase price of such Equipment Notes to or on
behalf of the Owner Trustee or the Company, as the case may be, issuing such
Equipment Notes, all as shall be described in the Delivery Notice; provided
that, if the Issuance Date is an Applicable Delivery Date, such purchase price
shall be paid from a portion of the proceeds of the sale of the Certificates.
The Trustee shall (as and when specified in such Delivery Notice), subject to
the conditions set forth in Section 2 of the Note Purchase Agreement, enter
into and perform its obligations under the Participation Agreement specified in
such Delivery Notice (the "Applicable Participation Agreement") and cause such
certificates, documents and legal opinions relating to the Trustee to be duly
delivered as required by the Applicable Participation Agreement.  If at any
time prior to the Applicable Delivery Date, the Trustee receives a notice of
postponement pursuant to Section 2(e) or 2(f) of the Note Purchase Agreement,
then the Trustee shall give the Depositary (with a copy to the Escrow Agent) a
notice of cancellation of such Notice of Purchase Withdrawal relating to such
Deposit or Deposits on such Applicable Delivery Date.  Upon satisfaction of the
conditions specified in the Note Purchase Agreement and the Applicable
Participation Agreement, the Trustee shall purchase the applicable Equipment
Notes with the proceeds of the withdrawals of one or more Deposits made on the
Applicable Delivery Date in accordance with the terms of the Deposit Agreement
and the Escrow Agreement (or, if the Issuance Date is Applicable Delivery Date
with respect to such Applicable Participation Agreement, from a portion of the
proceeds of the sale of the Certificates).  The purchase price of such
Equipment Notes shall equal the principal amount of such Equipment Notes.
Amounts withdrawn from such Deposit or Deposits in excess of the purchase price
of the



<PAGE>   31

                                                                              23


Equipment Notes or to the extent not applied on the Applicable Delivery Date to
the purchase price of the Equipment Notes, shall be re-deposited by the Trustee
with the Depositary on the Applicable Delivery Date in accordance with the
terms of the Deposit Agreement.

     Section 2.02. Withdrawal of Deposits.  If any Deposits remain outstanding
on the Business Day next succeeding the Cut-Off Date, (i) (A) the Trustee shall
give the Escrow Agent notice that the Trustee's obligation to purchase
Equipment Notes under the Note Purchase Agreement has terminated and instruct
the Escrow Agent to provide a notice of Final Withdrawal to the Depositary
substantially in the form of Exhibit B to the Deposit Agreement (the "Final
Withdrawal Notice") and (B) the Trustee will make a demand upon the Company
under the Note Purchase Agreement for an amount equal to the Special Redemption
Premium, such payment to be made on the Final Withdrawal Date.

     Section 2.03. Acceptance by Trustee.  The Trustee, upon the execution and
delivery of this Agreement, acknowledges its acceptance of all right, title and
interest in and to the  Trust Property and declares that the Trustee holds and
will hold such right, title and interest for the benefit of all then present
and future Certificateholders, upon the trusts herein set forth.  Subject to
Section 7.14, the Trustee shall take all actions reasonably necessary to effect
the registration of all such Equipment Notes in the name of the Subordination
Agent.  By its payment for and acceptance of each Certificate issued to it
under this Agreement, each initial Certificateholder as grantor of the Trust
thereby joins in the creation and declaration of the Trust.

     Section 2.04. Limitation of Powers.  The Trust is constituted solely for
the purpose of making the investment in the Equipment Notes, and, except as set
forth herein, the Trustee shall not be authorized or empowered to acquire any
other investments or engage in any other activities and, in particular, the
Trustee shall not be authorized or empowered to do anything that would cause
such Trust to fail to qualify as a "grantor trust" for federal income tax
purposes (including as subject to this restriction, acquiring any Aircraft (as
defined in the respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft once
acquired).



<PAGE>   32

                                                                              24


                                  ARTICLE III

                                THE CERTIFICATES

     Section 3.01. Title, Form, Denomination and Execution of Certificates.
(a) The Initial Certificates shall be known as the "7.461% Initial Pass Through
Certificates, Series 1997-1A-0" and the Exchange Certificates shall be known as
the "7.461% Exchange Pass Through Certificates, Series 1997-1A-O", in each
case, of the Trust.  Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Agreement and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Trustee or the officers executing such Certificates, as evidenced by the
Trustee's or officer's execution of the Certificates.  At the Escrow Agent's
request under the Escrow Agreement, the Trustee shall affix the corresponding
Escrow Receipt to each Certificate.  In any event, any transfer or exchange of
any Certificate shall also effect a transfer or exchange of the related Escrow
Receipt.  Prior to the Final Withdrawal Date, no transfer or exchange of any
Certificate shall be permitted unless the Corresponding Escrow Receipt is
attached thereto and also is so transferred or exchanged.  By acceptance of any
Certificate to which an Escrow Receipt is attached, each Holder of such a
Certificate acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.

     (b) The Initial Certificates shall be issued only in fully registered form
without coupons and only in denominations of $100,000 or integral multiples of
$1,000 in excess thereof, except that one Certificate may be issued in a
different denomination.  The Exchange Certificates will be issued in
denominations of $1,000 or integral multiples thereof, except that one
Certificate may be issued in a different denomination.  Each Certificate shall
be dated the date of its authentication.  The aggregate Fractional Undivided
Interest of Certificates shall not at any time exceed $437,876,000.

     (c) The Initial Certificates offered and sold in reliance on Rule 144A
shall be issued in the form of one or more



<PAGE>   33

                                                                              25


global Certificates substantially in the form of Exhibit A hereto with such
applicable legends as are provided for in Section 3.02 (each a "Restricted
Global Certificate") duly executed and authenticated by the Trustee as
hereinafter provided.  Such Restricted Global Certificates shall be in
registered form and be registered in the name of DTC and deposited with the
Trustee, at its Corporate Trust Office, as custodian for DTC.  The aggregate
principal amount of any Restricted Global Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Restricted Global Certificate, as provided in
Section 3.06 hereof, which adjustments shall be conclusive as to the aggregate
principal amount of any such Global Certificate.

     (d) The Initial Certificates offered and sold outside the United States in
reliance on Regulation S shall be issued in the form of one or more global
Certificates substantially in the form of Exhibit A hereto (each a "Regulation
S Global Certificate") duly executed and authenticated by the Trustee as
hereinafter provided.  Such Regulation S Global Certificates shall be in
registered form and be registered in the name of DTC and deposited with the
Trustee, at its Corporate Trust Office, as custodian for DTC, for credit
initially and during the Restricted Period (hereinafter defined) to the
respective accounts of beneficial owners of such Certificates (or to such other
accounts as they may direct) at Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel.  As used herein, the term
"Restricted Period", with respect to the Regulation S Global Certificates
offered and sold in reliance on Regulation S, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
the Certificates are first offered to persons other than distributors (as
defined in Regulation S) in reliance on Regulation S and (ii) the date of the
closing of the offering under the Certificate Purchase Agreement.  The
aggregate principal amount of any Regulation S Global Certificate may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC for such Global Certificate, as provided in
Section 3.06 hereof, which adjustments shall be conclusive as to the aggregate
principal amount of any such Global Certificate.  The Restricted Global
Certificate and Regulation S Global Certificate are sometimes collectively
referred to herein as the "Global Certificates".



<PAGE>   34

                                                                              26


     (e) Initial Certificates offered and sold to any Institutional Accredited
Investor which is not a QIB in a transaction exempt from registration under the
Securities Act (and other than as described in Section 3.01(d)) shall be issued
substantially in the form of Exhibit A hereto in definitive, fully registered
form without interest coupons with such applicable legends as are provided for
in Section 3.02 (the "Restricted Definitive Certificates") duly executed and
authenticated by the Trustee as hereinafter provided.  Certificates issued
pursuant to Section 3.05(b) in exchange for interests in a Regulation S Global
Certificate shall be issued in definitive, fully registered form without
interest coupons (the "Regulation S Definitive Certificates").  The Restricted
Definitive Certificates and the Regulation S Definitive Certificates are
sometimes collectively referred to herein as the "Definitive Certificates".

     (f) The Exchange Certificates shall be issued in the form of one or more
global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that (i) the Restricted Legend
(hereinafter defined) shall be omitted and (ii) such Exchange Certificates
shall contain such appropriate insertions, omissions, substitutions and other
variations from the form set forth in Exhibit A hereto relating to the nature
of the Exchange Certificates as the Responsible Officer of the Trustee
executing such Exchange Certificates on behalf of the Trust may determine, as
evidenced by such officer's execution on behalf of the Trust of such Exchange
Certificates.  Such Global Exchange Certificates shall be in registered form
and be registered in the name of DTC and deposited with the Trustee, at its
Corporate Trust Office, as custodian for DTC.  The aggregate principal amount
of any Global Exchange Certificate may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
DTC for such Global Exchange Certificate, which adjustments shall be conclusive
as to the aggregate principal amount of any such Global Exchange Certificate.
Subject to clause (i) and (ii) of the first sentence of this Section 3.01(f),
the terms hereof applicable to Restricted Global Certificates and/or Global
Certificates shall apply to the Global Exchange Certificates, mutatis mutandis.

     (g) The definitive Certificates shall be in registered form and shall be
typed, printed, lithographed or engraved or produced by any combination of
these methods or may be produced



<PAGE>   35

                                                                              27


in any other manner, all as determined by the officers executing such
Certificates, as evidenced by their execution of such Certificates.

     Section 3.02. Restrictive Legends.  All Initial Certificates issued
pursuant to this Agreement for resale pursuant to Rule 144A or offered and sold
to any Institutional Accredited Investor which is not a QIB (including any
Global Certificate issued upon registration of transfer, in exchange for or in
lieu of such Certificates) shall be "Restricted Certificates" and shall bear a
legend to the following effect (the "Restricted Legend") unless the Company and
the Trustee determine otherwise consistent with applicable law:

     "THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
  1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED
  OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
  PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
  HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
  BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
  INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
  OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
  ACCREDITED INVESTOR") OR (c) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
  CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
  THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE
  LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH
  THIS CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
  AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS
  CERTIFICATE EXCEPT (A) TO CONTINENTAL AIRLINES, INC., (B) TO A QUALIFIED
  INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
  (c) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
  RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
  REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR
  (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT;
  AND (3) AGREES THAT IF IT SHOULD RESELL OR OTHERWISE TRANSFER THIS
  CERTIFICATE IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS
  TRANSFERRED



<PAGE>   36

                                                                              28


  A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
  ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
  ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
  CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
  AFFILIATE OF ANY OF SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE BOX
  SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
  SUBMIT THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
  TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
  THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
  AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
  ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS."

     Each Global Certificate shall bear the following legend on the face
thereof:

     "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
  THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE
  OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
  CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME
  OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
  REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
  SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
  ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
  PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
  AN INTEREST HEREIN.

     TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
  WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
  SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE
  SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
  FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED
  TO HEREIN."



<PAGE>   37

                                                                              29


     Section 3.03. Authentication of Certificates.  (a)  On the Issuance Date,
the Trustee shall duly execute, authenticate and deliver Certificates in
authorized denominations equalling in the aggregate the amount set forth, with
respect to the Trust, in Schedule II to the Certificate Purchase Agreement,
evidencing the entire ownership of the Trust, which amount equals the maximum
aggregate principal amount of Equipment Notes which may be purchased by the
Trustee pursuant to the Note Purchase Agreement.

     (b) No Certificate shall be entitled to any benefit under this Agreement
or be valid or obligatory for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by the Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.

     Section 3.04. Transfer and Exchange.  The Trustee shall cause to be kept
at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 a register (the "Register") of the Certificates in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of such Certificates and of transfers and
exchanges of such Certificates as herein provided.  The Trustee shall initially
be the registrar (the "Registrar") for the purpose of registering such
Certificates and transfers and exchanges of such Certificates as herein
provided.

     All Certificates issued upon any registration of transfer or exchange of
Certificates shall be valid obligations of the Trust, evidencing the same
interest therein, and entitled to the same benefits under this Trust Agreement,
as the Certificates surrendered upon such registration of transfer or exchange.

     A Certificateholder may transfer a Certificate, or request that a
Certificate be exchanged for Certificates in an aggregate Fractional Undivided
Interest equal to the Fractional Undivided Interest of such Certificate
surrendered for exchange of other authorized denominations, by surrender of
such Certificate to the Trustee with the form of transfer notice thereon duly
completed and executed, and otherwise complying with the terms of this
Agreement, including providing evidence of compliance with any restrictions on
transfer, in form



<PAGE>   38

                                                                              30


satisfactory to the Trustee and the Registrar; provided that no exchanges of
Initial Certificates for Exchange Certificates shall occur until an Exchange
Offer Registration Statement shall have been declared effective by the SEC
(notice of which shall be provided to the Trustee by the Company).  No such
transfer shall be effected until, and such transferee shall succeed to the
rights of a Certificateholder only upon, final acceptance and registration of
the transfer by the Registrar in the Register.  Prior to the registration of
any transfer by a Certificateholder as provided herein, the Trustee shall treat
the person in whose name the Certificate is registered as the owner thereof for
all purposes, and the Trustee shall not be affected by notice to the contrary.
Furthermore, DTC shall, by acceptance of a Global Certificate, agree that
transfers of beneficial interests in such Global Certificate may be effected
only through a book-entry system maintained by DTC (or its agent) and that
ownership of a beneficial interest in the Certificate shall be required to be
reflected in a book-entry.  When Certificates are presented to the Registrar
with a request to register the transfer thereof or to exchange them for other
authorized denominations of a Certificate in a Fractional Undivided Interest
equal to the aggregate Fractional Undivided Interest of Certificates
surrendered for exchange, the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met.

     To permit registrations of transfers and exchanges in accordance with the
terms, conditions and restrictions hereof, the Trustee shall execute and
authenticate Certificates at the Registrar's request.  No service charge shall
be made to a Certificateholder for any registration of transfer or exchange of
Certificates, but the Trustee shall require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.  All Certificates surrendered for
registration of transfer or exchange shall be canceled and subsequently
destroyed by the Trustee.

     Section 3.05. Book-Entry Provisions for Restricted Global Certificates and
Regulation S Global Certificates. (a)  Members of, or participants in, DTC
("Agent Members") shall have no rights under this Agreement with respect to any
Global Certificate held on their behalf by DTC, or the Trustee as its
custodian, and DTC may be treated by the Trustee and any agent of the Trustee
as the absolute owner of such Global Certificate for



<PAGE>   39

                                                                              31


all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall
prevent the Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by DTC or shall
impair, as between DTC and its Agent Members, the operation of customary
practices governing the exercise of the rights of a holder of any Certificate.
Upon the issuance of any Global Certificate, the Registrar or its duly
appointed agent shall record DTC as the registered holder of such Global
Certificate.

     (b) Transfers of any Global Certificate shall be limited to transfers of
such Restricted Global Certificate or Regulation S Global Certificate in whole,
but not in part, to DTC.  Beneficial interests in the Restricted Global
Certificate and any Regulation S Global Certificate may be transferred in
accordance with the rules and procedures of DTC and the provisions of Section
3.06.  Beneficial interests in a Restricted Global Certificate or a Regulation
S Global Certificate shall be delivered to all beneficial owners thereof in the
form of Restricted Definitive Certificates or Regulation S Definitive
Certificates, as the case may be, if (i) DTC notifies the Trustee that it is
unwilling or unable to continue as depositary for such Restricted Global
Certificate or Regulation S Global Certificate, as the case may be, and a
successor depositary is not appointed by the Trustee within 90 days of such
notice, and (ii) after the occurrence and during the continuance of an Event of
Default, owners of beneficial interests in a Global Certificate with Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust advise the Trustee, the Company and DTC through Agent Members in writing
that the continuation of a book-entry system through DTC or its successor is no
longer in their best interests.

     (c) Any beneficial interest in one of the Global Certificates that is
transferred to a Person who takes delivery in the form of an interest in
another Global Certificate will, upon such transfer, cease to be an interest in
such Global Certificate and become an interest in the other Global Certificate
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Certificate for as long as it remains such an interest.

     (d) In connection with the transfer of an entire Restricted Global
Certificate or an entire Regulation S Global



<PAGE>   40

                                                                              32


Certificate to the beneficial owners thereof pursuant to paragraph (b) of this
Section 3.05, such Restricted Global Certificate or Regulation S Global
Certificate, as the case may be, shall be deemed to be surrendered to the
Trustee for  cancellation, and the Trustee shall execute, authenticate and
deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in such Restricted Global Certificate or Regulation S
Global Certificate, as the case may be, an equal aggregate principal amount of
Restricted Definitive Certificates or Regulation S Definitive Certificates, as
the case may be, of authorized denominations.  None of the Company, the
Registrar, the Paying Agent nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such registration instructions.  Upon the issuance of
Definitive Certificates, the Trustee shall recognize the Person in whose name
the Definitive Certificates are registered in the Register as
Certificateholders hereunder.  Neither the Company nor the Trustee shall be
liable if the Trustee or the Company is unable to locate a qualified successor
clearing agency.

     (e) Any Definitive Certificate delivered in exchange for an interest in
the Restricted Global Certificate pursuant to paragraph (b) of this Section
3.05 shall, except as otherwise provided by paragraph (e) of Section 3.06, bear
the Restricted Legend.

     (f) Prior to the expiration of the Restricted Period, any Regulation S
Definitive Certificate delivered in exchange for an interest in a Regulation S
Global Certificate pursuant to paragraph (b) of this Section shall bear the
Restricted Legend.

     (g) The registered holder of any Restricted Global Certificate or
Regulation S Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.

     Section 3.06. Special Transfer Provisions.  Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement, or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant
to an effective Exchange Offer Registration Statement, in each case pursuant to



<PAGE>   41

                                                                              33


the terms of the Registration Rights Agreement, the following provisions shall
apply to such Initial Certificates:

           (a) Transfers to Non-QIB Institutional Accredited Investors.  The
      following provisions shall apply with respect to the registration of any
      proposed transfer of a Certificate to any Institutional Accredited
      Investor which is neither a QIB nor a Non-U.S. Person:

                 (i) The Registrar shall register the transfer of any
            Certificate, whether or not bearing the Restricted Legend, only if
            (x) the requested transfer is at least two years after the later of
            the original issue date of the Certificates and the last date on
            which such Certificate was held by the Company, the Trustee or any
            affiliate of any of such Persons or (y) the proposed transferor is
            an Initial Purchaser who is transferring Certificates purchased
            under the Certificates Purchase Agreement and the proposed
            transferee has delivered to the Registrar a letter substantially in
            the form of Exhibit C hereto and the aggregate principal amount of
            the Certificates being transferred is at least $100,000.  Except as
            provided in the foregoing clause (y), the Registrar shall not
            register the transfer of any Certificate to any Institutional
            Accredited Investor which is neither a QIB nor a Non-U.S. Person.

                 (ii) If the proposed transferor is an Agent Member holding a
            beneficial interest in a Restricted Global Certificate, upon
            receipt by the Registrar of (x) the documents, if any, required by
            paragraph (i) and (y) instructions given in accordance with DTC's
            and the Registrar's procedures, the Registrar shall reflect on its
            books and records the date of the transfer and a decrease in the
            principal amount of such Restricted Global Certificate in an amount
            equal to the principal amount of the beneficial interest in such
            Restricted Global Certificate to be transferred, and the Trustee
            shall execute, authenticate and deliver to the transferor or at its
            direction, one or more Restricted Definitive Certificates of like
            tenor and amount.



<PAGE>   42

                                                                              34


     (b) Transfers to QIBs.  The following provisions shall apply with respect
to the registration of any proposed transfer of an Initial Certificate to a QIB
(excluding Non-U.S. Persons):

                 (i) If the Certificate to be transferred consists of
            Restricted Definitive Certificates, or of an interest in any
            Regulation S Global Certificate during the Restricted Period, the
            Registrar shall register the transfer if such transfer is being
            made by a proposed transferor who has checked the box provided for
            on the form of Initial Certificate stating, or has otherwise
            advised the Trustee and the Registrar in writing, that the sale has
            been made in compliance with the provisions of Rule 144A to a
            transferee who has signed the certification provided for on the
            form of Initial Certificate stating, or has otherwise advised the
            Trustee and the Registrar in writing, that it is purchasing the
            Initial Certificate for its own account or an account with respect
            to which it exercises sole investment discretion and that it, or
            the Person on whose behalf it is acting with respect to any such
            account, is a QIB within the meaning of Rule 144A, and is aware
            that the sale to it is being made in reliance on Rule 144A and
            acknowledges that it has received such information regarding the
            Trust and/or the Company as it has requested pursuant to Rule 144A
            or has determined not to request such information and that it is
            aware that the transferor is relying upon its foregoing
            representations in order to claim the exemption from registration
            provided by Rule 144A.

                 (ii) Upon receipt by the Registrar of the documents required
            by clause (i) above and instructions given in accordance with DTC's
            and the Registrar's procedures therefor, the Registrar shall
            reflect on its books and records the date of such transfer and an
            increase in the principal amount of a Restricted Global Certificate
            in an amount equal to the principal amount of the Restricted
            Definitive Certificates or interests in such Regulation S Global
            Certificate, as the case may be, being transferred, and the Trustee
            shall cancel such Definitive Certificates or decrease the amount of
            such Regulation S Global Certificate so transferred.



<PAGE>   43

                                                                              35


           (c) Transfers of Interests in the Regulation S Global Certificate or
      Regulation S Definitive Certificates.  After the expiration of the
      Restricted Period, the Registrar shall register any transfer of interests
      in any Regulation S Global Certificate or Regulation S Definitive
      Certificates without requiring any additional certification.  Until the
      expiration of the Restricted Period, interests in the Regulation S Global
      Certificate may only be held through Agent Members acting for and on
      behalf of Euroclear and Cedel.

           (d) Transfers to Non-U.S. Persons at Any Time.  The following
      provisions shall apply with respect to any registration of any transfer
      of an Initial Certificate to a Non-U.S. Person:

                 (i) Prior to the expiration of the Restricted Period, the
            Registrar shall register any proposed transfer of an Initial
            Certificate to a Non-U.S.Person upon receipt of a certificate
            substantially in the form set forth as Exhibit B hereto from the
            proposed transferor.

                 (ii) After the expiration of the Restricted Period, the
            Registrar shall register any proposed transfer to any Non-U.S.
            Person if the Certificate to be transferred is a Restricted
            Definitive Certificate or an interest in a Restricted Global
            Certificate, upon receipt of a certificate substantially in the
            form of Exhibit B from the proposed transferor.  The Registrar
            shall promptly send a copy of such certificate to the Company.

                 (iii) Upon receipt by the Registrar of (x) the documents, if
            any, required by clause (ii) and (y) instructions in accordance
            with DTC's and the Registrar's procedures, the Registrar shall
            reflect on its books and records the date of such transfer and a
            decrease in the principal amount of such Restricted Global
            Certificate in an amount equal to the principal amount of the
            beneficial interest in such Restricted Global Certificate to be
            transferred, and, upon receipt by the Registrar of instructions
            given in accordance with DTC's and the Registrar's procedures, the
            Registrar shall reflect on its books and records the



<PAGE>   44

                                                                              36


            date and an increase in the principal amount of the Regulation S
            Global Certificate in an amount equal to the principal amount of
            the Restricted Definitive Certificate or the Restricted Global
            Certificate, as the case may be, to be transferred, and the Trustee
            shall cancel the Definitive Certificate, if any, so transferred or
            decrease the amount of such Restricted Global Certificate.

           (e) Restricted Legend.  Upon the transfer, exchange or replacement
      of Certificates not bearing the Restricted Legend, the Registrar shall
      deliver Certificates that do not bear the Restricted Legend.  Upon the
      transfer, exchange or replacement of Certificates bearing the Restricted
      Legend, the Registrar shall deliver only Certificates that bear the
      Restricted Legend unless either (i) the circumstances contemplated by
      paragraph (d)(ii) of this Section 3.06 exist or (ii) there is delivered
      to the Registrar an Opinion of Counsel to the effect that neither such
      legend nor the related restrictions on transfer are required in order to
      maintain compliance with the provisions of the Securities Act.

           (f) General.  By acceptance of any Certificate bearing the
      Restricted Legend, each Holder of such a Certificate acknowledges the
      restrictions on transfer of such Certificate set forth in this Agreement
      and agrees that it will transfer such Certificate only as provided in
      this Agreement.  The Registrar shall not register a transfer of any
      Certificate unless such transfer complies with the restrictions on
      transfer, if any, of such Certificate set forth in this Agreement.  In
      connection with any transfer of Certificates, each Certificateholder
      agrees by its acceptance of the Certificates to furnish the Registrar or
      the Trustee such certifications, legal opinions or other information as
      either of them may reasonably require to confirm that such transfer is
      being made pursuant to an exemption from, or a transaction not subject
      to, the registration requirements of the Securities Act and in accordance
      with the terms and provisions of this Article III; provided that the
      Registrar shall not be required to determine the sufficiency of any such
      certifications, legal opinions or other information.



<PAGE>   45

                                                                              37


     Until such time as no Certificates remain Outstanding, the Registrar shall
retain copies of all letters, notices and other written communications received
pursuant to Section 3.05 or this Section 3.06.  The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.

     Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates.  If (a)
any mutilated Certificate is surrendered to the Registrar or the Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save each of them
harmless, then, in the absence of notice to the Registrar or the Trustee that
such destroyed, lost or stolen Certificate has been acquired by a bona fide
purchaser, and provided that the requirements of Section 8-405 of the Uniform
Commercial Code in effect in any applicable jurisdiction are met, the Trustee
shall execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.

     In connection with the issuance of any new Certificate under this Section
3.07, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Registrar) connected therewith.

     Any duplicate Certificate issued pursuant to this Section 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

     The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.



<PAGE>   46

                                                                              38


     Section 3.08. Persons Deemed Owners.  Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered
(as of the day of determination) as the owner of such Certificate for the
purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.

     Section 3.09. Cancellation.  All Certificates surrendered for payment or
transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for
cancellation and shall promptly be canceled by it.  No Certificates shall be
authenticated in lieu of or in exchange for any Certificates canceled as
provided in this Section, except as expressly permitted by this Agreement.  All
canceled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.

     Section 3.10. Temporary Certificates.  Until definitive Certificates are
ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates.
If temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay.  After the preparation
of definitive Certificates, the temporary Certificates shall be exchangeable
for definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder.  Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations.  Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.

     Section 3.11. Limitation of Liability for Payments.  All payments and
distributions made to Certificateholders in



<PAGE>   47

                                                                              39


respect of the Certificates shall be made only from the Trust Property and only
to the extent that the Trustee shall have sufficient income or proceeds from
the Trust Property to make such payments in accordance with the terms of
Article IV of this Agreement.  Each Certificateholder, by its acceptance of a
Certificate, agrees that it will look solely to the income and proceeds from
the Trust Property for any payment or distribution due to such
Certificateholder pursuant to the terms of this Agreement and that it will not
have any recourse to the Company, the Trustee, the Loan Trustees, the Liquidity
Providers, the Owner Trustees or the Owner Participants, except as otherwise
expressly provided herein or in the Intercreditor Agreement.

     The Company is a party to this Agreement solely for purposes of meeting
the requirements of the Trust Indenture Act, and therefore shall not have any
right, obligation or liability hereunder (except as otherwise expressly
provided herein).

                                   ARTICLE IV

                          DISTRIBUTIONS; STATEMENTS TO

                               CERTIFICATEHOLDERS

     Section 4.01. Certificate Account and Special Payments Account.  (a)  The
Trustee shall establish and maintain on behalf of the Certificateholders a
Certificate Account as one or more non-interest-bearing accounts.  The Trustee
shall hold the Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals therefrom only as
provided in this Agreement.  On each day when a Scheduled Payment is made to
the Trustee under the Intercreditor Agreement, the Trustee upon receipt thereof
shall immediately deposit the aggregate amount of such Scheduled Payment in the
Certificate Account.

     (b) The Trustee shall establish and maintain on behalf of the
Certificateholders a Special Payments Account as one or more accounts, which
shall be non-interest bearing except as provided in Section 4.04.  The Trustee
shall hold the Special Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom only as
provided in this Agreement.  On each day when one or more Special Payments are
made to the Trustee under the Intercreditor Agreement and upon the payment of
the Special Redemption Premium to the Trustee under the Note Purchase
Agreement, the Trustee,



<PAGE>   48

                                                                              40


upon receipt thereof, shall immediately deposit the aggregate amount of such
Special Payments in the Special Payments Account.

     (c) The Trustee shall cause the Subordination Agent to present to the
related Loan Trustee of each Equipment Note such Equipment Note on the date of
its stated final maturity or, in the case of any Equipment Note which is to be
redeemed in whole pursuant to the related Indenture, on the applicable
redemption date under such Indenture.

     Section 4.02. Distributions from Certificate Account and Special Payments
Account.  (a)  On each Regular Distribution Date or as soon thereafter as the
Trustee has confirmed receipt of the payment of all or any part of the
Scheduled Payments due on such date, the Trustee shall distribute out of the
Certificate Account the entire amount deposited therein pursuant to Section
4.01(a).  There shall be so distributed to each Certificateholder of record on
the Record Date with respect to such Regular Distribution Date (other than as
provided in Section 11.01 concerning the final distribution) by check mailed to
such Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional Undivided Interest
in the Trust held by such Certificateholder) of the total amount in the
Certificate Account, except that, with respect to Certificates registered on
the Record Date in the name of DTC, such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.

     (b) On each Special Distribution Date with respect to any Special Payment
or as soon thereafter as the Trustee has confirmed receipt of any Special
Payments due on the Equipment Notes held in the related Trust or realized upon
the sale of such Equipment Notes or receipt of the Special Redemption Premium,
the Trustee shall distribute out of the Special Payments Account the entire
amount of such Special Payment deposited therein pursuant to Section 4.01(b).
There shall be so distributed to each Certificateholder of record on the Record
Date with respect to such Special Distribution Date (other than as provided in
Section 11.01 concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional Undivided Interest
in the Trust held by such Certificateholder) of the total amount in the Special
Payments Account on account of such Special Payment, except that, with



<PAGE>   49

                                                                              41


respect to Certificates registered on the Record Date in the name of DTC, such
distribution shall be made by wire transfer in immediately available funds to
the account designated by DTC.

     (c) The Trustee shall, at the expense of the Company, cause notice of each
Special Payment to be mailed to each Certificateholder at his address as it
appears in the Register.  In the event of redemption or purchase of Equipment
Notes held in the Trust, such notice shall be mailed not less than 20 days
prior to the Special Distribution Date for the Special Payment resulting from
such redemption or purchase, which Special Distribution Date shall be the date
of such redemption or purchase.  In the event of the payment of a Special
Redemption Premium by the Company to the Trustee under the Note Purchase
Agreement, such notice shall be mailed, together with the notice by the Escrow
Paying Agent under Section 2.06 of the Escrow Agreement, not less than 20 days
prior to the Special Distribution Date for such amount, which Special
Distribution Date shall be the Final Withdrawal Date.  In the case of any other
Special Payments, such notice shall be mailed as soon as practicable after the
Trustee has confirmed that it has received funds for such Special Payment,
stating the Special Distribution Date for such Special Payment which shall
occur not less than 20 days after the date of such notice and as soon as
practicable thereafter.  Notices mailed by the Trustee shall set forth:

                 (i) the Special Distribution Date and the Record Date therefor
            (except as otherwise provided in Section 11.01),

                 (ii) the amount of the Special Payment for each $1,000 face
            amount Certificate and the amount thereof constituting principal,
            premium, if any, and interest,

                 (iii) the reason for the Special Payment, and

                 (iv) if the Special Distribution Date is the same date as a
            Regular Distribution Date, the total amount to be received on such
            date for each $1,000 face amount Certificate.

If the amount of (i) premium, if any, payable upon the redemption or purchase
of an Equipment Note or (ii) the Special Redemption Premium, if any, has not
been calculated at the time that the Trustee mails notice of a Special Payment,
it shall be sufficient



<PAGE>   50

                                                                              42


if the notice sets forth the other amounts to be distributed and states that
any premium received will also be distributed.

     If any redemption of the Equipment Notes held in the Trust is canceled,
the Trustee, as soon as possible after learning thereof, shall cause notice
thereof to be mailed to each Certificateholder at its address as it appears on
the Register.

     Section 4.03. Statements to Certificateholders.  (a)  On each Distribution
Date, the Trustee will include with each distribution to Certificateholders of
a Scheduled Payment or Special Payment, as the case may be, a statement setting
forth the information provided below (in the case of a Special Payment,
including any Special Redemption Premium, reflecting in part the information
provided by the Escrow Paying Agent under the Escrow Agreement).  Such
statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:

                 (i) the aggregate amount of funds distributed on such
            Distribution Date hereunder and under the Escrow Agreement,
            indicating the amount allocable to each source;

                 (ii) the amount of such distribution hereunder allocable to
            principal and the amount allocable to premium (including the
            Special Redemption Premium), if any;

                 (iii) the amount of such distribution hereunder allocable to
            interest; and

                 (iv) the amount of such distribution under the Escrow
            Agreement allocable to interest;

                 (v) the amount of such distribution under the Escrow Agreement
            allocable to Deposits; and

                 (vi) the Pool Balance and the Pool Factor.

     With respect to the Certificates registered in the name of DTC, on the
Record Date prior to each Distribution Date, the Trustee will request from DTC
a securities position listing setting forth the names of all Agent Members
reflected on DTC's books as holding interests in the Certificates on such
Record Date.  On each Distribution Date, the Trustee will mail to



<PAGE>   51

                                                                              43


each such Agent Member the statement described above and will make available
additional copies as requested by such Agent Member for forwarding to holders
of interests in the Certificates.

     (b) Within a reasonable period of time after the end of each calendar year
but not later than the latest date permitted by law, the Trustee shall furnish
to each Person who at any time during such calendar year was a
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which a Certificateholder shall reasonably request as necessary for
the purpose of such Certificateholder's preparation of its federal income tax
returns.  Such statement and such other items shall be prepared on the basis of
information supplied to the Trustee by the Agent Members and shall be delivered
by the Trustee to such Agent Members to be available for forwarding by such
Agent Members to the holders of interests in the Certificates in the manner
described in Section 4.03(a).

     (c) Promptly following (i) the Delivery Period Termination Date, if there
has been any change in the information set forth in clauses (x), (y) and (z)
below from that set forth in page 81 of the Offering Circular, and (ii) any
early redemption of purchase of, or any default in the payment of principal or
interest in respect of, any of the Equipment Notes held in the Trust, or any
Final Withdrawal, the Trustee shall furnish to Certificateholders of record on
such date a statement setting forth (x) the expected Pool Balances for each
subsequent Regular Distribution Date following the Delivery Period Termination
Date, (y) the related Pool Factors for such Regular Distribution Dates and (z)
the expected principal distribution schedule of the Equipment Notes, in the
aggregate, held as Trust Property at the date of such notice.  With respect to
the Certificates registered in the name of DTC, on the Delivery Period
Termination Date, the Trustee will request from DTC a securities position
listing setting forth the names of all Agent Members reflected on DTC's books
as holding interests in the Certificates on such date.  The Trustee will mail
to each such Agent Member the statement described above and will make



<PAGE>   52

                                                                              44


available additional copies as requested by such Agent Member for forwarding to
holders of interests in the Certificates.

     Section 4.04. Investment of Special Payment Moneys.  Any money received by
the Trustee pursuant to Section 4.01(b) representing a Special Payment which is
not distributed on the date received shall, to the extent practicable, be
invested in Permitted Investments by the Trustee pending distribution of such
Special Payment pursuant to Section 4.02.  Any investment made pursuant to this
Section 4.04 shall be in such Permitted Investments having maturities not later
than the date that such moneys are required to be used to make the payment
required under Section 4.02 on the applicable Special Distribution Date and the
Trustee shall hold any such Permitted Investments until maturity.  The Trustee
shall have no liability with respect to any investment made pursuant to this
Section 4.04, other than by reason of the willful misconduct or negligence of
the Trustee.  All income and earnings from such investments shall be
distributed on such Special Distribution Date as part of such Special Payment.

                                   ARTICLE V

                                  THE COMPANY

     Section 5.01. Maintenance of Corporate Existence.  The Company, at its own
cost and expense, will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence, rights and
franchises, except as otherwise specifically permitted in Section 5.02;
provided, however, that the Company shall not be required to preserve any right
or franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.

     Section 5.02. Consolidation, Merger, etc.  The Company shall not
consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:

     (a) the corporation formed by such consolidation or into which the Company
is merged or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety shall be (i)
organized and validly existing under the laws of the United States of America
or any



<PAGE>   53

                                                                              45


state thereof or the District of Columbia, (ii) a "citizen of the United
States" as defined in 49 U.S.C. 40102(a)(15), as amended, and (iii) a United
States certificated air carrier, if and so long as such status is a condition
of entitlement to the benefits of Section 1110 of the Bankruptcy Reform Act of
1978, as amended (11 U.S.C. Section  1110), with respect to the Leases;

     (b) the corporation formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety shall execute and
deliver to the Trustee a duly authorized, valid, binding and enforceable
agreement in form and substance reasonably satisfactory to the Trustee
containing an assumption by such successor corporation or Person of the due and
punctual performance and observance of each covenant and condition of this
Agreement, the Other Pass Through Trust Agreements and each Financing Document
to be performed or observed by the Company; and

     (c) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company reasonably
satisfactory to the Trustee, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned in clause
(b) above comply with this Section 5.02 and that all conditions precedent
herein provided for relating to such transaction have been complied with.

     Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Company as an entirety in accordance
with this Section 5.02, the successor corporation or Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement with the
same effect as if such successor corporation or Person had been named as the
Company herein.  No such conveyance, transfer or lease of substantially all of
the assets of the Company as an entirety shall have the effect of releasing any
successor corporation or Person which shall have become such in the manner
prescribed in this Section 5.02 from its liability in respect of this Agreement
and any Financing Document to which it is a party.



<PAGE>   54

                                                                              46


                                   ARTICLE VI

                                    DEFAULT

     Section 6.01. Events of Default.  (a)  Exercise of Remedies.  Upon the
occurrence and during the continuation of any Indenture Default under any
Indenture, the Trustee may, to the extent it is the Controlling Party at such
time (as determined pursuant to the Intercreditor Agreement), direct the
exercise of remedies as provided in the Intercreditor Agreement.

     (b) Purchase Rights of Certificateholders.  By acceptance of its
Certificate, each Certificateholder agrees that at any time after the
occurrence and during the continuation of a Triggering Event,

                 (i) each Class B Certificateholder shall have the right to
            purchase all, but not less than all, of the Certificates upon ten
            days' written notice to the Trustee and each other Class B
            Certificateholder, provided that (A) if prior to the end of such
            ten-day period any other Class B Certificateholder notifies such
            purchasing Class B Certificateholder that such other Class B
            Certificateholder wants to participate in such purchase, then such
            other Class B Certificateholder may join with the purchasing Class
            B Certificateholder to purchase all, but not less than all, of the
            Certificates pro rata based on the Fractional Undivided Interest in
            the Class B Trust held by each such Class B Certificateholder and
            (B) if prior to the end of such ten-day period any other Class B
            Certificateholder fails to notify the purchasing Class B
            Certificateholder of such other Class B Certificateholder's desire
            to participate in such a purchase, then such other Class B
            Certificateholder shall lose its right to purchase the Certificates
            pursuant to this Section 6.01(b); and

                 (ii) each holder of a Class C-I Certificate or a Class C-II
            Certificate (a "Class C Certificateholder") shall have the right
            (which shall not expire upon any purchase of the Certificates
            pursuant to clause (i) above) to purchase all, but not less than
            all, of the Certificates and the Class B Certificates upon ten
            days' written notice to the Trustee, the Class B



<PAGE>   55

                                                                              47


            Trustee and each other Class C Certificateholder, provided that (A)
            if prior to the end of such ten-day period any other Class C
            Certificateholder notifies such purchasing Class C
            Certificateholder that such other Class C Certificateholder wants
            to participate in such purchase, then such other Class C
            Certificateholder may join with the purchasing Class C
            Certificateholder to purchase all, but not less than all, of the
            Certificates and the Class B Certificates pro rata based on the
            Fractional Undivided Interest in the Class C-I Trust and the Class
            C-II Trust, taken as a whole, held by each such Class C
            Certificateholder and (B) if prior to the end of such ten-day
            period any other Class C Certificateholder fails to notify the
            purchasing Class C Certificateholder of such other Class C
            Certificateholder's desire to participate in such a purchase, then
            such other Class C Certificateholder shall lose its right to
            purchase the Certificates pursuant to this Section 6.01(b).

     The purchase price with respect to the Certificates shall be equal to the
Pool Balance of the Certificates, together with accrued and unpaid interest
thereon to the date of such purchase, without premium, but including any other
amounts then due and payable to the Certificateholders under this Agreement,
the Intercreditor Agreement, the Escrow Agreement or any Financing Document or
on or in respect of the Certificates; provided, however, that (i) if such
purchase occurs after the record date specified in Section 2.03(b) of the
Escrow Agreement relating to the distribution of unused Deposits and accrued
and unpaid interest thereunder, such purchase price shall be reduced by the
aggregate amount of unused Deposits and interest to be distributed under the
Escrow Agreement (which deducted amounts shall remain distributable to, and may
be retained by, the Certificateholder as of such Record Date) and (ii) if such
purchase occurs after a Record Date, such purchase price shall be reduced by
the amount to be distributed hereunder on the related Distribution Date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholder as of such Record Date); provided, further, that no such
purchase of Certificates shall be effective unless the purchaser(s) shall
certify to the Trustee that contemporaneously with such purchase, such
purchaser(s) is purchasing, pursuant to the terms of this Agreement and the
Other Pass Through Trust Agreements, the Certificates and the Class B
Certificates which are senior to the



<PAGE>   56

                                                                              48


securities held by such purchaser(s).  Each payment of the purchase price of
the Certificates referred to in the first sentence hereof shall be made to an
account or accounts designated by the Trustee and each such purchase shall be
subject to the terms of this Section 6.01(b).  Each Certificateholder agrees by
its acceptance of its Certificate that it will, subject to Section 3.04 hereof,
upon payment from such Class B Certificateholder(s) or Class C
Certificateholder(s), as the case may be, of the purchase price set forth in
the first sentence of this paragraph, forthwith sell, assign, transfer and
convey to the purchaser(s) thereof (without recourse, representation or
warranty of any kind except for its own acts), all of the right, title,
interest and obligation of such Certificateholder in this Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Financing Documents and all Certificates and Escrow Receipts held
by such Certificateholder (excluding all right, title and interest under any of
the foregoing to the extent such right, title or interest is with respect to an
obligation not then due and payable as respects any action or inaction or state
of affairs occurring prior to such sale) and the purchaser shall assume all of
such Certificateholder's obligations under this Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Financing Documents and all such Certificates and Escrow
Receipts.  The Certificates will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the
Certificateholders to deliver any Certificates (whether in the form of
Definitive Certificates or beneficial interests in Global Certificates) and,
upon such a purchase, (i) the only rights of the Certificateholders will be to
deliver the Certificates to the purchaser(s) and receive the purchase price for
such Certificates and (ii) if the purchaser(s) shall so request, such
Certificateholder will comply with all the provisions of Section 3.04 hereof to
enable new Certificates to be issued to the purchaser in such denominations as
it shall request.  All charges and expenses in connection with the issuance of
any such new Certificates shall be borne by the purchaser thereof.

     As used in this Section 6.01(b), the terms "Certificateholder", "Class",
"Class B Certificate", "Class B Certificateholder", "Class B Trust", "Class B
Trustee",

     "Class C-I Certificate", "Class C-II Certificate", "Class C-I Trust" and
"Class C-II Trust", shall have the



<PAGE>   57

                                                                              49


respective meanings assigned to such terms in the Intercreditor Agreement.

     Section 6.02. Incidents of Sale of Equipment Notes.  Upon any sale of all
or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:

     (1) Certificateholders and Trustee May Purchase Equipment Notes. Any
  Certificateholder, the Trustee in its individual or any other capacity or any
  other Person may bid for and purchase any of the Equipment Notes, and upon
  compliance with the terms of sale, may hold, retain, possess and dispose of
  such Equipment Notes in their own absolute right without further
  accountability.

     (2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the
  Trustee making such sale shall be a sufficient discharge to any purchaser for
  his purchase money, and, after paying such purchase money and receiving such
  receipt, such purchaser or its personal representative or assigns shall not
  be obliged to see to the application of such purchase money, or be in any way
  answerable for any loss, misapplication or non-application thereof.

     (3) Application of Moneys Received upon Sale. Any moneys collected by the
  Trustee upon any sale made either under the power of sale given by this
  Agreement or otherwise for the enforcement of this Agreement shall be applied
  as provided in Section 4.02.

     Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May
Bring Suit.  If there shall be a failure to make payment of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure to pay principal of, premium, if any, or
interest on any Equipment Note or to pay Rent under any Lease in accordance
with the applicable Indenture), shall be entitled and



<PAGE>   58

                                                                              50


empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.

     Section 6.04. Control by Certificateholders.  Subject to Section 6.03 and
the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee with
respect to the Trust or pursuant to the terms of the Intercreditor Agreement,
or exercising any trust or power conferred on the Trustee under this Agreement
or the Intercreditor Agreement, including any right of the Trustee as
Controlling Party under the Intercreditor Agreement or as holder of the
Equipment Notes, provided that

     (1) such Direction shall not be in conflict with any rule of law or with
  this Agreement and would not involve the Trustee in personal liability or
  expense,

     (2) the Trustee shall not determine that the action so directed would be
  unjustly prejudicial to the Certificateholders not taking part in such
  Direction, and

     (3) the Trustee may take any other action deemed proper by the Trustee
  which is not inconsistent with such Direction.

     Section 6.05. Waiver of Past Defaults.  Subject to the Intercreditor
Agreement, the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust (i) may on behalf of all of the Certificateholders waive any past Event
of Default hereunder and its consequences or (ii) if the Trustee is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default under any Indenture and its
consequences, and thereby annul any Direction given by such Certificateholders
or the Trustee to such Loan Trustee with respect thereto, except a default:



<PAGE>   59

                                                                              51


     (1) in the deposit of any Scheduled Payment or Special Payment under
  Section 4.01 or in the distribution of any payment under Section 4.02 on the
  Certificates, or

     (2) in the payment of the principal of (premium, if any) or interest on
  the Equipment Notes, or

     (3) in respect of a covenant or provision hereof which under Article IX
  cannot be modified or amended without the consent of each Certificateholder
  holding an Outstanding Certificate affected thereby.

     Upon any such waiver, such default shall cease to exist with respect to
the Certificates and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose and any direction given by the Trustee on
behalf of the Certificateholders to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.  Upon
any such waiver, the Trustee shall vote the Equipment Notes issued under the
relevant Indenture to waive the corresponding Indenture Default.

     Section 6.06. Right of Certificateholders to Receive Payments Not to Be
Impaired.  Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of
such Certificateholder.

     Section 6.07. Certificateholders May Not Bring Suit Except Under Certain
Conditions.  A Certificateholder shall not have the right to institute any
suit, action or proceeding at law or in equity or otherwise with respect to
this Agreement, for the appointment of a receiver or for the enforcement of any
other remedy under this Agreement, unless:

     (1) such Certificateholder previously shall have given written notice to
  the Trustee of a continuing Event of Default;



<PAGE>   60

                                                                              52


     (2) Certificateholders holding Certificates evidencing Fractional
  Undivided Interests aggregating not less than 25% of the Trust shall have
  requested the Trustee in writing to institute such action, suit or proceeding
  and shall have offered to the Trustee indemnity as provided in Section
  7.03(e);

     (3) the Trustee shall have refused or neglected to institute such an
  action, suit or proceeding for 60 days after receipt of such notice, request
  and offer of indemnity; and

     (4) no direction inconsistent with such written request shall have been
  given to the Trustee during such 60-day period by Certificateholders holding
  Certificates evidencing Fractional Undivided Interests aggregating not less
  than a majority in interest in the Trust.

     It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on
any property subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all the Certificateholders subject to
the provisions of this Agreement.

     Section 6.08. Remedies Cumulative.  Every remedy given hereunder to the
Trustee or to any of the Certificateholders shall not be exclusive of any other
remedy or remedies, and every such remedy shall be cumulative and in addition
to every other remedy given hereunder or now or hereafter given by statute,
law, equity or otherwise.

                                  ARTICLE VII

                                  THE TRUSTEE

     Section 7.01. Certain Duties and Responsibilities.  (a)  Except during the
continuance of an Event of Default, the Trustee undertakes to perform such
duties as are specifically set



<PAGE>   61

                                                                              53


forth in this Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Trustee.

     (b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.

     (c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that

     (1) this Subsection shall not be construed to limit the effect of
  Subsection (a) of this Section; and

     (2) the Trustee shall not be liable for any error of judgment made in good
  faith by a Responsible Officer of the Trustee, unless it shall be proved that
  the Trustee was negligent in ascertaining the pertinent facts.

     (d) Whether or not herein expressly so provided, every provision of this
Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.

     Section 7.02. Notice of Defaults.  As promptly as practicable after, and
in any event within 90 days after, the occurrence of any default (as such term
is defined below) hereunder, the Trustee shall transmit by mail to the Company,
the Owner Trustees, the Owner Participants, the Loan Trustees and the
Certificateholders in accordance with Section 313(c) of the Trust Indenture
Act, notice of such default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except in the case of
a default on the payment of the principal, premium, if any, or interest on any
Equipment Note held in the Trust, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee
or a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Certificateholders.  For the purpose of this Section, the term "default"
means any event that is, or after notice or lapse of time or both would become,
an Event of Default.



<PAGE>   62

                                                                              54


     Section 7.03. Certain Rights of Trustee.  Subject to the provisions of
Section 315 of the Trust Indenture Act:

     (a) the Trustee may rely and shall be protected in acting or refraining
from acting in reliance upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;

     (b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a written description of the subject matter thereof
accompanied by an Officer's Certificate and an Opinion of Counsel as provided
in Section 1.02 of this Agreement;

     (c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate of the Company, any Owner Trustee or
any Loan Trustee;

     (d) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;

     (e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the Direction of any of the
Certificateholders pursuant to this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity against the
cost, expenses and liabilities which might be incurred by it in compliance with
such Direction;

     (f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document;

     (g) the Trustee may execute any of the trusts or powers under this
Agreement or perform any duties under this



<PAGE>   63

                                                                              55


Agreement either directly or by or through agents or attorneys, and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it under this Agreement;

     (h) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the Direction of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement; and

     (i) the Trustee shall not be required to expend or risk its own funds in
the performance of any of its duties under this Agreement, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
is not reasonably assured to it.

     Section 7.04. Not Responsible for Recitals or Issuance of Certificates.
The recitals contained herein and in the Certificates, except the certificates
of authentication, shall not be taken as the statements of the Trustee, and the
Trustee assumes no responsibility for their correctness.  Subject to Section
7.15, the Trustee makes no representations as to the validity or sufficiency of
this Agreement, any Equipment Notes, the Intercreditor Agreement, the Deposit
Agreement, the Escrow Agreement, the Certificates or any other Financing
Document, except that the Trustee hereby represents and warrants that this
Agreement has been, and the Intercreditor Agreement, the Registration Rights
Agreement, the Note Purchase Agreement, the Escrow Agreement and each
Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.

     Section 7.05. May Hold Certificates.  The Trustee, any Paying Agent,
Registrar or any of their Affiliates or any other agent in their respective
individual or any other capacity may become the owner or pledgee of
Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture
Act, if applicable, may otherwise deal with the Company, the Owner



<PAGE>   64

                                                                              56


Trustees or the Loan Trustees with the same rights it would have if it were not
Trustee, Paying Agent, Registrar or such other agent.

     Section 7.06. Money Held in Trust.  Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.

     Section 7.07. Compensation and Reimbursement.  The Company agrees:

     (1) to pay, or cause to be paid, to the Trustee from time to time
  reasonable compensation for all services rendered by it hereunder (which
  compensation shall not be limited by any provision of law in regard to the
  compensation of a trustee of an express trust);

     (2) except as otherwise expressly provided herein, to reimburse, or cause
  to be reimbursed, the Trustee upon its request for all reasonable
  out-of-pocket expenses, disbursements and advances incurred or made by the
  Trustee in accordance with any provision of this Agreement (including the
  reasonable compensation and the expenses and disbursements of its agents and
  counsel), except any such expense, disbursement or advance as may be
  attributable to its negligence, willful misconduct or bad faith or as may be
  incurred due to the Trustee's breach of its representations and warranties
  set forth in Section 7.15; and

     (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold
  it harmless against, any loss, liability or expense (other than for or with
  respect to any tax) incurred without negligence, willful misconduct or bad
  faith, on its part, arising out of or in connection with the acceptance or
  administration of this Trust, including the costs and expenses of defending
  itself against any claim or liability in connection with the exercise or
  performance of any of its powers or duties hereunder, except for any such
  loss, liability or expense incurred by reason of the Trustee's breach of its
  representations and warranties set forth in Section 7.15; provided, however,
  that the foregoing paragraph (3) shall cease to have any further force or



<PAGE>   65

                                                                              57


  effect upon the execution and delivery by the Trustee of any Participation
  Agreement.

     With respect to paragraph (3) above, the Trustee shall notify the Company
promptly of any claim for which it may seek indemnity.  The Company shall
defend the claim and the Trustee shall cooperate in the defense.  The Trustee
may have separate counsel with the consent of the Company and the Company will
pay the reasonable fees and expenses of such counsel.  The Company need not pay
for any settlement made, in settlement or otherwise, without its consent.

     The Trustee shall be entitled to reimbursement from, and shall have a lien
prior to the Certificates upon, the Trust Property for any tax incurred without
negligence, bad faith or willful misconduct, on its part, arising out of or in
connection with the acceptance or administration of such Trust (other than any
tax attributable to the Trustee's compensation for serving as such), including
any costs and expenses incurred in contesting the imposition of any such tax.
If the Trustee reimburses itself from the Trust Property of such Trust for any
such tax, it will mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names and addresses
appear in the Register.

     Section 7.08. Corporate Trustee Required; Eligibility.  There shall at all
times be a Trustee hereunder which shall be eligible to act as a trustee under
Section 310(a) of the Trust Indenture Act and shall have a combined capital and
surplus of at least $75,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully and unconditionally guaranteed by a corporation organized
and doing business under the laws of the United States, any state or territory
thereof or of the District of Columbia and having a combined capital and
surplus of at least $75,000,000).  If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of
federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section 7.08, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published.



<PAGE>   66

                                                                              58


     In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 7.08 to act as Trustee, the Trustee shall
resign immediately as Trustee in the manner and with the effect specified in
Section 7.09.

     Section 7.09. Resignation and Removal; Appointment of Successor.  (a)  No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.

     (b) The Trustee may resign at any time as trustee by giving prior written
notice thereof to the Company, the Authorized Agents, the Owner Trustees and
the Loan Trustees.  If an instrument of acceptance by a successor Trustee shall
not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan Trustees and the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

     (c) The Trustee may be removed at any time by Direction of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee and to the Company, the Owner Trustees and the Loan
Trustees.

     (d) If at any time:

     (1) the Trustee shall fail to comply with Section 310 of the Trust
  Indenture Act, if applicable, after written request therefor by the Company
  or by any Certificateholder who has been a bona fide Certificateholder for at
  least six months; or

     (2) the Trustee shall cease to be eligible under Section 7.08 and shall
  fail to resign after written request therefor by the Company or by any such
  Certificateholder; or

     (3) the Trustee shall become incapable of acting or shall be adjudged a
  bankrupt or insolvent or a receiver of the Trustee or of its property shall
  be appointed or any public officer shall take charge or control of the
  Trustee or of its property or affairs for the purpose of rehabilitation,
  conservation or liquidation;



<PAGE>   67

                                                                              59


then, in any case, (i) the Company may, with the consent of the Owner
Participants, which consent may not be unreasonably withheld, remove the
Trustee or (ii) any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

     (e) If a Responsible Officer of the Trustee shall obtain actual knowledge
of an Avoidable Tax which has been or is likely to be asserted, the Trustee
shall promptly notify the Company and shall, within 30 days of such
notification, resign hereunder unless within such 30-day period the Trustee
shall have received notice that the Company has agreed to pay such tax.  The
Company shall promptly appoint a successor Trustee in a jurisdiction where
there are no Avoidable Taxes.

     (f) If the Trustee shall resign, be removed or become incapable of acting
or if a vacancy shall occur in the office of the Trustee for any cause, the
Company shall promptly appoint a successor Trustee.  If, within one year after
such resignation, removal or incapability, or other occurrence of such vacancy,
a successor Trustee shall be appointed by Direction of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust delivered to the Company, the
Owner Trustees, the Loan Trustees and the retiring Trustee, and the Company
approves such appointment, which approval shall not be unreasonably withheld,
then the successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment, become the successor Trustee and supersede the successor
Trustee appointed as provided above.  If no successor Trustee shall have been
so appointed as provided above and accepted appointment in the manner
hereinafter provided, any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.

     (g) The successor Trustee shall give notice of the resignation and removal
of the Trustee and appointment of the successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the
Certificateholders as their names and addresses appear in the Register.  Each
notice



<PAGE>   68

                                                                              60


shall include the name of such successor Trustee and the address of its
Corporate Trust Office.

     Section 7.10. Acceptance of Appointment by Successor.  Every successor
Trustee appointed hereunder shall execute and deliver to the Company, the
Authorized Agents, the Owner Trustees and the Loan Trustees and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on
request of the Company or the successor Trustee, such retiring Trustee shall
execute and deliver an instrument transferring to such successor Trustee all
such rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all Trust Property held by such
retiring Trustee hereunder, subject nevertheless to its lien, if any, provided
for in Section 7.07. Upon request of any such successor Trustee, the Company,
the retiring Trustee and such successor Trustee shall execute and deliver any
and all instruments containing such provisions as shall be necessary or
desirable to transfer and confirm to, and for more fully and certainly vesting
in, such successor Trustee all such rights, powers and trusts.

     No institution shall accept its appointment as a Trustee hereunder unless
at the time of such acceptance such institution shall be qualified and eligible
under this Article VII.

     Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VII, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.  In case any Certificates shall have
been executed or authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such execution or authentication and deliver
the Certificates so



<PAGE>   69

                                                                              61


executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.

     Section 7.12. Maintenance of Agencies.  (a)  There shall at all times be
maintained an office or agency in the location set forth in Section 12.03 where
Certificates may be presented or surrendered for registration of transfer or
for exchange, and for payment thereof and where notices and demands to or upon
the Trustee in respect of such certificates or this Agreement may be served;
provided, however, that, if it shall be necessary that the Trustee maintain an
office or agency in another location (e.g., the Certificates shall be
represented by Definitive Certificates and shall be listed on a national
securities exchange), the Trustee will make all reasonable efforts to establish
such an office or agency.  Written notice of the location of each such other
office or agency and of any change of location thereof shall be given by the
Trustee to the Company, the Owner Trustees, the Loan Trustees (in the case of
any Owner Trustee or Loan Trustee, at its address specified in the Financing
Documents or such other address as may be notified to the Trustee) and the
Certificateholders.  In the event that no such office or agency shall be
maintained or no such notice of location or of change of location shall be
given, presentations and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.

     (b) There shall at all times be a Registrar and a Paying Agent hereunder
with respect to the Certificates.  Each such Authorized Agent shall be a bank
or trust company, shall be a corporation organized and doing business under the
laws of the United States or any state, with a combined capital and surplus of
at least $75,000,000, or, if the Trustee shall be acting as the Registrar or
Paying Agent hereunder, a corporation having a combined capital and surplus in
excess of $5,000,000, the obligations of which are guaranteed by a corporation
organized and doing business under the laws of the United States or any state,
with a combined capital and surplus of at least $75,000,000, and shall be
authorized under such laws to exercise corporate trust powers, subject to
supervision by Federal or state authorities.  The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates.  Each Registrar shall furnish to the Trustee, at
stated intervals of not more than six months, and at



<PAGE>   70

                                                                              62


such other times as the Trustee may request in writing, a copy of the Register
maintained by such Registrar.

     (c) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authorized Agent, shall be the successor of such Authorized Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authorized Agent or such successor
corporation.

     (d) Any Authorized Agent may at any time resign by giving written notice
of resignation to the Trustee, the Company, the Owner Trustees and the Loan
Trustees.  The Company may, and at the request of the Trustee shall, at any
time terminate the agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Trustee.  Upon the resignation
or termination of an Authorized Agent or in case at any time any such
Authorized Agent shall cease to be eligible under this Section (when, in either
case, no other Authorized Agent performing the functions of such Authorized
Agent shall have been appointed), the Company shall promptly appoint one or
more qualified successor Authorized Agents, reasonably satisfactory to the
Trustee, to perform the functions of the Authorized Agent which has resigned or
whose agency has been terminated or who shall have ceased to be eligible under
this Section.  The Company shall give written notice of any such appointment
made by it to the Trustee, the Owner Trustees and the Loan Trustees; and in
each case the Trustee shall mail notice of such appointment to all
Certificateholders as their names and addresses appear on the Register.

     (e) The Company agrees to pay, or cause to be paid, from time to time to
each Authorized Agent reasonable compensation for its services and to reimburse
it for its reasonable expenses.

     Section 7.13. Money for Certificate Payments to Be Held in Trust.  All
moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited and held in trust for the benefit of the
Certificateholders entitled to such payment, subject to the provisions of this
Section.



<PAGE>   71

                                                                              63


Moneys so deposited and held in trust shall constitute a separate trust fund
for the benefit of the Certificateholders with respect to which such money was
deposited.

     The Trustee may at any time, for the purpose of obtaining the satisfaction
and discharge of this Agreement or for any other purpose, direct any Paying
Agent to pay to the Trustee all sums held in trust by such Paying Agent, such
sums to be held by the Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and, upon such payment by any  Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.

     Section 7.14. Registration of Equipment Notes in Name of Subordination
Agent.  The Trustee agrees that all Equipment Notes to be purchased by the
Trust shall be issued in the name of the Subordination Agent or its nominee and
held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent or its nominee
shall be reflected as the owner of such Equipment Notes in the register of the
issuer of such Equipment Notes.

     Section 7.15. Representations and Warranties of Trustee.  The Trustee
hereby represents and warrants that:

     (a) the Trustee is a Delaware banking corporation organized and validly
existing in good standing under the laws of the State of Delaware;

     (b) the Trustee has full power, authority and legal right to execute,
deliver, and perform this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Financing Documents to which it is a party and has taken all
necessary action to authorize the execution, delivery, and performance by it of
this Agreement, the Intercreditor Agreement, the Registration Rights Agreement,
the Escrow Agreement, the Note Purchase Agreement and the Financing Documents
to which it is a party;

     (c) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Note Purchase Agreement and the Financing Documents to
which it is a party (i) will not violate any provision of United States federal
law or the law of the state of the United States where it is



<PAGE>   72

                                                                              64


located governing the banking and trust powers of the Trustee or any order,
writ, judgment, or decree of any court, arbitrator or governmental authority
applicable to the Trustee or any of its assets, (ii) will not violate any
provision of the articles of association or by-laws of the Trustee, or (iii)
will not violate any provision of, or constitute, with or without notice or
lapse of time, a default under, or result in the creation or imposition of any
lien on any properties included in the Trust Property pursuant to the
provisions of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability to
perform its duties hereunder or thereunder or on the transactions contemplated
herein or therein;

     (d) the execution, delivery and performance by the Trustee of this
Agreement, the Intercreditor Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Note Purchase Agreement, and the Financing Documents to
which it is a party will not require the authorization, consent, or approval
of, the giving of notice to, the filing or registration with, or the taking of
any other action in respect of, any governmental authority or agency of the
United States or the state of the United States where it is located regulating
the banking and corporate trust activities of the Trustee; and

     (e) this Agreement, the Intercreditor Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Note Purchase Agreement, and the Financing
Documents to which it is a party have been duly executed and delivered by the
Trustee and constitute the legal, valid, and binding agreements of the Trustee,
enforceable against it in accordance with their respective terms, provided that
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and (ii) general principles of equity.

     Section 7.16. Withholding Taxes, Information Reporting.  The Trustee, as
trustee of the grantor trust created by this Agreement, shall exclude and
withhold from each distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates any and all
withholding taxes applicable thereto as required by law.  In addition, the
Trustee shall remit such amounts as would be required by section 1446 of the
Internal Revenue Code of 1986,



<PAGE>   73

                                                                              65


as amended, if the Trust were characterized as a partnership engaged in a U.S.
trade or business for U.S. federal income tax purposes and shall withhold such
amounts from amounts distributable to or for the benefit of Certificateholders
or Investors that are not United States persons within the meaning of section
7701(a)(30) of the Internal Revenue Code of 1986, as amended.  In this regard,
the Trustee shall cause the appropriate withholding agent to withhold with
respect to such distributions in the manner contemplated by Section 10.04 of
Revenue Procedure 89-31 and Treasury Regulation 1.1445-8(b)(3)) by filing a
notice with the National Association of Securities Dealers, Inc. substantially
in the form of Exhibit E hereto on or before the date 10 days prior to the
Record Date.  The Trustee shall mail such notice to the National Association of
Securities Dealers no later than the date than 15 days prior to the Record
Date.  Investors that are not United States Persons agree to furnish a United
States taxpayer identification number ("TIN") to the Trustee and the Trustee
shall provide such TINs to the appropriate withholding agent.  The Trustee
agrees to act as such withholding agent (except to the extent contemplated
above with respect to withholding amounts as if the Trust were characterized as
a partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes) and, in connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any amounts payable
in respect of the Certificates, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the
Certificateholders, that it will file any necessary withholding tax returns or
statements when due, and that, as promptly as possible after the payment
thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from
time to time.  The Trustee agrees to file any other information reports as it
may be required to file under United States law.  Each Certificateholder or
Investor that is not a United States person within the meaning of section
7701(a)(30) of the Internal Revenue Code, as amended, by its acceptance of a
Certificate or a beneficial interest therein, agrees to indemnify and hold
harmless the Trust and the Trustee from and against any improper failure to
withhold taxes from amounts payable to it or for its benefit, other than an
improper failure attributable to the gross negligence or willful misconduct of
the Trustee.



<PAGE>   74

                                                                              66


     Section 7.17. Trustee's Liens.  The Trustee in its individual capacity
agrees that it will at its own cost and expense promptly take any action as may
be necessary to duly discharge and satisfy in full any mortgage, pledge, lien,
charge, encumbrance, security interest or claim ("Trustee's Liens") on or with
respect to the Trust Property which is attributable to the Trustee either (i)
in its individual capacity and which is unrelated to the transactions
contemplated by this Agreement, the Intercreditor Agreement, the Note Purchase
Agreement or the Financing Documents, or (ii) as Trustee hereunder or in its
individual capacity and which arises out of acts or omissions which are not
contemplated by this Agreement.

     Section 7.18. Preferential Collection of Claims.  The Trustee shall comply
with Section 311(a) of the Trust Indenture Act, excluding any creditor
relationship listed in Section 311(b) of the Trust Indenture Act.  If the
Trustee shall resign or be removed as Trustee, it shall be subject to Section
311(a) of the Trust Indenture Act to the extent provided therein.

                                  ARTICLE VIII

                CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE

     Section 8.01. The Company to Furnish Trustee with Names and Addresses of
Certificateholders.  The Company will furnish to the Trustee within 15 days
after each Record Date with respect to a Scheduled Payment, and at such other
times as the Trustee may request in writing within 30 days after receipt by the
Company of any such request, a list, in such form as the Trustee may reasonably
require, of all information in the possession or control of the Company as to
the names and addresses of the Certificateholders, in each case as of a date
not more than 15 days prior to the time such list is furnished; provided,
however, that so long as the Trustee is the sole Registrar, no such list need
be furnished; and provided further, however, that no such list need be
furnished for so long as a copy of the Register is being furnished to the
Trustee pursuant to Section 7.12.

     Section 8.02. Preservation of Information; Communications to
Certificateholders.  The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders contained
in the most recent list furnished to the Trustee as provided in Section 7.12



<PAGE>   75

                                                                              67


or Section 8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as Registrar, if so
acting.  The Trustee may destroy any list furnished to it as provided in
Section 7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.

     Section 8.03. Reports by Trustee.  Within 60 days after May 15 of each
year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, as provided
in Section 313(c) of the Trust Indenture Act, a brief report dated as of such
May 15, if required by Section 313(a) of the Trust Indenture Act.

     Section 8.04. Reports by the Company.  The Company shall:

     (a) file with the Trustee, within 30 days after the Company is required to
file the same with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may from time to time by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended;
or, if the Company is not required to file information, documents or reports
pursuant to either of such sections, then to file with the Trustee and the SEC,
in accordance with rules and regulations prescribed by the SEC, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations;

     (b) during any period, prior to the consummation of the Exchange Offer and
during which the Shelf Registration Statement is not in effect, in which the
Company is not subject to Section 13(a), 13(c) or 15(d) under the Securities
Exchange Act of 1934, make available to any Holder of the Certificates in
connection with any sale thereof and any prospective purchaser of the
Certificates from such Holder, in each case upon request, the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the
Securities Act but only for so long as any of the Certificates remain
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the



<PAGE>   76

                                                                              68


Securities Act and, in any event, only until the second anniversary of the
Issuance Date;

     (c) file with the Trustee and the SEC, in accordance with the rules and
regulations prescribed by the SEC, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Agreement, as may be required by such rules and
regulations, including, in the case of annual reports, if required by such
rules and regulations, certificates or opinions of independent public
accountants, conforming to the requirements of Section 1.02;

     (d) transmit to all Certificateholders, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act such summaries of any
information, documents and reports required to be filed by the Company pursuant
to subsections (a) and (c) of this Section 8.04 as may be required by rules and
regulations prescribed by the SEC; and

     (e) furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial officer
or principal accounting officer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Agreement (it being
understood that for purposes of this paragraph (e), such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Agreement).

                                   ARTICLE IX

                            SUPPLEMENTAL AGREEMENTS

     Section 9.01. Supplemental Agreements Without Consent of
Certificateholders.  Without the consent of the Certificateholders, the Company
may (but will not be required to), and the Trustee (subject to Section 9.03)
shall, at the Company's request, at any time and from time to time, enter into
one or more agreements supplemental hereto or, if applicable, to the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Deposit Agreement, the Registration Rights Agreement or any Liquidity Facility
in form satisfactory to the Trustee, for any of the following purposes:



<PAGE>   77

                                                                              69


     (1) to evidence the succession of another corporation to the Company and
  the assumption by any such successor of the covenants of the Company herein
  contained or of the Company's obligations under the Note Purchase Agreement,
  the Registration Rights Agreement or any Liquidity Facility; or

     (2) to add to the covenants of the Company for the benefit of the
  Certificateholders, or to surrender any right or power conferred upon the
  Company in this Agreement, the Note Purchase Agreement, the Registration
  Rights Agreement or any Liquidity Facility; or

     (3) to correct or supplement any provision in this Agreement, the
  Intercreditor Agreement, the Escrow Agreement, the Deposit Agreement, the
  Note Purchase Agreement, the Registration Rights Agreement or any Liquidity
  Facility which may be defective or inconsistent with any other provision
  herein or therein or to cure any ambiguity or correct any mistake or to
  modify any other provision with respect to matters or questions arising under
  this Agreement, the Escrow Agreement, the Deposit Agreement, the Note
  Purchase Agreement, the Intercreditor Agreement, the Registration Rights
  Agreement or any Liquidity Facility, provided that any such action shall not
  materially adversely affect the interests of the Certificateholders; or

     (4) to comply with any requirement of the SEC, any applicable law, rules
  or regulations of any exchange or quotation system on which the Certificates
  are listed, any regulatory body or the Registration Rights Agreement to
  effectuate the Exchange Offer; or

     (5) to modify, eliminate or add to the provisions of this Agreement to
  such extent as shall be necessary to continue the qualification of this
  Agreement (including any supplemental agreement) under the Trust Indenture
  Act or under any similar Federal statute hereafter enacted, and to add to
  this Agreement such other provisions as may be expressly permitted by the
  Trust Indenture Act, excluding, however, the provisions referred to in
  Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of
  which this instrument was executed or any corresponding provision in any
  similar Federal statute hereafter enacted; or



<PAGE>   78

                                                                              70


     (6) to evidence and provide for the acceptance of appointment under this
  Agreement by the Trustee of a successor Trustee and to add to or change any
  of the provisions of this Agreement as shall be necessary to provide for or
  facilitate the administration of the Trust, pursuant to the requirements of
  Section 7.10; or

     (7) to provide the information required under Section 7.12 and Section
  12.03 as to the Trustee; or

     (8) to modify or eliminate provisions relating to the transfer or exchange
  of Exchange Certificates or the Initial Certificates upon consummation of the
  Exchange Offer (as defined in the Registration Rights Agreement) or
  effectiveness of the Shelf Registration Statement or the Exchange Offer
  Registration Statement;

provided, however, that no such supplemental agreement shall adversely affect
the status of any Trust as a grantor trust under Subpart E, Part I of
Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986,
as amended, for U.S. federal income tax purposes.

     Section 9.02. Supplemental Agreements with Consent of Certificateholders.
With the consent of the Certificateholders holding Certificates (including
consents obtained in connection with a tender offer or exchange offer for the
Certificates) evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust, by Direction of said
Certificateholders delivered to the Company and the Trustee, the Company may
(with the consent of the Owner Trustees, if any, which consent shall not be
unreasonably withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement or agreements for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
the Intercreditor Agreement, any Liquidity Facility, the Registration Rights
Agreement, the Escrow Agreement, the Deposit Agreement or the Note Purchase
Agreement to the extent applicable to such Certificateholders or of modifying
in any manner the rights and obligations of such Certificateholders under this
Agreement, the Intercreditor Agreement, any Liquidity Facility, the
Registration Rights Agreement, the Escrow Agreement, the Deposit Agreement or
the Note Purchase Agreement to the extent applicable to such Certificateholders
or of modifying in any manner the rights and



<PAGE>   79

                                                                              71


obligations of such Certificateholders under this Agreement, the Intercreditor
Agreement, any Liquidity Facility, the Registration Rights Agreement, the
Escrow Agreement, the Deposit Agreement or the Note Purchase Agreement;
provided, however, that no such agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected thereby:

     (1) reduce in any manner the amount of, or delay the timing of, any
  receipt by the Trustee (or, with respect to the Deposits, the
  Certificateholders) of payments on the Equipment Notes held in the Trust or
  on the Deposits or distributions that are required to be made herein on any
  Certificate, or change any date of payment on any Certificate, or change the
  place of payment where, or the coin or currency in which, any Certificate is
  payable, or impair the right to institute suit for the enforcement of any
  such payment or distribution on or after the Regular Distribution Date or
  Special Distribution Date applicable thereto; or

     (2) permit the disposition of any Equipment Note included in the Trust
  Property except as permitted by this Agreement, or otherwise deprive such
  Certificateholder of the benefit of the ownership of the Equipment Notes in
  the Trust; or

     (3) reduce the specified percentage of the aggregate Fractional Undivided
  Interests of the Trust which is required for any such supplemental agreement,
  or reduce such specified percentage required for any waiver of compliance
  with certain provisions of this Agreement or certain defaults hereunder and
  their consequences provided for in this Agreement; or

     (4) waive, amend or modify Section 2.4, 3.2 or 3.3 of the Intercreditor
  Agreement in a manner adverse to the Certificateholders; or

     (5) modify any of the provisions of this Section 9.02 or Section 6.05,
  except to increase any such percentage or to provide that certain other
  provisions of this Agreement cannot be modified or waived without the consent
  of the Certificateholder of each Certificate affected thereby; or

     (6) adversely affect the status of any Trust as a grantor trust under
  Subpart E, Part I of Subchapter J of



<PAGE>   80

                                                                              72


  Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended,
  for U.S. federal income tax purposes.

     It shall not be necessary for any Direction of Certificateholders under
this Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Direction shall approve the
substance thereof.

     Section 9.03. Documents Affecting Immunity or Indemnity.  If in the
opinion of the Trustee any document required to be executed by it pursuant to
the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity
or indemnity in favor of the Trustee under this Agreement, the Trustee may in
its discretion decline to execute such document.

     Section 9.04. Execution of Supplemental Agreements.  In executing, or
accepting the additional trusts created by, any agreement permitted by this
Article or the modifications thereby of the trusts created by this Agreement,
the Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this Agreement.

     Section 9.05. Effect of Supplemental Agreements.  Upon the execution of
any agreement supplemental to this Agreement under this Article, this Agreement
shall be modified in accordance therewith, and such supplemental agreement
shall form a part of this Agreement for all purposes; and every Holder of a
Certificate theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

     Section 9.06. Conformity with Trust Indenture Act.  Every supplemental
agreement executed pursuant to this Article shall conform to the requirements
of the Trust Indenture Act as then in effect.

     Section 9.07. Reference in Certificates to Supplemental Agreements.
Certificates authenticated and delivered after the execution of any
supplemental agreement pursuant to this Article may bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
agreement; and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.



<PAGE>   81

                                                                              73


                                   ARTICLE X

                AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS

     Section 10.01. Amendments and Supplements to Indentures and Financing
Documents.  In the event that the Trustee, as holder (or beneficial owner
through the Subordination Agent) of any Equipment Note in trust for the benefit
of the Certificateholders or as Controlling Party under the Intercreditor
Agreement, receives (directly or indirectly through the Subordination Agent) a
request for a consent to any amendment, modification, waiver or supplement
under any Indenture, any other Financing Document, any Equipment Note or any
other related document, the Trustee shall forthwith send a notice of such
proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice.
The Trustee shall request from the Certificateholders a Direction as to (a)
whether or not to take or refrain from taking (or direct the Subordination
Agent to take or refrain from taking) any action which a holder of such
Equipment Note has the option to direct, (b) whether or not to give or execute
(or direct the Subordination Agent to give or execute) any waivers, consents,
amendments, modifications or supplements as a holder of such Equipment Note or
a Controlling Party and (c) how to vote (or direct the Subordination Agent to
vote) any Equipment Note if a vote has been called for with respect thereto.
Provided such a request for Certificateholder Direction shall have been made,
in directing any action or casting any vote or giving any consent as the holder
of any Equipment Note (or in directing the Subordination Agent in any of the
foregoing), (i) other than as Controlling Party, the Trustee shall vote for or
give consent to any such action with respect to such Equipment Note in the same
proportion as that of (A) the aggregate face amounts of all Certificates
actually voted in favor of or for giving consent to such action by such
Direction of Certificateholders to (B) the aggregate face amount of all
Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote
as directed in such Certificateholder Direction by the Certificateholders
evidencing a Fractional Undivided Interest aggregating not less than a majority
in interest in the Trust.  For purposes of the immediately preceding sentence,
a Certificate shall have been "actually voted" if the Holder of such
Certificate has delivered to the Trustee an instrument evidencing such Holder's
consent to such Direction prior to two Business Days before the Trustee directs
such action



<PAGE>   82

                                                                              74


or casts such vote or gives such consent.  Notwithstanding the foregoing, but
subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in
its own discretion and at its own direction, consent and notify the relevant
Loan Trustee of such consent (or direct the Subordination Agent to consent and
notify the Loan Trustee of such consent) to any amendment, modification, waiver
or supplement under the relevant Indenture, any other Financing Document, any
Equipment Note or any other related document, if an Event of Default hereunder
shall have occurred and be continuing, or if such amendment, modification,
waiver or supplement will not materially adversely affect the interests of the
Certificateholders.

                                   ARTICLE XI

                              TERMINATION OF TRUST

     Section 11.01. Termination of the Trust.  The respective obligations and
responsibilities of the Company and the Trustee with respect to the Trust shall
terminate upon the earlier of (A) the completion of the assignment, transfer
and discharge described in the first sentence of the immediately following
paragraph and (B) distribution to all Holders of Certificates and the Trustee
of all amounts required to be distributed to them pursuant to this Agreement
and the disposition of all property held as part of the Trust Property;
provided, however, that in no event shall the Trust continue beyond one hundred
ten (110) years following the date of the earliest execution of this Trust
Agreement.

     Upon the earlier of (i) the first Business Day following March 31, 1998,
or, if later, the fifth Business Day following the Delivery Period Termination
Date and (ii) the fifth Business Day following the date on which a Triggering
Event occurs (such date, the "Transfer Date"), or, if later the date on which
all of the conditions set forth in the immediately following sentence have been
satisfied, the Trustee is hereby directed (subject only to the immediately
following sentence) to, and the Company shall direct the institution that will
serve as the Related Trustee under the Related Pass Through Trust Agreement to,
execute and deliver the Assignment and Assumption Agreement, pursuant to which
the Trustee shall assign, transfer and deliver all of the Trustee's right,
title and interest to the Trust Property to the Related Trustee under the
Related Pass Through Trust Agreement.  The Trustee and the Related Trustee



<PAGE>   83

                                                                              75


shall execute and deliver the Assignment and Assumption Agreement upon the
satisfaction of the following conditions:

           (i) The Trustee, the Related Trustee and each of the Rating Agencies
      then rating the Certificates shall have received an Officer's Certificate
      and an Opinion of Counsel dated the date of the Assignment and Assumption
      Agreement and each satisfying the requirements of Section 1.02, which
      Opinion of Counsel shall be substantially to the effect set forth below
      and may be relied upon by the Beneficiaries (as defined in the Assignment
      and Assumption Agreement):

            (a)  upon the execution and delivery thereof by the
                 parties thereto in accordance with the terms of this Agreement
                 and the Related Pass Through Trust Agreement, the Assignment
                 and Assumption Agreement will constitute the valid and binding
                 obligation of each of the parties thereto enforceable against
                 each such party in accordance with its terms;

            (b)  upon the execution and delivery of the Assignment
                 and Assumption Agreement in accordance with the terms of this
                 Agreement and the Related Pass Through Trust Agreement, each
                 of the Certificates then Outstanding will be entitled to the
                 benefits of the Related Pass Through Trust Agreement;

            (c)  the Related Trust is not required to be
                 registered as an investment company under the Investment
                 Company Act of 1940, as amended;

            (d)  the Related Pass Through Trust Agreement
                 constitutes the valid and binding obligation of the Company
                 enforceable against the Company in accordance with its terms;
                 and

            (e)  neither the execution and delivery of the
                 Assignment and Assumption Agreement in accordance with the
                 terms of this Agreement and the Related Pass Through Trust
                 Agreement, nor the consummation by the parties thereto of the
                 transactions contemplated to be consummated thereunder on the
                 date thereof, will violate any law or governmental rule or
                 regulation of the State of New York or the United States of
                 America known to such counsel to



<PAGE>   84

                                                                              76


                  be applicable to the transactions contemplated by the
                  Assignment and Assumption Agreement.

           (ii) The Trustee and the Company shall have received (x) a copy of
      the articles of incorporation and bylaws of the Related Trustee certified
      as of the Transfer Date by the Secretary or Assistant Secretary of such
      institution and (y) a copy of the filing (including all attachments
      thereto) made by the institution serving as the Related Trustee with the
      Office of the Superintendent, State of New York Banking Department for
      the qualification of the Related Trustee under Section 131(3) of the New
      York Banking Law.

Upon the execution of the Assignment and Assumption Agreement by the parties
thereto, the Trust shall be terminated, the Certificateholders shall receive
beneficial interests in the Related Trust in exchange for their interests in
the Trust equal to their respective beneficial interests in the Trust, and the
Outstanding Certificates representing Fractional Undivided Interests in the
Trust shall be deemed for all purposes of this Agreement and the Related Pass
Through Trust Agreement, without further signature or action of any party or
Certificateholder, to be certificates representing the same fractional
undivided interests in the Related Trust and its trust property.  By acceptance
of its Certificate, each Certificateholder consents to such assignment,
transfer and delivery of the Trust Property to the trustee of the Related Trust
upon the execution and delivery of the Assignment and Assumption Agreement.

     In connection with the occurrence of the event set forth in clause (B)
above, notice of such termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be mailed promptly by
the Trustee to Certificateholders not earlier than the 60th day and not later
than the 20th day next preceding such final Distribution Date specifying (A)
the Distribution Date upon which the proposed final payment of the Certificates
will be made upon presentation and surrender of Certificates at the office or
agency of the Trustee therein specified, (B) the amount of any such proposed
final payment, and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office or agency of the Trustee
therein specified.  The Trustee shall give such notice to the Registrar



<PAGE>   85

                                                                              77


at the time such notice is given to Certificateholders.  Upon presentation and
surrender of the Certificates in accordance with such notice, the Trustee shall
cause to be distributed to Certificateholders such final payments.

     In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto.  No
additional interest shall accrue on the Certificates after the Distribution
Date specified in the first written notice.  In the event that any money held
by the Trustee for the payment of distributions on the Certificates shall
remain unclaimed for two years (or such lesser time as the Trustee shall be
satisfied, after sixty days' notice from the Company, is one month prior to the
escheat period provided under applicable law) after the final distribution date
with respect thereto, the Trustee shall pay to each Loan Trustee the
appropriate amount of money relating to such Loan Trustee and shall give
written notice thereof to the related Owner Trustees, the Owner Participants
and the Company.

                                  ARTICLE XII

                            MISCELLANEOUS PROVISIONS

     Section 12.01. Limitation on Rights of Certificateholders.  The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations, and liabilities of the
parties hereto or any of them.

     Section 12.02. Certificates Nonassessable and Fully Paid.  Except as set
forth in the last sentence of this Section 12.02, Certificateholders shall not
be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant



<PAGE>   86

                                                                              78


to Section 3.03, are and shall be deemed fully paid.  No Certificateholder
shall have any right (except as expressly provided herein) to vote or in any
manner otherwise control the operation and management of the Trust Property,
the Trust, or the obligations of the parties hereto, nor shall anything set
forth herein, or contained in the terms of the Certificates, be construed so as
to constitute the Certificateholders from time to time as partners or members
of an association.  Neither the existence of the Trust nor any provision herein
is intended to or shall limit the liability the Certificateholders would
otherwise incur if the Certificateholders owned Trust Property as co-owners, or
incurred any obligations of the Trust, directly rather than through the Trust.

     Section 12.03. Notices.  (a)  Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier service or telecopy, and any such notice shall be
effective when delivered or received or, if mailed, three days after deposit in
the United States mail with proper postage for ordinary mail prepaid,

     if to the Company, to:
          Continental Airlines, Inc.
          2929 Allen Parkway
          Houston, TX  77019
          Attention:  Chief Financial Officer and
                      General Counsel

          Facsimile:  (713) 523-2831


     if to the Trustee, to:
          Wilmington Trust Company
          Rodney Square North
          1100 North Market Street
          Wilmington, DE  19890-0001
          Attention:  Corporate Trust Department

          Facsimile:  (302) 651-8882
          Telephone:  (302) 651-8584



<PAGE>   87

                                                                              79


     (b) The Company or the Trustee, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.

     (c) Any notice or communication to Certificateholders shall be mailed by
first-class mail to the addresses for Certificateholders shown on the Register
kept by the Registrar.  Failure so to mail a notice or communication or any
defect in such notice or communication shall not affect its sufficiency with
respect to other Certificateholders.

     (d) If a notice or communication is mailed in the manner provided above
within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.

     (e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.

     (f) Notwithstanding the foregoing, all communications or notices to the
Trustee shall be deemed to be given only when received by a Responsible Officer
of the Trustee.

     (g) The Trustee shall promptly furnish the Company with a copy of any
demand, notice or written communication received by the Trustee hereunder from
any Certificateholder, Owner Trustee or Loan Trustee.

     Section 12.04. Governing Law.  THIS AGREEMENT HAS BEEN DELIVERED IN THE
STATE OF DELAWARE AND THIS AGREEMENT AND THE CERTIFICATES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.

     Section 12.05. Severability of Provisions.  If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or the Trust, or of
the Certificates or the rights of the Certificateholders thereof.



<PAGE>   88

                                                                              80


     Section 12.06. Trust Indenture Act Controls.  Upon the occurrence of any
Registration Event, this Agreement shall become subject to the provisions of
the Trust Indenture Act and shall, to the extent applicable, be governed by
such provisions.  From and after any Registration Event, if any provision of
this Agreement limits, qualifies or conflicts with another provision which is
required to be included in this Agreement by the Trust Indenture Act, the
required provision shall control.

     Section 12.07. Effect of Headings and Table of Contents.  The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.

     Section 12.08. Successors and Assigns.  All covenants, agreements,
representations and warranties in this Agreement by the Trustee and the Company
shall bind and, to the extent permitted hereby, shall inure to the benefit of
and be enforceable by their respective successors and assigns, whether so
expressed or not.

     Section 12.09. Benefits of Agreement.  Nothing in this Agreement or in the
Certificates, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Certificateholders, any
benefit or any legal or equitable right, remedy or claim under this Agreement.

     Section 12.10. Legal Holidays.  In any case where any Regular Distribution
Date or Special Distribution Date relating to any Certificate shall not be a
Business Day, then (notwithstanding any other provision of this Agreement)
payment need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on such Regular
Distribution Date or Special Distribution Date, and no interest shall accrue
during the intervening period.

     Section 12.11. Counterparts.  For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

     Section 12.12. Intention of Parties.  The parties hereto intend that the
Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of



<PAGE>   89

                                                                              81


Subchapter J of the Internal Revenue Code of 1986, as amended, and not as a
trust or association taxable as a corporation or as a partnership.  Each
Certificateholder and Investor, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes.  The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as
to further such intent.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first written above.

                                    CONTINENTAL AIRLINES,INC.


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


                                    WILMINGTON TRUST COMPANY,
                                    as Trustee


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



<PAGE>   90


                                                                       EXHIBIT A


                              FORM OF CERTIFICATE

REGISTERED

No._________

           [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
      SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
      ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
      OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET
      FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
      HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
      BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT
      IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
      501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
      ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (c) IT IS NOT A
      U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE
      TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
      ACT; (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LATER
      OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON
      WHICH THIS CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
      TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS RESELL OR
      OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) CONTINENTAL
      AIRLINES, INC., (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
      COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (c) OUTSIDE
      THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
      RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION
      FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
      (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IF IT
      SHOULD RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE IT WILL
      DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
      NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.  IN CONNECTION
      WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE
      LATER OF THE ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST
      DATE ON WHICH


                                      A-1


<PAGE>   91


      THIS CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
      TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS, THE HOLDER MUST
      CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
      TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
      TRUSTEE.  AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
      "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
      BY REGULATION S UNDER THE SECURITIES ACT.  THE PASS THROUGH TRUST
      AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
      REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE
      FOREGOING RESTRICTIONS.](1)

           [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
      REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
      CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION
      OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN
      EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE &
      CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
      REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE &
      CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
      REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
      FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
      THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

           TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
      TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
      SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
      PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS
      MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS
      3.05 AND 3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO
      HEREIN.](2)

- ---------
(1) Not to be included on the face of the Regulation S Global Certificate.
(2) To be included on the face of each Global Certificate.


                                      A-2


<PAGE>   92


                             [GLOBAL CERTIFICATE](3)

           CONTINENTAL AIRLINES PASS THROUGH TRUST, SERIES 1997-1A-O

                ____% Continental Airlines [Initial] [Exchange]
                           Pass Through Certificate,
                                Series 1997-1A-O

                      Final Maturity Date: October 1, 2016

evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Continental Airlines, Inc.

   $__________ Fractional Undivided Interest representing .______% of the
   Trust per $1,000 face amount

     THIS CERTIFIES THAT _______________, for value received, is the registered
owner of a $________ (__________dollars) Fractional Undivided Interest in the
Continental Airlines Pass Through Trust, Series 1997-1A-O (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of March 21, 1997 (the
"Agreement"), between Wilmington Trust Company (the "Trustee") and Continental
Airlines, Inc., a corporation incorporated under Delaware law (the "Company"),
a summary of certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms used herein
have the meanings assigned to them in the Agreement.  This Certificate is one
of the duly authorized Certificates designated as "7.461% Continental Airlines
[Initial] [Exchange] Pass Through Certificates, Series 1997-1A-O" (herein
called the "Certificates").  This Certificate is issued under and is subject to
the terms, provisions, and conditions of the Agreement.  By virtue of its
acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement.  The property of the Trust includes an interest in certain Equipment
Notes and all rights of the Trust to receive payments under the Intercreditor
Agreement and any Liquidity Facility (the "Trust Property").  Each issue of the
Equipment Notes is secured by, among other things, a security interest in the
Aircraft leased to or owned by the Company.


- ---------
(3) To be included on the face of each Global Certificate.


                                      A-3


<PAGE>   93


     The Certificates represent fractional undivided interests in the Trust and
the Trust Property, and have no rights, benefits or interest in respect of any
assets or property other than the Trust Property.

     Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee, there will be distributed on each April 1 and October 1 (a "Regular
Distribution Date"), commencing on October 1, 1997, to the Person in whose name
this Certificate is registered at the close of business on the 15th day
preceding the Regular Distribution Date, an amount in respect of the Scheduled
Payments due on such Regular Distribution Date on the Equipment Notes, the
receipt of which has been confirmed by the Trustee, equal to the product of the
percentage interest in the Trust evidenced by this Certificate and an amount
equal to the sum of such Scheduled Payments.  Subject to and in accordance with
the terms of the Agreement and the Intercreditor Agreement, in the event that
Special Payments on the Equipment Notes are received by the Trustee, from funds
then available to the Trustee, there shall be distributed on the applicable
Special Distribution Date, to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Special
Distribution Date, an amount in respect of such Special Payments on the
Equipment Notes, the receipt of which has been confirmed by the Trustee, equal
to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so
received.  If a Regular Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day with the same force and effect as if made on such Regular Distribution Date
or Special Distribution Date and no interest shall accrue during the
intervening period.  The Trustee shall mail notice of each Special Payment and
the Special Distribution Date therefor to the Certificateholder of this
Certificate.

     The Certificates do not represent a direct obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any of their
affiliates.  The Certificates are limited in right or payment, all as more
specifically set forth on the face hereof and in the Agreement.  All payments
or distributions made to Certificateholders under the Agreement shall be made
only from the Trust Property and only to the extent that the Trustee shall have
sufficient income or


                                      A-4


<PAGE>   94


proceeds from the Trust Property to make such payments in accordance with the
terms of the Agreement.  Each Certificate-holder of this Certificate, by its
acceptance hereof, agrees that it will look solely to the income and proceeds
from the Trust Property to the extent available for distribution to such
Certificateholder as provided in the Agreement.  This Certificate does not
purport to summarize the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds, and duties evidenced hereby.  A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at
such other places, if any, designated by the Trustee, by any Certificateholder
upon request.

     The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any
time by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust.  Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate
and of any Certificate issued upon the transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent is made upon this
Certificate.  The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.

     As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, in the Borough of Manhattan, the City of New York, duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized
in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in
the Trust will be issued to the designated transferee or transferees.


                                      A-5


<PAGE>   95


     [The Holder of this Certificate is entitled to the benefits of the
Exchange and Registration Rights Agreement, dated as of March 21, 1997, among
the Company, the Trustee and the Initial Purchasers named therein (the
"Registration Rights Agreement").  In the event that no Registration Event has
occurred on or prior to the 210th day after the date of the issuance of the
Certificates, the interest rate per annum payable in respect of the Equipment
Notes and the Deposits shall be increased by 0.50%, from and including the
210th day after the Issuance Date to but excluding the earlier of (i) the date
on which a Registration Event occurs and (ii) the date on which there cease to
be any Registrable Certificates (as defined in the Registration Rights
Agreement).  In the event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by Section 2(b)(B) of the
Registration Rights Agreement for more than 60 days, whether or not
consecutive, during any 12-month period, the interest rate per annum payable in
respect of the Equipment Notes and the Deposits shall be increased by 0.50%
from the 61st day of the applicable 12-month period such Shelf Registration
Statement ceases to be effective until such time as the Shelf Registration
Statement again becomes effective ( or, if earlier, the end of the period
specified by Section 2(b)(B) of the Registration Rights Agreement).](4)

     Except as otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Certificate will be made after notice
mailed by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency of the
Trustee specified in such notice.

     Under certain circumstances set forth in Section 11.01 of the Agreement,
all of the Trustee's right, title and interest to the Trust Property may be
assigned, transferred and delivered to the Related Trustee of the Related Trust
pursuant to the Assignment and Assumption Agreement.  Upon the effectiveness of
such Assignment and Assumption Agreement (the "Transfer"), the Trust shall be
terminated, the Certificateholders shall receive beneficial interests in the
Related Trust in exchange for their interests in the Trust equal to their
respective beneficial interests in the Trust, the Certificates representing
Fractional


- ---------
(4) To be included only on each Initial Certificate.



                                      A-6


<PAGE>   96


Undivided Interests in the Trust shall be deemed for all purposes of the
Agreement and the Related Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests in the Related Trust and
its trust property.  Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related
Pass Through Trust Agreement as a certificateholder thereunder.  From and after
the Transfer, unless and to the extent the context otherwise requires,
references herein to the Trust, the Agreement and the Trustee shall constitute
references to the Related Trust, the Related Pass Through Trust Agreement and
trustee of the Related Trust, respectively.

     The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of [$100,000](5) [$1,000](6) Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof except
that one Certificate may be in a different denomination. As provided in the
Agreement and subject to certain limitations therein set forth, the
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same aggregate Fractional Undivided Interest in the Trust, as
requested by the Certificateholder surrendering the same.

     No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment by the Holder of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.

     Each Certificateholder or Investor that is not a United States person
within the meaning of section 7701(a)(30) of the Internal Revenue Code, as
amended, by its acceptance of a Certificate or a beneficial interest therein,
agrees to indemnify and hold harmless the Trust and the Trustee from and
against any improper failure to withhold taxes from amounts payable to it or
for its benefit.  Each Certificateholder and Investor, by its acceptance of
this Certificate or a beneficial interest herein, agrees to treat the Trust as
a grantor trust for all U.S. federal, state and local income tax purposes.


- ---------
(5) To be included only on each Initial Certificate.
(6) To be included only on each Initial Certificate.


                                      A-7


<PAGE>   97


     The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor any such
agent shall be affected by any notice to the contrary.

     The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant
to the Agreement and the disposition of all property held as part of the Trust
Property.

     UNTIL THE TRANSFER, THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.  FROM AND AFTER THE TRANSFER, THE AGREEMENT AND
THIS CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.



                                      A-8


<PAGE>   98


     IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: _______________, 1997        CONTINENTAL AIRLINES PASS THROUGH TRUST,
                                      SERIES 1997-1A-O

                                    By: WILMINGTON TRUST COMPANY, not in
                                        its individual capacity but
                                        solely as Trustee

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

[Attest:


- ---------------------------------
Authorized Signature]



                                      A-9


<PAGE>   99


             [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

                    This is one of the Certificates referred
                     to in the within-mentioned Agreement.


                                    WILMINGTON TRUST COMPANY, not in its
                                    individual capacity but solely as Trustee


                                    By:
                                       ----------------------------------
Authorized Officer



                                      A-10


<PAGE>   100


                            FORM OF TRANSFER NOTICE

     FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.



please print or typewrite name and address including zip code of assignee



the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing



attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.

                    [THE FOLLOWING PROVISION TO BE INCLUDED
                              ON ALL CERTIFICATES
                         EXCEPT REGULATION S GLOBAL AND
                     REGULATION S DEFINITIVE CERTIFICATES]

     In connection with any transfer of this Certificate occurring prior to the
date that is the earlier of the date of an effective Registration Statement or
the date two years after the later of the original issuance of this Certificate
or the last date on which this Certificate was held by Continental Airlines,
Inc., the Trustee or any affiliate of such Persons, the undersigned confirms
that without utilizing any general solicitation or general advertising that:

                                  [Check One]

[  ] (a) this Certificate is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.

                                       or

[  ] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that


                                      A-11


<PAGE>   101


comply with the conditions of transfer set forth in this Certificate and the
Agreement.

If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.

Date: __________________            [Name of Transferor]

                                    NOTE:  The signature must correspond with
                                    the name as written upon the face of the
                                    within-mentioned instrument in every
                                    particular, without alteration or any
                                    change whatsoever.

Signature Guarantee: ______________________

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

     The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.

Dated: 
       ------------------           -------------------------------------

                                    NOTE:  To be executed by an executive
                                    officer.



                                      A-12


<PAGE>   102


                                                                       EXHIBIT B


             FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
               TRANSFERS OF CERTIFICATES PURSUANT TO REGULATION S

                                           [date]

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE  19890-0001
Attention:  Corporate Trust Trustee Administration

      Re:  Continental Airlines Pass Through Trust (the "Trust"), Series
           1997-1A-O, Continental Airlines Pass Through Certificates, Series
           1997-1A-O (the "Certificates")

Sirs:

           In connection with our proposed sale of $_____ Fractional Undivided
Interest of the Certificates, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:

           (1) the offer of the Certificates was not made to a person in the
      United States;

           (2) either (a) at the time the buy order was originated, the
      transferee was outside the United States or we and any person acting on
      our behalf reasonably believed that the transferee was outside the United
      States or (b) the transaction was executed in, on or through the
      facilities of a designated off-shore securities market and neither we nor
      any person acting on our behalf knows that the transaction has been
      pre-arranged with a buyer in the United States;

           (3) no directed selling efforts have been made in the United States
      in contravention of the requirements of Rule 903(b) or Rule 904(b) of
      Regulation S, as applicable; and


                                      B-1


<PAGE>   103


           (4) the transaction is not part of a plan or scheme to evade the
      registration requirements of the Securities Act.

           In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.

           You and Continental Airlines, Inc. are entitled to rely upon this 
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.


                                    Very truly yours,


                                    [Name of Transferor]



                                      B-2


<PAGE>   104


                                                                       EXHIBIT C


                     FORM OF CERTIFICATE TO BE DELIVERED IN
                  CONNECTION WITH TRANSFERS OF CERTIFICATES TO
                  NON-QIB INSTITUTIONAL ACCREDITED INVESTORS


                                           ________________, ____

Wilmington Trust Company
  Rodney Square North
  1100 North Market Street
  Wilmington, DE  19890-0001
  Attention:  Corporate Trust Trustee Administration
  Continental Airlines, Inc.
  2929 Allen Parkway
  Houston, Texas  77019

                              CONTINENTAL AIRLINES
               PASS THROUGH TRUST, SERIES 1997-1A-O (the "Trust")
                  Pass Through Certificates, Series 1997-1A-O
                              (the "Certificates")

Ladies and Gentlemen:

        In connection with our proposed purchase of U.S. $[_____________]
Fractional Undivided Interest of Certificates, we confirm that:

     1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Trust
Agreement, dated as of March 21, 1997, between Continental Airlines, Inc. (the
"Company") and Wilmington Trust Company (the "Trustee") relating to the
Certificates, and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").

     2. We are purchasing Certificates having an aggregate principal amount of
not less than $100,000 and each account (if any) for which we are purchasing
Certificates is purchasing


                                      C-1


<PAGE>   105


Certificates having an aggregate principal amount of not less than $100,000.

     3. We understand that the Certificates have not been registered under the
Securities Act, that the Certificates are being sold to us in a transaction
that is exempt from the registration requirements of the Securities Act and
that the Certificates may not be offered or resold except as permitted in the
following sentence.  We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that, if we should sell any
Certificates within two years after the later of the original issuance of such
Certificate and the last date on which such Certificate is owned by the
Company, the Trustee or any affiliate of any of such persons, we will do so
only (A) to the Company, (B) in accordance with Rule 144A under the Securities
Act to a "qualified institutional buyer" (as defined therein), (c) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (D) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act or (E) pursuant to an effective registration statement under
the Securities Act, and we further agree to provide to any person purchasing
any of the Certificates from us a notice advising such purchaser that resales
of the Certificates are restricted as stated herein.

     4. We understand that, on any proposed resale of any Certificates, we will
be required to furnish to the Company and the Trustee such certifications,
legal opinions and other information as the Company and the Trustee may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions.  We further understand that the Certificates purchased
by us will bear a legend to the foregoing effect.

     5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Certificates, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investments.

     6. We are acquiring the Certificates purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion and not
with a view to any


                                      C-2


<PAGE>   106


distribution of the Certificates, subject, nevertheless to the understanding
that the disposition of our property shall at all times be and remain within
our control.

        You are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy thereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

                                    Very truly yours,

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



                                      C-3


<PAGE>   107


                                                                       EXHIBIT D


                  FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
           Continental Airlines Pass Through Trust, Series 1997-[1_]

     ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ____________, 199_ (the
"Agreement"), between Wilmington Trust Company, a Delaware banking corporation
("WTC"), not in its individual capacity except as expressly provided herein,
but solely as trustee under the Pass Through Trust Agreement dated as of March
21, 1997 (as amended, modified or otherwise supplemented from time to time, the
"Pass Through Trust Agreement") in respect of the Continental Airlines Pass
Through Trust, Series 1997-1_-O (the "Assignor"), and Wilmington Trust Company,
a Delaware banking corporation, not in its individual capacity except as
expressly provided herein, but solely as trustee under the Pass Through Trust
Agreement dated as of March 21, 1997  (the "New Pass Through Trust Agreement")
in respect of the Continental Airlines Pass Through Trust, Series 1997-1_-S
(the "Assignee").

                              W I T N E S S E T H:

     WHEREAS, the parties hereto desire to effect on the date hereof (the
"Transfer Date") (a) the transfer by the Assignor to the Assignee of all of the
right, title and interest of the Assignor in, under and with respect to, among
other things, the Trust Property and each of the documents listed in Schedule I
hereto (the "Scheduled Documents") and (b) the assumption by the Assignee of
the obligations of the Assignor (i) under the Scheduled Documents and (ii) in
respect of the Certificates issued under the Pass Through Trust Agreement; and

     WHEREAS, the Scheduled Documents permit such transfer upon satisfaction of
certain conditions heretofore or concurrently herewith being complied with;

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree
as follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Pass Through Trust Agreement):

     1. Assignment.  The Assignor does hereby sell, assign, convey, transfer
and set over unto the Assignee as of the Transfer Date all of its present and
future right, title and


                                      D-1


<PAGE>   108


interest in, under and with respect to the Trust Property and the Scheduled
Documents and each other contract, agreement, document or instrument relating
to the Trust Property or the Scheduled Documents (such other contracts,
agreements, documents or instruments, together with the Scheduled Documents, to
be referred to as the "Assigned Documents"), and any proceeds therefrom,
together with all documents and instruments evidencing any of such right, title
and interest.

     2. Assumption.  The Assignee hereby assumes for the benefit of the
Assignor and each of the parties listed in Schedule II hereto (collectively,
the "Beneficiaries") all of the duties and obligations of the Assignor,
whenever accrued, pursuant to the Assigned Documents and hereby confirms that
it shall be deemed a party to each of the Assigned Documents to which the
Assignor is a party and shall be bound by all the terms thereof (including the
agreements and obligations of the Assignor set forth therein) as if therein
named as the Assignor.  Further, the Assignee hereby assumes for the benefit of
the Assignor and the Beneficiaries all of the duties and obligations of the
Assignor under the Outstanding Certificates and hereby confirms that the
Certificates representing Fractional Undivided Interests under the Pass Through
Trust Agreement shall be deemed for all purposes of the Pass Through Trust
Agreement and the New Pass Through Trust Agreement to be certificates
representing the same fractional undivided interests under the New Pass Through
Trust Agreement equal to their respective beneficial interests in the trust
created under the Pass Through Trust Agreement.

     3. Effectiveness.  This Agreement shall be effective upon the execution
and delivery hereof by the parties hereto, and each Certificateholder, by its
acceptance of its Certificate or a beneficial interest therein, agrees to be
bound by the terms of this Agreement.

     4. Payments.  The Assignor hereby covenants and agrees to pay over to the
Assignee, if and when received following the Transfer Date, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignor that, under Section 1 hereof, belong to the Assignee.

     5. Further Assurances.  The Assignor shall, at any time and from time to
time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further

                                      D-2


<PAGE>   109


instruments and documents and take such further action as the Assignee may
reasonably request to obtain the full benefits of this Agreement and of the
right and powers herein granted.  The Assignor agrees to deliver the Global
Certificates, and all Trust Property, if any, then in the physical possession
of the Assignor, to the Assignee.

     6. Representations and Warranties.  (a)  The Assignee represents and
warrants to the Assignor and each of the Beneficiaries that:

     (i) it has all requisite power and authority and legal right to enter into
  and carry out the transactions contemplated hereby and to carry out and
  perform the obligations of the "Pass Through Trustee" under the Assigned
  Documents;

     (ii) on and as of the date hereof, the representations and warranties of
  the Assignee set forth in Section 7.15 of the New Pass Through Trust
  Agreement are true and correct.

     (b) The Assignor represents and warrants to the Assignee that:

     (i) it is duly incorporated, validly existing and in good standing under
  the laws of the State of Delaware and has the full trust power, authority and
  legal right under the laws of the State of Delaware and the United States
  pertaining to its trust and fiduciary powers to execute and deliver this
  Agreement;

     (ii) the execution and delivery by it of this Agreement and the
  performance by it of its obligations hereunder have been duly authorized by
  it and will not violate its articles of association or by-laws or the
  provisions of any indenture, mortgage, contract or other agreement to which
  it is a party or by which it is bound; and

     (iii) this Agreement constitutes the legal, valid and binding obligations
  of it enforceable against it in accordance with its terms, except as the same
  may be limited by applicable bankruptcy, insolvency, reorganization,
  moratorium or similar laws affecting the rights of creditors generally and by
  general principles of equity, whether considered in a proceeding at law or in
  equity.


                                      D-3


<PAGE>   110


     7. GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.

     8. Counterparts.  This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument.  It
shall not be necessary that any counterpart be signed by both parties so long
as each party shall sign at least one counterpart.

     9. Third Party Beneficiaries.  The Assignee hereby agrees, for the benefit
of the Beneficiaries, that its representations, warranties and covenants
contained herein are also intended to be for the benefit of each Beneficiary,
and each Beneficiary shall be deemed to be an express third party beneficiary
with respect thereto, entitled to enforce directly and in its own name any
rights or claims it may have against such party as such beneficiary.


                                      D-4


<PAGE>   111


     IN WITNESS WHEREOF, the parties hereto, through their respective officers
thereunto duly authorized, have duly executed this Assignment as of the day and
year first above written.

                                    ASSIGNOR:

                                    WILMINGTON TRUST COMPANY, not in its
                                    individual capacity except as expressly
                                    provided herein, but solely as trustee
                                    under the Pass Through Trust Agreement in
                                    respect of the Continental Airlines Pass
                                    Through Trust 1997-1_-O

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

                                    ASSIGNEE:

                                    WILMINGTON TRUST COMPANY, not in its
                                    individual capacity except as expressly
                                    provided herein, but solely as trustee
                                    under the Pass Through Trust Agreement in
                                    respect of the Continental Airlines Pass
                                    Through Trust 1997-1_-S

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



                                      D-5


<PAGE>   112


                                   Schedule I


                         Schedule of Assigned Documents

           (1) Intercreditor Agreement dated as of March 21, 1997 among the
      Trustee, the Other Trustees, the Liquidity Providers, the liquidity
      providers, if any, relating to the Certificates issued under (and as
      defined in) each of the Other Pass Through Trust Agreements and the
      Subordination Agent.

           (2) Registration Rights Agreement dated as of March 21, 1997 among
      the Initial Purchasers, the Trustee, the Other Trustees, and the Company.

           (3) Escrow and Paying Agent Agreement (Class __) dated as of March
      21, 1997 among the Escrow Agent, the Initial Purchasers, the Trustee and
      the Paying Agent.

           (4) Note Purchase Agreement dated as of March 21, 1997 among the
      Company, the Trustee, the Other Trustees, the Depositary, the Escrow
      Agent, the Paying Agent and the Subordination Agent.

           (5) Deposit Agreement (Class __) dated as of March 21, 1997 between
      the Escrow Agent and the Depositary.

           (6) Each of the Operative Agreements (as defined in the
      Participation Agreement for each Aircraft) in effect as of the Transfer
      Date.


                                      D-6


<PAGE>   113


                                                                     Schedule II


                           Schedule of Beneficiaries

Wilmington Trust Company, not in its individual capacity but solely as
     Subordination Agent.

Wilmington Trust Company, not in its individual capacity but solely as Paying
     Agent

ABN AMRO Bank N.V., Chicago Branch, as Liquidity Provider

ING Bank N.V., as Liquidity Provider

Continental Airlines, Inc.

Credit Suisse First Boston Corporation, as Initial Purchaser

Morgan Stanley & Co. Incorporated, as Initial Purchaser

Chase Securities Inc., as Initial Purchaser

Goldman Sachs & Co., as Initial Purchaser

First Security Bank, National Association, as Escrow Agent

Each of the other parties to the Assigned Documents


                                      D-7


<PAGE>   114


                                                                       EXHIBIT E


            FORM OF NOTICE TO DESIGNATE NOMINEE AS WITHHOLDING AGENT
         (Treas. Reg. Section  1.1445-8(f); 17 C.F.R. 240.10b-17(b)(1))

                                           [DATE]

National Association of
Securities Dealers, Inc.
Market Operations
80 Merritt Blvd.
Trumbull, CT  06611

     Re:  Continental Airlines Pass Through Certificates,
          Series 1997-1A-O Pass Through Certificates,
          Series 1997-1A-O

     With respect to distributions to be made on [INSERT DISTRIBUTION DATE] to
holders of the above-referenced Pass Through Certificates in the amount of $
____ per $1,000 principal amount of Certificate, we hereby designate the
appropriate nominees to withhold from amounts distributable to any non-U.S.
Person such amounts as required by section 1446 of the Internal Revenue Code of
1986, as amended.  The term "non-U.S. Person" means any person or entity that,
for U.S. federal income tax purposes, is not a "U.S. Person."  "U.S. Person"
for this purpose means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized under the laws of
the United States or any political subdivision thereof, or an estate or trust,
the income of which is subject to U.S. federal income taxation regardless of
its source.  The date of record for determining holders of Certificates
entitled to receive the distribution on [INSERT DISTRIBUTION DATE] is [INSERT
RELATED RECORD DATE].


                                    Very truly yours,




                                      E-1



<PAGE>   1
                                                                     EXHIBIT 4.6




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





                          PASS THROUGH TRUST AGREEMENT

                           Dated as of March 21, 1997

                                    between

                           CONTINENTAL AIRLINES, INC.

                                      and

                           WILMINGTON TRUST COMPANY,

                                   as Trustee

           Continental Airlines Pass Through Trust, Series 1997-1B-O

          7.461% Initial  Pass Through Certificates, Series 1997-1B-O
          7.461% Exchange Pass Through Certificates, Series 1997-1B-O

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

<PAGE>   2
Reconciliation and tie between Continental Airlines  Pass Through Trust
Agreement, Series 1997-1B-O dated as of March 21, 1997, and the Trust Indenture
Act of 1939.  This reconciliation does not constitute part of the Pass Through
Trust Agreement.


<TABLE>
<CAPTION>

         Trust Indenture Act                             Pass Through Trust
          of 1939 Section                                 Agreement Section
         -------------------                             ------------------
<S>                                                       <C>
              310(a)(1)                                           7.08
               (a)(2)                                             7.08
               312(a)                                       3.05; 8.01; 8.02
               313(a)                                          7.06; 8.03
               314(a)                                           8.04(a),
                                                               (c) & (d)
               (a)(4)                                           8.04(e)
               (c)(1)                                             1.02
               (c)(2)                                             1.02
               (d)(1)                                         7.13; 11.01
               (d)(2)                                         7.13; 11.01
               (d)(3)                                             2.01
                 (e)                                              1.02
               315(b)                                             7.02 
       316(a)(last sentence)                                      1.04(c)
              (a)(1)(A)                                           6.04
              (a)(1)(B)                                           6.05
                 (b)                                              6.06
                 (c)                                            1.04(e)
              317(a)(1)                                           6.03
                 (b)                                              7.13
               318(a)                                            12.06
</TABLE>






<PAGE>   3
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
                                    ARTICLE I

                                   DEFINITIONS

Section 1.01.   Definitions   . . . . . . . . . . . . . . . . . . . . . . .    3
Section 1.02.   Compliance Certificates and Opinions  . . . . . . . . . . .   18
Section 1.03.   Form of Documents Delivered to Trustee  . . . . . . . . . .   19
Section 1.04.   Directions of Certificateholders  . . . . . . . . . . . . .   19

                                   ARTICLE II

        ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF EQUIPMENT NOTES

Section
 2.01.   Issuance of Certificates; Acquisition of Equipment Notes  .   21
Section 2.02.   Withdrawal of Deposits  . . . . . . . . . . . . . . . . . .   23
Section 2.03.   Acceptance by Trustee   . . . . . . . . . . . . . . . . . .   23
Section 2.04.   Limitation of Powers  . . . . . . . . . . . . . . . . . . .   23

                                   ARTICLE III

                                THE CERTIFICATES

Section 3.01.   Title, Form, Denomination and Execution of Certificates   .   24
Section 3.02.   Restrictive Legends   . . . . . . . . . . . . . . . . . . .   27
Section 3.03.   Authentication of Certificates  . . . . . . . . . . . . . .   29
Section 3.04.   Transfer and Exchange   . . . . . . . . . . . . . . . . . .   29
Section 3.05.   Book-Entry Provisions for Restricted Global Certificates
                and Regulation S Global Certificates  . . . . . . . . . . .   31
Section 3.06.   Special Transfer Provisions   . . . . . . . . . . . . . . .   33
Section 3.07.   Mutilated, Destroyed, Lost or Stolen Certificates   . . . .   37
Section 3.08.   Persons Deemed Owners   . . . . . . . . . . . . . . . . . .   38
Section 3.09.   Cancellation  . . . . . . . . . . . . . . . . . . . . . . .   38
Section 3.10.   Temporary Certificates  . . . . . . . . . . . . . . . . . .   38
Section 3.11.   Limitation of Liability for Payments  . . . . . . . . . . .   39
</TABLE>






                                      (i)

<PAGE>   4
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
                                   ARTICLE IV

                 DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

Section 4.01.   Certificate Account and Special Payments Account  . . . . .   39
Section 4.02.   Distributions from Certificate Account and Special
                Payments Account  . . . . . . . . . . . . . . . . . . . . .   40
Section 4.03.   Statements to Certificateholders  . . . . . . . . . . . . .   42
Section 4.04.   Investment of Special Payment Moneys  . . . . . . . . . . .   44

                                    ARTICLE V

                                   THE COMPANY

Section 5.01.   Maintenance of Corporate Existence  . . . . . . . . . . . .   44
Section 5.02.   Consolidation, Merger, etc.   . . . . . . . . . . . . . . .   45

                                   ARTICLE VI

                                     DEFAULT

Section 6.01.   Events of Default   . . . . . . . . . . . . . . . . . . . .   46
Section 6.02.   Incidents of Sale of Equipment Notes  . . . . . . . . . . .   49
Section 6.03.   Judicial Proceedings Instituted by Trustee; Trustee May
                Bring Suit  . . . . . . . . . . . . . . . . . . . . . . . .   50
Section 6.04.   Control by Certificateholders   . . . . . . . . . . . . . .   50
Section 6.05.   Waiver of Past Defaults   . . . . . . . . . . . . . . . . .   51
</TABLE>






                                      (ii)

<PAGE>   5
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
Section 6.06.   Right of Certificateholders to Receive Payments
                Not to Be Impaired  . . . . . . . . . . . . . . . . . . . .   52
Section 6.07.   Certificateholders May Not Bring Suit Except
                Under Certain Conditions  . . . . . . . . . . . . . . . . .   52
Section 6.08.   Remedies Cumulative   . . . . . . . . . . . . . . . . . . .   53

                                   ARTICLE VII

                                   THE TRUSTEE

Section 7.01.   Certain Duties and Responsibilities   . . . . . . . . . . .   53
Section 7.02.   Notice of Defaults  . . . . . . . . . . . . . . . . . . . .   54
Section 7.03.   Certain Rights of Trustee   . . . . . . . . . . . . . . . .   54
Section 7.04.   Not Responsible for Recitals or Issuance of Certificates  .   56
Section 7.05.   May Hold Certificates   . . . . . . . . . . . . . . . . . .   56
Section 7.06.   Money Held in Trust   . . . . . . . . . . . . . . . . . . .   56
Section 7.07.   Compensation and Reimbursement  . . . . . . . . . . . . . .   57
Section 7.08.   Corporate Trustee Required; Eligibility   . . . . . . . . .   58
Section 7.09.   Resignation and Removal; Appointment of Successor   . . . .   59
Section 7.10.   Acceptance of Appointment by Successor  . . . . . . . . . .   61
Section 7.11.   Merger, Conversion, Consolidation or
                Succession to Business  . . . . . . . . . . . . . . . . . .   61
Section 7.12.   Maintenance of Agencies   . . . . . . . . . . . . . . . . .   62
Section 7.13.   Money for Certificate Payments to Be Held in Trust  . . . .   63
Section 7.14.   Registration of Equipment Notes in Name of
                Subordination Agent   . . . . . . . . . . . . . . . . . . .   64
Section 7.15.   Representations and Warranties of Trustee   . . . . . . . .   64
</TABLE>






                                     (iii)

<PAGE>   6
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
Section 7.16.   Withholding Taxes, Information Reporting  . . . . . . . . .   65
Section 7.17.   Trustee's Liens   . . . . . . . . . . . . . . . . . . . . .   67
Section 7.18.   Preferential Collection of Claims   . . . . . . . . . . . .   67

                                  ARTICLE VIII

                CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE

Section 8.01.   The Company to Furnish Trustee with Names and
                Addresses of Certificateholders   . . . . . . . . . . . . .   67
Section 8.02.   Preservation of Information; Communications
                to Certificateholders   . . . . . . . . . . . . . . . . . .   68
Section 8.03.   Reports by Trustee  . . . . . . . . . . . . . . . . . . . .   68
Section 8.04.   Reports by the Company  . . . . . . . . . . . . . . . . . .   68

                                   ARTICLE IX

                             SUPPLEMENTAL AGREEMENTS

Section 9.01.   Supplemental Agreements Without Consent
                of Certificateholders   . . . . . . . . . . . . . . . . . .   70
Section 9.02.   Supplemental Agreements with
                Consent of Certificateholders   . . . . . . . . . . . . . .   71
Section 9.03.   Documents Affecting Immunity or Indemnity   . . . . . . . .   73
Section 9.04.   Execution of Supplemental Agreements  . . . . . . . . . . .   73
Section 9.05.   Effect of Supplemental Agreements   . . . . . . . . . . . .   73
Section 9.06.   Conformity with Trust Indenture Act   . . . . . . . . . . .   74
Section 9.07.   Reference in Certificates to Supplemental Agreements  . . .   74
</TABLE>






                                      (iv)

<PAGE>   7
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
- -------                                                                     ----
<S>                                                                         <C>
                                    ARTICLE X

                AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS

Section 10.01.  Amendments and Supplements to Indentures and
                Financing Documents   . . . . . . . . . . . . . . . . . . .   74

                                   ARTICLE XI

                              TERMINATION OF TRUST

Section 11.01.  Termination of the Trust  . . . . . . . . . . . . . . . . .   75

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

Section 12.01.  Limitation on Rights of Certificateholders  . . . . . . . .   79
Section 12.02.  Certificates Nonassessable and Fully Paid   . . . . . . . .   79
Section 12.03.  Notices   . . . . . . . . . . . . . . . . . . . . . . . . .   79
Section 12.04.  Governing Law   . . . . . . . . . . . . . . . . . . . . . .   81
Section 12.05.  Severability of Provisions  . . . . . . . . . . . . . . . .   81
Section 12.06.  Trust Indenture Act Controls  . . . . . . . . . . . . . . .   81
Section 12.07.  Effect of Headings and Table of Contents  . . . . . . . . .   81
Section 12.08.  Successors and Assigns  . . . . . . . . . . . . . . . . . .   82
Section 12.09.  Benefits of Agreement   . . . . . . . . . . . . . . . . . .   82
Section 12.10.  Legal Holidays  . . . . . . . . . . . . . . . . . . . . . .   82
Section 12.11.  Counterparts  . . . . . . . . . . . . . . . . . . . . . . .   82
Section 12.12.  Intention of Parties  . . . . . . . . . . . . . . . . . . .   82
</TABLE>






                                      (v)

<PAGE>   8



Exhibit A-    Form of Certificate
Exhibit B-    Form of Certificate to Request Removal of Restricted Legend
Exhibit C-    Form of Certificate to be Delivered by an Institutional
              Accredited Investor
Exhibit D-    Form of Assignment and Assumption Agreement
Exhibit E-    Form of Notice to Withholding Agent





                                      (vi)

<PAGE>   9
                          PASS THROUGH TRUST AGREEMENT

                 This PASS THROUGH TRUST AGREEMENT, dated as of March 21, 1997
(the "Agreement"), between CONTINENTAL AIRLINES, INC., a Delaware corporation,
and WILMINGTON TRUST COMPANY, as Trustee, is made with respect to the formation
of Continental Airlines Pass Through Trust, Series 1997-1B-O and the issuance
of 7.461% Continental Airlines Pass Through Trust, Series 1997-1B-O Pass
Through Certificates representing fractional undivided interests in the Trust.

                                  WITNESSETH:

                 WHEREAS, the Company has obtained commitments from Boeing for
the delivery of certain Aircraft;

                 WHEREAS, the Company intends to finance the acquisition of
each such Aircraft either (i) through separate leveraged lease transactions in
which the Company will lease such aircraft (collectively, the "Leased
Aircraft") or (ii) through separate secured loan transactions in which the
Company will own such Aircraft (collectively, the "Owned Aircraft");

                 WHEREAS, in the case of each Leased Aircraft, each Owner
Trustee, acting on behalf of the corresponding Owner Participant, will issue
pursuant to an Indenture, on a non-recourse basis, three series of Equipment
Notes in order to finance a portion of its purchase price of such Leased
Aircraft;

                 WHEREAS, in the case of each Owned Aircraft, the Company, will
issue pursuant to an Indenture, on a recourse basis, three series of Equipment
Notes to finance a portion of the purchase price of such Owned Aircraft;

                 WHEREAS, the Trustee, upon execution and delivery of this
Agreement, hereby declares the creation of the Trust for the benefit of the
Certificateholders, and the initial Certificateholders, as the grantors of the
Trust, by their respective acceptances of the Certificates, join in the
creation of this Trust with the Trustee;

                 WHEREAS, all Certificates to be issued by the Trust will
evidence fractional undivided interests in the Trust and will convey no rights,
benefits or interests in respect of any






<PAGE>   10
                                                                             2

property other than the Trust Property except for those Certificates to which
an Escrow Receipt has been affixed;

                 WHEREAS, the Escrow Agent and the Initial Purchasers  have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Initial Purchasers have delivered to the
Escrow Agent the proceeds from the sale of the Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;

                 WHEREAS, the Escrow Agent on behalf of the Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;

                 WHEREAS, pursuant to the terms and conditions of this
Agreement and the Note Purchase Agreement, upon or shortly following delivery
of an Aircraft, the Trustee on behalf of the Trust, using funds withdrawn under
the Escrow Agreement, may purchase an Equipment Note having the same interest
rate as, and final maturity date not later than the final Regular Distribution
Date of, the Certificates issued hereunder and shall hold such Equipment Note
in trust for the benefit of the Certificateholders;

                 WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the Trust, the Company
has duly authorized the execution and delivery of this Agreement as the
"issuer", as such term is defined in and solely for purposes of the Securities
Act, of the Certificates to be issued pursuant hereto and as the "obligor", as
such term is defined in and solely for purposes of the Trust Indenture Act of
1939, as amended, with respect to all such Certificates and is undertaking to
perform certain administrative and ministerial duties hereunder and is also
undertaking to pay the ongoing fees and expenses of the Trustee;

                 WHEREAS, all of the conditions and requirements necessary to
make this Agreement, when duly executed and






<PAGE>   11
                                                                               6

delivered, a valid, binding and legal instrument, enforceable in accordance
with its terms and for the purposes herein expressed, have been done, performed
and fulfilled, and the execution and delivery of this Agreement in the form and
with the terms hereof have been in all respects duly authorized; and

                 WHEREAS, upon issuance of the Exchange Certificates, if any,
or the effectiveness of the Shelf Registration Statement, this Agreement, as
amended or supplemented from time to time, will be subject to the provisions of
the Trust Indenture Act of 1939, and shall, to the extent applicable, be
governed by such provisions;

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

                                   ARTICLE I

                                  DEFINITIONS

                 Section 1.01.  Definitions.  For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:

                 (1)      the terms used in this Agreement, including in the
         recitals to this Agreement, that are defined in this Article have the
         meanings assigned to them in this Article, and include the plural as
         well as the singular;

                 (2)      all other terms used herein which are defined in the
         Trust Indenture Act, either directly or by reference therein, or by
         the rules promulgated under the Trust Indenture Act, have the meanings
         assigned to them therein;

                 (3)      all references in this Agreement to designated
         "Articles", "Sections", "Subsections" and other subdivisions are to
         the designated Articles, Sections, Subsections and other subdivisions
         of this Agreement;

                 (4)      the words "herein", "hereof" and "hereunder" and
         other words of similar import refer to this Agreement as a whole and
         not to any particular Article, Section, Subsection or other
         subdivision; and






<PAGE>   12
                                                                               7

                 (5)      unless the context otherwise requires, whenever the
         words "including", "include" or "includes" are used herein, it shall
         be deemed to be followed by the phrase "without limitation".

         Affiliate:  Means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person, provided, however, that neither
America West Airlines, Inc. nor any of its subsidiaries shall be deemed to be an
"Affiliate" of the Company for purposes of this Agreement.  For the purposes of
this definition, "control" means the power, directly or indirectly, to direct
the management and policies of such Person, whether through the ownership of
voting securities or by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                 Agent Members:  Has the meaning specified in Section 3.05.

                 Agreement:  Has the meaning specified in the initial paragraph
hereto.

         Aircraft:  Means each of the New Aircraft or Substitute
Aircraft in respect of which a Participation Agreement is entered into
in accordance with the Note Purchase Agreement.

                 Aircraft Purchase Agreement:  Has the meaning specified in the
Note Purchase Agreement.

                 Applicable Delivery Date:  Has the meaning specified in
Section 2.01(b).

                 Applicable Participation Agreement:  Has the meaning specified
in Section 2.01(b).

                 Assignment and Assumption Agreement:  Means the assignment and
assumption agreement substantially in the form of Exhibit D hereto executed 
and delivered in accordance with Section 11.01.

                 Authorized Agent:  Means any Paying Agent or Registrar for the
Certificates.






<PAGE>   13
                                                                               8

                 Avoidable Tax:  Means a state or local tax (i) upon (w) the
         Trust, (x) the Trust Property, (y) Certificateholders or (z) the
         Trustee for which the Trustee is entitled to seek reimbursement from
         the Trust Property, and (ii) which would be avoided if the Trustee
         were located in another state, or jurisdiction within a state, within
         the United States.  A tax shall not be an Avoidable Tax if the Company
         or any Owner Trustee shall agree to pay, and shall pay, such tax.

                 Boeing:  Means The Boeing Company.

                 Business Day:  Means any day other than a Saturday, a Sunday
         or a day on which commercial banks are required or authorized to close
         in Houston, Texas, New York, New York, Salt Lake City, Utah or, so
         long as any Certificate is outstanding, the city and state in which
         the Trustee or any Loan Trustee maintains its Corporate Trust Office
         or receives and disburses funds.

                 Cedel:  Means Cedel Bank societe anonyme.

                 Certificate:  Means any one of the Initial Certificates or
         Exchange Certificates and any such Certificates issued in exchange
         therefor or replacement thereof pursuant to this Agreement.

                 Certificate Account:  Means the account or accounts created
         and maintained pursuant to Section 4.01(a).

                 Certificate Purchase Agreement:  Means the Purchase Agreement
         dated March 12, 1997 among the Initial Purchasers, the Company and the
         Depositary, as the same may be amended, supplemented or otherwise
         modified from time to time in accordance with its terms.

                 Certificateholder or Holder:  Means the Person in whose name a
         Certificate is registered in the Register.

                 Class C Certificateholder:  Has the meaning specified in
         Section 6.01.

                 Company:  Means Continental Airlines, Inc., a Delaware
         corporation, or its successor in interest pursuant to Section 5.02, or
         (only in the context of provisions hereof, if any, where such
         reference is required for purposes of






<PAGE>   14
                                                                               9

         compliance with the Trust Indenture Act) any other "obligor" (within
         the meaning of the Trust Indenture Act) with respect to the
         Certificates.

                 Controlling Party:  Has the meaning specified in the
         Intercreditor Agreement.

                 Corporate Trust Office:  With respect to the Trustee or any
         Loan Trustee, means the office of such trustee in the city at which at
         any particular time its corporate trust business shall be principally
         administered.

                 Cut-off Date:  Means the earlier of (a) the Delivery Period
         Termination Date and (b) the date on which a Triggering Event occurs.

                 Definitive Certificates:  Has the meaning specified in Section
         3.01(e).

                 Delivery Date:  Has the meaning specified in the Note Purchase
         Agreement.

                 Delivery Notice:  Has the meaning specified in the Note
         Purchase Agreement.

                 Delivery Period Termination Date:  Means the earlier of (a)
         March 31, 1998, or, if the Equipment Notes relating to all of the New
         Aircraft (or Substitute Aircraft in lieu thereof) have not been
         purchased by the Trust and the Other Trusts on or prior to such date
         due to any reason beyond the control of the Company and not occasioned
         by the Company's fault or negligence, June 30, 1998 and (b) the date
         on which Equipment Notes issued with respect to all of the New
         Aircraft (or Substitute Aircraft in lieu thereof) have been purchased
         by the Trust and the Other Trusts in accordance with the Note Purchase
         Agreement.

                 Deposits:  Has the meaning specified in the Deposit Agreement.

                 Deposit Agreement:  Means the Deposit Agreement dated as of
         March 21, 1997 relating to the Certificates between the Depositary and
         the Escrow Agent, as the same may be amended, supplemented or
         otherwise modified from time to time in accordance with its terms.






<PAGE>   15
                                                                              10

                 Depositary:  Means Credit Suisse First Boston, a Swiss bank,
        acting through its New York branch.

                 Direction:  Has the meaning specified in Section 1.04(a).

                 Distribution Date:  Means any Regular Distribution Date or
        Special Distribution Date as the context requires.

                 DTC:  Means The Depository Trust Company, its nominees and
        their respective successors.

                 Equipment Notes:  Means the equipment notes issued under the
        Indentures.

                 ERISA:  Means the Employee Retirement Income Security Act of
        1974, as amended from time to time, or any successor federal statute.

                 ERISA Legend:    Has the meaning specified in Section 3.12.

                 Escrow Agent:  Means, initially, First Security Bank, National
        Association, and any replacement or successor therefor appointed in
        accordance with the Escrow Agreement.

                 Escrow Agreement:  Means the Escrow and Paying Agent Agreement
        dated as of March 21, 1997 relating to the Certificates, among the
        Escrow Agent, the Escrow Paying Agent, the Trustee and the Initial
        Purchasers, as the same may be amended, supplemented or otherwise
        modified from time to time in accordance with its terms.

                 Escrow Paying Agent:  Means the Person acting as paying agent
        under the Escrow Agreement.

                 Escrow Receipt:  Means the receipt substantially in the form
        annexed to the Escrow Agreement representing a fractional undivided
        interest in the funds held in escrow thereunder.

                 Euroclear:  Means the Euroclear System.

                 Event of Default:  Means an Indenture Default under any
        Indenture pursuant to which Equipment Notes held by the Trust were
        issued.






<PAGE>   16
                                                                              11

                 Exchange Certificates:  Means the pass through certificates
         substantially in the form of Exhibit A hereto issued in exchange for
         the Initial Certificates pursuant to the Registration Rights Agreement
         and authenticated hereunder.

                 Exchange Offer:  Means the exchange offer which may be made
         pursuant to the Registration Rights Agreement to exchange Initial
         Certificates for Exchange Certificates.

                 Exchange Offer Registration Statement:  Means the registration
         statement that, pursuant to the Registration Rights Agreement, is
         filed by the Company with the SEC with respect to the exchange of
         Initial Certificates for Exchange Certificates.

                 Final Maturity Date:  Means October 1, 2014.

                 Final Withdrawal:  Has the meaning specified in the Escrow
         Agreement.

                 Final Withdrawal Date:  Has the meaning specified in the
         Escrow Agreement.

                 Final Withdrawal Notice:  Has the meaning specified in Section
         2.02.

                 Financing Documents:  With respect to any Equipment Note,
         means (i) the Indenture and the Participation Agreement relating to
         such Equipment Note, and (ii) in the case of any Equipment Note
         related to a Leased Aircraft, the Lease relating to such Leased
         Aircraft.

                 Fractional Undivided Interest:  Means the fractional undivided
         interest in the Trust that is evidenced by a Certificate.

                 Global Certificates:  Has the meaning specified in Section
         3.01(d).

                 Global Exchange Certificate:  Has the meaning specified in
         Section 3.01(f).

                 Indenture:  Means each of the separate trust indentures and
         mortgages relating to the Aircraft, each as specified or described in
         a Delivery Notice delivered pursuant to the






<PAGE>   17
                                                                              12

         Note Purchase Agreement or the related Participation Agreement, in
         each case as the same may be amended, supplemented or otherwise
         modified from time to time in accordance with its terms.

                 Indenture Default:  With respect to any Indenture, means any
         Event of Default (as such term is defined in such Indenture).

                 Initial Certificates:  Means the certificates issued and
         authenticated hereunder substantially in the form of Exhibit A hereto
         other than the Exchange Certificates.

                 Initial Purchasers:  Means, collectively, Credit Suisse First
         Boston Corporation, Morgan Stanley & Co. Incorporated, Chase
         Securities Inc. and Goldman Sachs & Co.

                 Institutional Accredited Investor:  Means an institutional
         investor that is an "accredited investor" within the meaning set forth
         in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
         Securities Act.

                 Intercreditor Agreement:  Means the Intercreditor Agreement
         dated as of March 21, 1997 among the Trustee, the Other Trustees, the
         Liquidity Providers, the liquidity providers relating to the
         Certificates issued under (and as defined in) each of the Other Pass
         Through Trust Agreements, and Wilmington Trust Company, as
         Subordination Agent and as trustee thereunder, as amended,
         supplemented or otherwise modified from time to time in accordance
         with its terms.

                 Investors:  Means the Initial Purchasers together with all
         subsequent beneficial owners of the Certificates.

                 Issuance Date:  Means the date of the issuance of the Initial
         Certificates.

                 Lease:  Means, with respect to each Leased Aircraft, the lease
         between an Owner Trustee, as the lessor, and the Company, as the
         lessee, referred to in the related Indenture, as such lease may be
         amended, supplemented or otherwise modified in accordance with its
         terms.

                 Leased Aircraft:  Has the meaning specified in the second
         recital to this Agreement.






<PAGE>   18
                                                                              13

                 Liquidity Facility:  Means, initially, (i) the Revolving
         Credit Agreement dated as of March 21, 1997 relating to the
         Certificates, between ABN Amro Bank N.V. and the Subordination Agent,
         as agent and trustee for the Trustee, and (ii) the Revolving Credit
         Agreement dated as of March 21, 1997 relating to the Certificates,
         between ING Bank N.V. and the Subordination Agent, as agent and
         trustee for the Trustee, and, from and after the replacement of either
         such Agreement pursuant to the Intercreditor Agreement, the
         replacement liquidity facility therefor, in each case as amended,
         supplemented or otherwise modified from time to time in accordance
         with their respective terms.

                 Liquidity Provider:  Means, initially, each of ABN Amro Bank
         N.V. and ING Bank N.V., and any replacement or successor therefor
         appointed in accordance with the Intercreditor Agreement.

                 Loan Trustee:  With respect to any Equipment Note or the
         Indenture applicable thereto, means the bank or trust company
         designated as trustee under such Indenture, together with any
         successor to such trustee appointed pursuant thereto.

                 New Aircraft:  Has the meaning specified in the Note Purchase
         Agreement.

                 Non-U.S. Person:  Means a Person that is not a "U.S. person",
         as defined in Regulation S.

                 Note Purchase Agreement:  Means the Note Purchase Agreement
         dated as of March 21, 1997 among the Trustee, the Other Trustees, the
         Company, the Escrow Agent, the Escrow Paying Agent and the
         Subordination Agent, providing for, among other things, the purchase
         of Equipment Notes by the Trustee on behalf of the Trust, as the same
         may be amended, supplemented or otherwise modified from time to time,
         in accordance with its terms.

                 Notice of Purchase Withdrawal:  Has the meaning specified in
         the Deposit Agreement.

                 Offering Circular:  Means the Offering Circular dated March
         12, 1997 relating to the offering of the Certificates and the
         certificates issued under the Other Pass Through Trust Agreements.






<PAGE>   19
                                                                              14

                 Officer's Certificate:  Means a certificate signed, (a) in the
         case of the Company, by (i) the Chairman or Vice Chairman of the Board
         of Directors, the President, any Executive Vice President, any Senior
         Vice President or the Treasurer of the Company, signing alone, or (ii)
         any Vice President of the Company signing together with the Secretary,
         the Assistant Secretary, the Treasurer or any Assistant Treasurer of
         the Company or, (b) in the case of an Owner Trustee or a Loan Trustee,
         a Responsible Officer of such Owner Trustee or such Loan Trustee, as
         the case may be.

                 Opinion of Counsel:  Means a written opinion of legal counsel
         who (a) in the case of counsel for the Company may be (i) a senior
         attorney of the Company one of whose principal duties is furnishing
         advice as to legal matters, (ii) Hughes Hubbard & Reed LLP, or (iii)
         such other counsel designated by the Company and reasonably acceptable
         to the Trustee and (b) in the case of counsel for any Owner Trustee or
         any Loan Trustee may be such counsel as may be designated by any of
         them whether or not such counsel is an employee of any of them, and
         who shall be reasonably acceptable to the Trustee.

                 Other Pass Through Trust Agreements:  Means each of the three
         other Continental Airlines 1997-1 Pass Through Trust Agreements
         relating to Continental Airlines Pass Through Trust, Series 1997-1A-O,
         Continental Airlines Pass Through Trust, Series 1997-1C-I-O, and
         Continental Airlines Pass Through Trust, Series 1997-1C- II-O, dated
         the date hereof.

                 Other Trustees:  Means the trustees under the Other Pass
         Through Trust Agreements, and any successor or other trustee appointed
         as provided therein.

                 Other Trusts:  Means the Continental Airlines Pass Through
         Trust, Series 1997-1A-O, Continental Airlines Pass Through Trust,
         Series 1997-1C-I-O, and Continental Airlines Pass Through Trust,
         Series 1997-1C- II-O, created on the date hereof.

                 Outstanding:  When used with respect to Certificates, means,
         as of the date of determination, all Certificates theretofore
         authenticated and delivered under this Agreement, except:






<PAGE>   20
                                                                              15

                      (i)           Certificates theretofore canceled by the
                 Registrar or delivered to the Trustee or the Registrar for
                 cancellation;
                      (ii)          Certificates for which money in the full
                 amount required to make the final distribution with respect to
                 such Certificates pursuant to Section 11.01 hereof has been
                 theretofore deposited with the Trustee in trust for the
                 Holders of such Certificates as provided in Section 4.01
                 pending distribution of such money to such Certificateholders
                 pursuant to payment of such final distribution; and
                      (iii)         Certificates in exchange for or in lieu of
                 which other Certificates have been authenticated and delivered
                 pursuant to this Agreement.

                 Owned Aircraft:  Has the meaning specified in the second
recital to this Agreement.

                 Owner Participant:  With respect to any Equipment Note
         relating to a Leased Aircraft, means the "Owner Participant" as
         referred to in the Indenture pursuant to which such Equipment Note is
         issued and any permitted successor or assign of such Owner
         Participant; and Owner Participants at any time of determination means
         all of the Owner Participants thus referred to in the Indentures.

                 Owner Trustee:  With respect to any Equipment Note relating to
         a Leased Aircraft, means the "Owner Trustee", as referred to in the
         Indenture pursuant to which such Equipment Note is issued, not in its
         individual capacity but solely as trustee; and Owner Trustees means
         all of the Owner Trustees party to any of the Indentures.

                 Participation Agreement:  Means each Participation Agreement
         to be entered into by the Trustee pursuant to the Note Purchase
         Agreement, as the same may be amended, supplemented or otherwise
         modified in accordance with its terms.

                 Paying Agent:  Means the paying agent maintained and appointed
         for the Certificates pursuant to Section 7.12.

                 Permitted Investments:  Means obligations of the United States
         of America or agencies or instrumentalities thereof






<PAGE>   21
                                                                              16

         for the payment of which the full faith and credit of the United
         States of America is pledged, maturing in not more than 60 days after
         the date of acquisition thereof or such lesser time as is required for
         the distribution of any Special Payments on a Special Distribution
         Date.

                 Person:  Means any person, including any individual,
         corporation, limited liability company, partnership, joint venture,
         association, joint-stock company, trust, trustee, unincorporated
         organization, or government or any agency or political subdivision
         thereof.

                 Plan Transferee:  Means any Plan or any entity that is using
         the assets of any Plan to purchase or hold its interest in a
         Certificate.  For purposes of this definition, a "Plan" means any
         employee benefit plan subject to ERISA as well as any plan that is not
         subject to ERISA but which is subject to Section 4975 of the Internal
         Revenue Code of 1986, as amended.

                 Pool Balance:  Means, as of any date, (i) the original
         aggregate face amount of the Certificates less (ii) the aggregate
         amount of all payments made in respect of such Certificates other than
         payments made in respect of interest or premium thereon or
         reimbursement of any costs or expenses incurred in connection
         therewith less (iii) the aggregate amount of unused Deposits
         distributed as a Final Withdrawal other than payments in respect of
         interest or premium thereon.  The Pool Balance as of any Distribution
         Date shall be computed after giving effect to the payment of
         principal, if any, on the Equipment Notes or other Trust Property held
         in such Trust and the distribution thereof to be made on such
         Distribution Date and the distribution of the Final Withdrawal to be
         made on such Distribution Date.

                 Pool Factor:  Means, as of any date, the quotient (rounded to
         the seventh decimal place) computed by dividing (i) the Pool Balance
         as at such date by (ii) the original aggregate face amount of the
         Certificates.  The Pool Factor as of any Distribution Date shall be
         computed after giving effect to the payment of principal, if any, on
         the Equipment Notes or other Trust Property and the distribution
         thereof to be made on such Distribution Date and the distribution of
         the Final Withdrawal to be made on such Distribution Date.






<PAGE>   22
                                                                              17

                 PTC Event of Default:  Means any failure to pay within 10
         Business Days of the due date thereof:  (i) the outstanding Pool
         Balance on the Final Maturity Date or (ii) interest due on the
         Certificates on any Distribution Date (unless the Subordination Agent
         shall have made an Interest Drawing or Drawings (as defined in the
         Intercreditor Agreement), or a withdrawal or withdrawals pursuant to
         section 3.6(f) of the Intercreditor Agreement, with respect thereto in
         an aggregate amount sufficient to pay such interest and shall have
         distributed such amount to the Trustee).

                 QIB:      Means a qualified institutional buyer as defined in
         Rule 144A.

                 Record Date:  Means (i) for Scheduled Payments to be
         distributed on any Regular Distribution Date, other than the final
         distribution, the 15th day (whether or not a Business Day) preceding
         such Regular Distribution Date, and (ii) for Special Payments to be
         distributed on any Special Distribution Date, other than the final
         distribution, the 15th day (whether or not a Business Day) preceding
         such Special Distribution Date.

                 Register and Registrar:  Mean the register maintained and the
         registrar appointed pursuant to Sections 3.04 and 7.12.

                 Registration Event:  Means the declaration of the
         effectiveness by the SEC of the Exchange Offer Registration Statement
         or the Shelf Registration Statement.

                 Registration Rights Agreement:  Means the Exchange and
         Registration Rights Agreement dated as of March 21, 1997, among the
         Initial Purchasers, the Trustee, the Other Trustees and the Company,
         as amended, supplemented or otherwise modified from time to time in
         accordance with its terms.

                 Regular Distribution Date:  With respect to distributions of
         Scheduled Payments in respect of the Certificates, means each date
         designated as a Regular Distribution Date in the Certificates issued
         pursuant to this Agreement, until payment of all the Scheduled
         Payments to be made under the Equipment Notes held in the Trust have
         been made; provided, however, that, if any such day shall






<PAGE>   23
                                                                              18

         not be a Business Day, the related distribution shall be made on the
         next succeeding Business Day without additional interest.

                 Regulation S:  Means Regulation S under the Securities Act or
         any successor regulation thereto.

                 Regulation S Definitive Certificates:  Has the meaning
         specified in Section 3.01(e).

                 Regulation S Global Certificates:  Has the meaning specified
         in Section 3.01(d).

                 Related Pass Through Trust Agreement:  Means the Continental
         Airlines 1997-1 Pass Through Trust Agreement relating to the
         Continental Airlines Pass Through Trust, Series 1997-1B-S, dated the
         date hereof, entered into by the Company and the institution acting as
         trustee thereunder, which agreement becomes effective upon the
         execution and delivery of the Assignment and Assumption Agreement
         pursuant to Section 11.01.

                 Related Trust:  Means the Continental Pass Through Trust,
         Series 1997-1B-S, formed under the Related Pass Through Trust
         Agreement.

                 Related Trustee:  Means the trustee under the Related Pass
         Through Trust Agreement.

                 Responsible Officer:  With respect to the Trustee, any Loan
         Trustee and any Owner Trustee, means any officer in the Corporate
         Trust Office of the Trustee, Loan Trustee or Owner Trustee or any
         other officer customarily performing functions similar to those
         performed by the persons who at the time shall be such officers,
         respectively, or to whom any corporate trust matter is referred
         because of his knowledge of and familiarity with a particular subject.

                 Restricted Definitive Certificates:  Has the meaning specified
         in Section 3.01(e).

                 Restricted Global Certificate:  Has the meaning specified in
         Section 3.01(c).

                 Restricted Legend:  Has the meaning specified in Section 3.02.






<PAGE>   24
                                                                              19

                 Restricted Period:  Has the meaning specified in Section 
         3.01(d).

                 Rule 144A:  Means Rule 144A under the Securities Act and any
         successor rule thereto.

                 Scheduled Payment:  With respect to any Equipment Note, means
         (i) any payment of principal or interest on such Equipment Note (other
         than any such payment which is not in fact received by the
         Subordination Agent within five days of the date on which such payment
         is scheduled to be made) due from the obligor thereon or (ii) any
         payment of interest on the Certificates with funds drawn under any
         Liquidity Facility, which payment represents the installment of
         principal at the stated maturity of such installment of principal on
         such Equipment Note, the payment of regularly scheduled interest
         accrued on the unpaid principal amount of such Equipment Note, or
         both; provided that any payment of principal, premium, if any, or
         interest resulting from the redemption or purchase of any Equipment
         Note shall not constitute a Scheduled Payment.

                 SEC:      Means the Securities and Exchange Commission, as
         from time to time constituted or created under the United States
         Securities Exchange Act of 1934, as amended, or, if at any time after
         the execution of this instrument such Commission is not existing and
         performing the duties now assigned to it under the Trust Indenture
         Act, then the body performing such duties on such date.

                 Securities Act:  Means the United States Securities Act of
         1933, as amended from time to time, or any successor thereto.

                 Shelf Registration Statement:  Means the shelf registration
         statement which may be required to be filed by the Company with the
         SEC pursuant to any Registration Rights Agreement, other than an
         Exchange Offer Registration Statement.

                 Special Distribution Date:  Means each date on which a Special
         Payment is to be distributed as specified in this Agreement; provided,
         however, that, if any such day shall not be a Business Day, the
         related distribution shall be made on the next succeeding Business Day
         without additional interest.






<PAGE>   25
                                                                              20

                 Special Redemption Premium:  Means the premium payable by the
         Company in respect of the Final Withdrawal pursuant to the Note
         Purchase Agreement.

                 Special Payment:  Means any payment (other than a Scheduled
         Payment) in respect of, or any proceeds of, any Equipment Note or
         Trust Indenture Estate (as defined in each Indenture) or Special
         Redemption Premium.

                 Special Payments Account:  Means the account or accounts
         created and maintained pursuant to Section 4.01(b).

                 Subordination Agent:  Has the meaning specified in the
         Intercreditor Agreement.

                 Substitute Aircraft:  Has the meaning specified in the Note
         Purchase Agreement.

                 TIN:  Has the meaning specified in Section 7.16.

                 Transfer Date:  Has the meaning specified in Section 11.01.

                 Triggering Event:  Has the meaning assigned to such term in
         the Intercreditor Agreement.

                 Trust:  Means the trust created by this Agreement, the estate
         of which consists of the Trust Property.

                 Trust Indenture Act:  Means the United States Trust Indenture
         Act of 1939, as amended from time to time, or any successor thereto.

                 Trust Property:  Means (i) the Equipment Notes held as the
         property of the Trust and, subject to the Intercreditor Agreement, all
         monies at any time paid thereon and all monies due and to become due
         thereunder, (ii) funds from time to time deposited in the Certificate
         Account and the Special Payments Account and, subject to the
         Intercreditor Agreement, any proceeds from the sale by the Trustee
         pursuant to Article VI hereof of any Equipment Note and (iii) all
         rights of the Trust and the Trustee, on behalf of the Trust, under the
         Intercreditor Agreement, the Escrow Agreement, the Note Purchase
         Agreement and the Liquidity Facilities, including, without limitation,
         all rights to receive certain payments thereunder, and all monies paid
         to






<PAGE>   26
                                                                              21

         the Trustee on behalf of the Trust pursuant to the Intercreditor
         Agreement or the Liquidity Facilities, provided, that rights with
         respect to the Deposits or under the Escrow Agreement, except for the
         right to direct withdrawals for the purchase of Equipment Notes to be
         held herein, will not constitute Trust Property.

                 Trustee:  Means Wilmington Trust Company, or its successor in
         interest, and any successor or other trustee appointed as provided
         herein.

                 Trustee's Lien:  Has the meaning specified in Section 7.17.

                 Section 1.02.  Compliance Certificates and Opinions.  Upon any
application or request (except with respect to matters set forth in Article II)
by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take
any action under any provision of this Agreement, the Company, such Owner
Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee
(i) an Officer's Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Agreement relating to such particular application or request,
no additional certificate or opinion need be furnished.

                 Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement (other than a certificate
provided pursuant to Section 8.04(e)) shall include:

                 (1)      a statement that each individual signing such
         certificate or opinion has read such covenant or condition and the
         definitions in this Agreement relating thereto;

                 (2)      a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;






<PAGE>   27
                                                                              22

                 (3)      a statement that, in the opinion of each such
         individual, he has made such examination or investigation as is
         necessary to enable him to express an informed opinion as to whether
         or not such covenant or condition has been complied with; and

                 (4)      a statement as to whether, in the opinion of each
         such individual, such condition or covenant has been complied with.

                 Section 1.03.  Form of Documents Delivered to Trustee.  In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters and any such Person may certify or give an
opinion as to such matters in one or several documents.

                 Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement or, in respect of the Certificates, this
Agreement, they may, but need not, be consolidated and form one instrument.

                 Section 1.04.  Directions of Certificateholders.  (a) Any
direction, consent, request, demand, authorization, notice, waiver or other
action provided by this Agreement to be given or taken by Certificateholders (a
"Direction") may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Certificateholders in person or by
an agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required pursuant to this Agreement, to the Company or any Loan Trustee.  Proof
of execution of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement and conclusive
in favor of the Trustee, the Company and any Loan Trustee, if made in the
manner provided in this Section.






<PAGE>   28
                                                                              23

                 (b)      The fact and date of the execution by any Person of
any such instrument or writing may be proved by the certificate of any notary
public or other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the Person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or such other officer and where
such execution is by an officer of a corporation or association or a member of
a partnership, on behalf of such corporation, association or partnership, such
certificate or affidavit shall also constitute sufficient proof of his
authority.  The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.

                 (c)      In determining whether the Certificateholders of the
requisite Fractional Undivided Interests of Certificates Outstanding have given
any Direction under this Agreement, Certificates owned by the Company or any
Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination.  In determining whether the Trustee shall
be protected in relying upon any such Direction, only Certificates which the
Trustee knows to be so owned shall be so disregarded.  Notwithstanding the
foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded, and (ii) if any amount of
Certificates so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Company or any Affiliate thereof.

                 (d)      For all purposes of this Agreement, all Initial
Certificates and all Exchange Certificates shall vote and take all other
actions of Certificateholders together as one series of Certificates.

                 (e)      The Company may at its option, by delivery of an
Officer's Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any Direction.  Notwithstanding Section
316(c) of the Trust Indenture Act, such record date shall be the record date
specified in such Officer's Certificate, which shall be a date not more than 30
days prior to the first solicitation of Certificateholders in connection






<PAGE>   29
                                                                              24

therewith.  If such a record date is fixed, such Direction may be given before
or after such record date, but only the Certificateholders of record at the
close of business on such record date shall be deemed to be Certificateholders
for the purposes of determining whether Certificateholders of the requisite
proportion of Outstanding Certificates have authorized or agreed or consented
to such Direction, and for that purpose the Outstanding Certificates shall be
computed as of such record date; provided that no such Direction by the
Certificateholders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Agreement not later
than one year after such record date.

                 (f)      Any Direction by the Holder of any Certificate shall
bind the Holder of every Certificate issued upon the transfer thereof or in
exchange therefor or in lieu thereof, whether or not notation of such Direction
is made upon such Certificate.

                 (g)      Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates.

                                   ARTICLE II

                       ORIGINAL ISSUANCE OF CERTIFICATES;

                         ACQUISITION OF EQUIPMENT NOTES

                 Section 2.01.  Issuance of Certificates; Acquisition of
Equipment Notes.  (a)  The Trustee is hereby directed (i) to execute and
deliver the Intercreditor Agreement, the Registration Rights Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company and (ii) subject
to the respective terms thereof, to perform its obligations thereunder.  Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Certificate Purchase Agreement, the Trustee shall execute,
deliver, authenticate, issue and sell Certificates in authorized denominations
equalling in the aggregate the amount set forth, with respect to the Trust, in
Schedule II to the Certificate Purchase Agreement evidencing the entire
ownership interest in the Trust, which amount equals the maximum aggregate
principal amount of Equipment Notes which






<PAGE>   30
                                                                              25

may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.06, 3.07  and 3.10 hereof, the
Trustee shall not execute, authenticate or deliver Certificates in excess of
the aggregate amount specified in this paragraph.

                 (b)      On or after the Issuance Date, the Company may
deliver from time to time to the Trustee a Delivery Notice relating to one or
more Equipment Notes.  After receipt of a Delivery Notice and in any case no
later than one Business Day prior to a Delivery Date as to which such Delivery
Notice relates (the "Applicable Delivery Date") (or, if the Issuance Date is an
Applicable Delivery Date, on the Issuance Date), the Trustee shall (as and when
specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice
of Purchase Withdrawal to the Depositary requesting (A) the withdrawal of one
or more Deposits on the Applicable Delivery Date in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement
and (B) the payment of all, or a portion, of such Deposit or Deposits in an
amount equal in the aggregate to the purchase price of such Equipment Notes to
or on behalf of the Owner Trustee or the Company, as the case may be, issuing
such Equipment Notes, all as shall be described in the Delivery Notice;
provided that, if the Issuance Date is an Applicable Delivery Date, such
purchase price shall be paid from a portion of the proceeds of the sale of the
Certificates.  The Trustee shall (as and when specified in such Delivery
Notice), subject to the conditions set forth in Section 2 of the Note Purchase
Agreement, enter into and perform its obligations under the Participation
Agreement specified in such Delivery Notice (the "Applicable Participation
Agreement") and cause such certificates, documents and legal opinions relating
to the Trustee to be duly delivered as required by the Applicable Participation
Agreement.  If at any time prior to the Applicable Delivery Date, the Trustee
receives a notice of postponement pursuant to Section 2(e) or 2(f) of the Note
Purchase Agreement, then the Trustee shall give the Depositary (with a copy to
the Escrow Agent) a notice of cancellation of such Notice of Purchase
Withdrawal relating to such Deposit or Deposits on such Applicable Delivery
Date.  Upon satisfaction of the conditions specified in the Note Purchase
Agreement and the Applicable Participation Agreement, the Trustee shall
purchase the applicable Equipment Notes with the proceeds of the withdrawals of
one or more Deposits made on the Applicable Delivery Date in accordance with
the terms of the Deposit Agreement and the Escrow






<PAGE>   31
                                                                              26

Agreement (or, if the Issuance Date is Applicable Delivery Date with respect to
such Applicable Participation Agreement, from a portion of the proceeds of the
sale of the Certificates).  The purchase price of such Equipment Notes shall
equal the principal amount of such Equipment Notes.  Amounts withdrawn from
such Deposit or Deposits in excess of the purchase price of the Equipment Notes
or to the extent not applied on the Applicable Delivery Date to the purchase
price of the Equipment Notes, shall be re-deposited by the Trustee with the
Depositary on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement.

                 Section 2.02.  Withdrawal of Deposits.     If any Deposits
remain outstanding on the Business Day next succeeding the Cut-Off Date, (i)
(A) the Trustee shall give the Escrow Agent notice that the Trustee's
obligation to purchase Equipment Notes under the Note Purchase Agreement has
terminated and instruct the Escrow Agent to provide a notice of Final
Withdrawal to the Depositary substantially in the form of Exhibit B to the
Deposit Agreement (the "Final Withdrawal Notice") and (B) the Trustee will make
a demand upon the Company under the Note Purchase Agreement for an amount equal
to the Special Redemption Premium, such payment to be made on the Final
Withdrawal Date.

                 Section 2.03.  Acceptance by Trustee.  The Trustee, upon the
execution and delivery of this Agreement, acknowledges its acceptance of all
right, title and interest in and to the  Trust Property and declares that the
Trustee holds and will hold such right, title and interest for the benefit of
all then present and future Certificateholders, upon the trusts herein set
forth.  Subject to Section 7.14, the Trustee shall take all actions reasonably
necessary to effect the registration of all such Equipment Notes in the name of
the Subordination Agent.  By its payment for and acceptance of each Certificate
issued to it under this Agreement, each initial Certificateholder as grantor of
the Trust thereby joins in the creation and declaration of the Trust.

                 Section 2.04.  Limitation of Powers.  The Trust is constituted
solely for the purpose of making the investment in the Equipment Notes, and,
except as set forth herein, the Trustee shall not be authorized or empowered to
acquire any other investments or engage in any other activities and, in
particular, the Trustee shall not be authorized or empowered to do anything
that would cause such Trust to fail to qualify as a "grantor






<PAGE>   32
                                                                              27

trust" for federal income tax purposes (including as subject to this
restriction, acquiring any Aircraft (as defined in the respective Indentures)
by bidding such Equipment Notes or otherwise, or taking any action with respect
to any such Aircraft once acquired).

                                  ARTICLE III

                                THE CERTIFICATES

                 Section 3.01.  Title, Form, Denomination and Execution of
Certificates.  (a)  The Initial Certificates shall be known as the "7.461%
Initial Pass Through Certificates, Series 1997-1B-0" and the Exchange
Certificates shall be known as the "7.461% Exchange Pass Through Certificates,
Series 1997-1B-O", in each case, of the Trust.  Each Certificate will represent
a fractional undivided interest in the Trust and shall be substantially in the
form set forth as Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the Trustee or the officers executing
such Certificates, as evidenced by the Trustee's or officer's execution of the
Certificates.  At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate.  In
any event, any transfer or exchange of any Certificate shall also effect a
transfer or exchange of the related Escrow Receipt.  Prior to the Final
Withdrawal Date, no transfer or exchange of any Certificate shall be permitted
unless the corresponding Escrow Receipt is attached thereto and also is so
transferred or exchanged.  By acceptance of any Certificate to which an Escrow
Receipt is attached, each Holder of such a Certificate acknowledges and accepts
the restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.

                 (b)      The Initial Certificates shall be issued only in
fully registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a different denomination.  The Exchange Certificates will be
issued in denominations of $1,000 or integral multiples thereof, except that
one Certificate may be issued in a different denomination.






<PAGE>   33
                                                                              28

Each Certificate shall be dated the date of its authentication.  The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$148,333,000.

                 (c)      The Initial Certificates offered and sold in reliance
on Rule 144A shall be issued in the form of one or more global Certificates
substantially in the form of Exhibit A hereto with such applicable legends as
are provided for in Section 3.02 (each a "Restricted Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided.  Such
Restricted Global Certificates shall be in registered form and be registered in
the name of DTC and deposited with the Trustee, at its Corporate Trust Office,
as custodian for DTC.  The aggregate principal amount of any Restricted Global
Certificate may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC for such Restricted Global
Certificate, as provided in Section 3.06 hereof, which adjustments shall be
conclusive as to the aggregate principal amount of any such Global Certificate.

                 (d)  The Initial Certificates offered and sold outside the
United States in reliance on Regulation S shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each a
"Regulation S Global Certificate") duly executed and authenticated by the
Trustee as hereinafter provided.  Such Regulation S Global Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian for DTC, for credit
initially and during the Restricted Period (hereinafter defined) to the
respective accounts of beneficial owners of such Certificates (or to such other
accounts as they may direct) at Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel.  As used herein, the term
"Restricted Period", with respect to the Regulation S Global Certificates
offered and sold in reliance on Regulation S, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
the Certificates are first offered to persons other than distributors (as
defined in Regulation S) in reliance on Regulation S and (ii) the date of the
closing of the offering under the Certificate Purchase Agreement.  The
aggregate principal amount of any Regulation S Global Certificate may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC for such Global Certificate, as provided in
Section 3.06 hereof, which adjustments shall be






<PAGE>   34
                                                                              29

conclusive as to the aggregate principal amount of any such Global Certificate.
The Restricted Global Certificate and Regulation S Global Certificate are
sometimes collectively referred to herein as the "Global Certificates".

                 (e)      Initial Certificates offered and sold to any
Institutional Accredited Investor which is not a QIB in a transaction exempt
from registration under the Securities Act (and other than as described in
Section 3.01(d)) shall be issued substantially in the form of Exhibit A hereto
in definitive, fully registered form without interest coupons with such
applicable legends as are provided for in Section 3.02 (the "Restricted
Definitive Certificates") duly executed and authenticated by the Trustee as
hereinafter provided.  Certificates issued pursuant to Section 3.05(b) in
exchange for interests in a Regulation S Global Certificate shall be issued in
definitive, fully registered form without interest coupons (the "Regulation S
Definitive Certificates").  The Restricted Definitive Certificates and the
Regulation S Definitive Certificates are sometimes collectively referred to
herein as the "Definitive Certificates".

                 (f)      The Exchange Certificates shall be issued in the form
of one or more global Certificates substantially in the form of Exhibit A
hereto (each, a "Global Exchange Certificate"), except that (i) the Restricted
Legend (hereinafter defined) shall be omitted and (ii) such Exchange
Certificates shall contain such appropriate insertions, omissions,
substitutions and other variations from the form set forth in Exhibit A hereto
relating to the nature of the Exchange Certificates as the Responsible Officer
of the Trustee executing such Exchange Certificates on behalf of the Trust may
determine, as evidenced by such officer's execution on behalf of the Trust of
such Exchange Certificates.  Such Global Exchange Certificates shall be in
registered form and be registered in the name of DTC and deposited with the
Trustee, at its Corporate Trust Office, as custodian for DTC.  The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificate.  Subject to clause (i) and (ii) of the first sentence of this
Section 3.01(f), the terms hereof applicable to Restricted Global






<PAGE>   35
                                                                              30

Certificates and/or Global Certificates shall apply to the Global Exchange
Certificates, mutatis mutandis.

                 (g)      The definitive Certificates shall be in registered
form and shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner, all as
determined by the officers executing such Certificates, as evidenced by their
execution of such Certificates.

                 Section 3.02.  Restrictive Legends.  All Initial Certificates
issued pursuant to this Agreement for resale pursuant to Rule 144A or offered
and sold to any Institutional Accredited Investor which is not a QIB (including
any Global Certificate issued upon registration of transfer, in exchange for or
in lieu of such Certificates) shall be "Restricted Certificates" and shall bear
a legend to the following effect (the "Restricted Legend") unless the Company
and the Trustee determine otherwise consistent with applicable law:

                 "THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
         SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
         ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
         TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH
         IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
         REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
         DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
         INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
         (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
         "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.  PERSON
         AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN
         COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
         IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
         OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
         HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
         ANY OF SUCH PERSONS RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE
         EXCEPT (A) TO CONTINENTAL AIRLINES, INC., (B) TO A QUALIFIED
         INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
         ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
         COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
         EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
         ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
         STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IF IT SHOULD
         RESELL OR






<PAGE>   36
                                                                              31

         OTHERWISE TRANSFER THIS CERTIFICATE IT WILL DELIVER TO EACH PERSON TO
         WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
         EFFECT OF THIS LEGEND.  IN CONNECTION WITH ANY TRANSFER OF THIS
         CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
         OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
         HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY AFFILIATE OF
         ANY OF SUCH PERSONS, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
         FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
         AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.  AS USED HEREIN, THE TERMS
         "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
         MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.  THE
         PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
         TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN
         VIOLATION OF THE FOREGOING RESTRICTIONS."

                 Each Global Certificate shall bear the following legend on the
face thereof:

                 "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
         REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
         ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
         EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS
         CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
         NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
         PAYMENT HEREON IS MADE TO CEDE & CO.  OR TO SUCH OTHER ENTITY AS IS
         REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
         PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
         IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
         AN INTEREST HEREIN.
                 TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
         TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
         SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
         PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE
         IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND
         3.06 OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN."

                 Section 3.03.  Authentication of Certificates.  (a)  On the
Issuance Date, the Trustee shall duly execute, authenticate and deliver
Certificates in authorized denominations equalling in the aggregate the amount
set forth, with respect to the Trust, in






<PAGE>   37
                                                                              32

Schedule II to the Certificate Purchase Agreement, evidencing the entire
ownership of the Trust, which amount equals the maximum aggregate principal
amount of Equipment Notes which may be purchased by the Trustee pursuant to the
Note Purchase Agreement.

                 (b)      No Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.

                 Section 3.04.  Transfer and Exchange.  The Trustee shall cause
to be kept at the office or agency to be maintained by it in accordance with
the provisions of Section 7.12 a register (the "Register") of the Certificates
in which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of such Certificates and of
transfers and exchanges of such Certificates as herein provided.  The Trustee
shall initially be the registrar (the "Registrar") for the purpose of
registering such Certificates and transfers and exchanges of such Certificates
as herein provided.

                 All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid obligations of the Trust, evidencing
the same interest therein, and entitled to the same benefits under this Trust
Agreement, as the Certificates surrendered upon such registration of transfer
or exchange.

                 A Certificateholder may transfer a Certificate, or request
that a Certificate be exchanged for Certificates in an aggregate Fractional
Undivided Interest equal to the Fractional Undivided Interest of such
Certificate surrendered for exchange of other authorized denominations, by
surrender of such Certificate to the Trustee with the form of transfer notice
thereon duly completed and executed, and otherwise complying with the terms of
this Agreement, including providing evidence of compliance with any
restrictions on transfer, in form satisfactory to the Trustee and the
Registrar; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be






<PAGE>   38
                                                                              33

provided to the Trustee by the Company).  No such transfer shall be effected
until, and such transferee shall succeed to the rights of a Certificateholder
only upon, final acceptance and registration of the transfer by the Registrar
in the Register.  Prior to the registration of any transfer by a
Certificateholder as provided herein, the Trustee shall treat the person in
whose name the Certificate is registered as the owner thereof for all purposes,
and the Trustee shall not be affected by notice to the contrary.  Furthermore,
DTC shall, by acceptance of a Global Certificate, agree that transfers of
beneficial interests in such Global Certificate may be effected only through a
book-entry system maintained by DTC (or its agent), and that ownership of a
beneficial interest in the Certificate shall be required to be reflected in a
book-entry.  When Certificates are presented to the Registrar with a request to
register the transfer thereof or to exchange them for other authorized
denominations of a Certificate in a Fractional Undivided Interest equal to the
aggregate Fractional Undivided Interest of Certificates surrendered for
exchange, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met.

                 To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee
shall execute and authenticate Certificates at the Registrar's request.  No
service charge shall be made to a Certificateholder for any registration of
transfer or exchange of Certificates, but the Trustee shall require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.  All Certificates
surrendered for registration of transfer or exchange shall be canceled and
subsequently destroyed by the Trustee.

                 Section 3.05.  Book-Entry Provisions for Restricted Global
Certificates and Regulation S Global Certificates. (a)  Members of, or
participants in, DTC ("Agent Members") shall have no rights under this
Agreement with respect to any Global Certificate held on their behalf by DTC,
or the Trustee as its custodian, and DTC may be treated by the Trustee and any
agent of the Trustee as the absolute owner of such Global Certificate for all
purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall
prevent the Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by DTC or shall
impair, as between DTC






<PAGE>   39
                                                                              34

and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Certificate.  Upon the issuance of
any Global Certificate, the Registrar or its duly appointed agent shall record
DTC as the registered holder of such Global Certificate.

                 (b)      Transfers of any Global Certificate shall be limited
to transfers of such Restricted Global Certificate or Regulation S Global
Certificate in whole, but not in part, to DTC.  Beneficial interests in the
Restricted Global Certificate and any Regulation S Global Certificate may be
transferred in accordance with the rules and procedures of DTC and the
provisions of Section 3.06.  Beneficial interests in a Restricted Global
Certificate or a Regulation S Global Certificate shall be delivered to all
beneficial owners thereof in the form of Restricted Definitive Certificates or
Regulation S Definitive Certificates, as the case may be, if (i) DTC notifies
the Trustee that it is unwilling or unable to continue as depositary for such
Restricted Global Certificate or Regulation S Global Certificate, as the case
may be, and a successor depositary is not appointed by the Trustee within 90
days of such notice, and (ii) after the occurrence and during the continuance
of an Event of Default, owners of beneficial interests in a Global Certificate
with Fractional Undivided Interests aggregating not less than a majority in
interest in the Trust advise the Trustee, the Company and DTC through Agent
Members in writing that the continuation of a book-entry system through DTC or
its successor is no longer in their best interests.

                 (c)  Any beneficial interest in one of the Global Certificates
that is transferred to a Person who takes delivery in the form of an interest
in another Global Certificate will, upon such transfer, cease to be an interest
in such Global Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests
in such other Global Certificate for as long as it remains such an interest.

                 (d)  In connection with the transfer of an entire Restricted
Global Certificate or an entire Regulation S Global Certificate to the
beneficial owners thereof pursuant to paragraph (b) of this Section 3.05, such
Restricted Global Certificate or Regulation S Global Certificate, as the case
may be, shall be deemed to be surrendered to the Trustee for






<PAGE>   40
                                                                              35

cancellation, and the Trustee shall execute, authenticate and deliver, to each
beneficial owner identified by DTC in exchange for its beneficial interest in
such Restricted Global Certificate or Regulation S Global Certificate, as the
case may be, an equal aggregate principal amount of Restricted Definitive
Certificates or Regulation S Definitive Certificates, as the case may be, of
authorized denominations.  None of the Company, the Registrar, the Paying Agent
nor the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
registration instructions.  Upon the issuance of Definitive Certificates, the
Trustee shall recognize the Person in whose name the Definitive Certificates
are registered in the Register as Certificateholders hereunder.  Neither the
Company nor the Trustee shall be liable if the Trustee or the Company is unable
to locate a qualified successor clearing agency.

                 (e)  Any Definitive Certificate delivered in exchange for an
interest in the Restricted Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (e) of Section
3.06, bear the Restricted Legend.

                 (f)  Prior to the expiration of the Restricted Period, any
Regulation S Definitive Certificate delivered in exchange for an interest in a
Regulation S Global Certificate pursuant to paragraph (b) of this Section shall
bear the Restricted Legend.

                 (g)  The registered holder of any Restricted Global
Certificate or Regulation S Global Certificate may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Agreement or the Certificates.

                 Section 3.06.  Special Transfer Provisions.  Unless and until
(i) an Initial Certificate is sold under an effective Shelf Registration
Statement, or (ii) an Initial Certificate is exchanged for an Exchange
Certificate pursuant to an effective Exchange Offer Registration Statement, in
each case pursuant to the terms of the Registration Rights Agreement, the
following provisions shall apply to such Initial Certificates:

                 (a)      Transfers to Non-QIB Institutional Accredited
         Investors.  The following provisions shall apply with






<PAGE>   41
                                                                              36

         respect to the registration of any proposed transfer of a Certificate
         to any Institutional Accredited Investor which is neither a QIB nor a
         Non-U.S. Person:

                          (i)     The Registrar shall register the transfer of
                 any Certificate, whether or not bearing the Restricted Legend,
                 only if (x) the requested transfer is at least two years after
                 the later of the original issue date of the Certificates and
                 the last date on which such Certificate was held by the
                 Company, the Trustee or any affiliate of any of such Persons
                 or (y) the proposed transferor is an Initial Purchaser who is
                 transferring Certificates purchased under the Certificates
                 Purchase Agreement and the proposed transferee has delivered
                 to the Registrar a letter substantially in the form of Exhibit
                 C hereto and the aggregate principal amount of the
                 Certificates being transferred is at least $100,000.  Except
                 as provided in the foregoing clause (y), the Registrar shall
                 not register the transfer of any Certificate to any
                 Institutional Accredited Investor which is neither a QIB nor a
                 Non- U.S. Person.

                          (ii)    If the proposed transferor is an Agent Member
                 holding a beneficial interest in a Restricted Global
                 Certificate, upon receipt by the Registrar of (x) the
                 documents, if any, required by paragraph (i) and (y)
                 instructions given in accordance with DTC's and the
                 Registrar's procedures, the Registrar shall reflect on its
                 books and records the date of the transfer and a decrease in
                 the principal amount of such Restricted Global Certificate in
                 an amount equal to the principal amount of the beneficial
                 interest in such Restricted Global Certificate to be
                 transferred, and the Trustee shall execute, authenticate and
                 deliver to the transferor or at its direction, one or more
                 Restricted Definitive Certificates of like tenor and amount.

                 (b)      Transfers to QIBs.  The following provisions shall
         apply with respect to the registration of any proposed transfer of an
         Initial Certificate to a QIB (excluding Non-U.S. Persons):

                          (i)     If the Certificate to be transferred consists
                 of Restricted Definitive Certificates, or of






<PAGE>   42
                                                                              37

                 an interest in any Regulation S Global Certificate during the
                 Restricted Period, the Registrar shall register the transfer
                 if such transfer is being made by a proposed transferor who
                 has checked the box provided for on the form of Initial
                 Certificate stating, or has otherwise advised the Trustee and
                 the Registrar in writing, that the sale has been made in
                 compliance with the provisions of Rule 144A to a transferee
                 who has signed the certification provided for on the form of
                 Initial Certificate stating, or has otherwise advised the
                 Trustee and the Registrar in writing, that it is purchasing
                 the Initial Certificate for its own account or an account with
                 respect to which it exercises sole investment discretion and
                 that it, or the Person on whose behalf it is acting with
                 respect to any such account, is a QIB within the meaning of
                 Rule 144A, and is aware that the sale to it is being made in
                 reliance on Rule 144A and acknowledges that it has received
                 such information regarding the Trust and/or the Company as it
                 has requested pursuant to Rule 144A or has determined not to
                 request such information and that it is aware that the
                 transferor is relying upon its foregoing representations in
                 order to claim the exemption from registration provided by
                 Rule 144A.

                          (ii)    Upon receipt by the Registrar of the
                 documents required by clause (i) above and instructions given
                 in accordance with DTC's and the Registrar's procedures
                 therefor, the Registrar shall reflect on its books and records
                 the date of such transfer and an increase in the principal
                 amount of a Restricted Global Certificate in an amount equal
                 to the principal amount of the Restricted Definitive
                 Certificates or interests in such Regulation S Global
                 Certificate, as the case may be, being transferred, and the
                 Trustee shall cancel such Definitive Certificates or decrease
                 the amount of such Regulation S Global Certificate so
                 transferred.

                 (c)      Transfers of Interests in the Regulation S Global
         Certificate or Regulation S Definitive Certificates.  After the
         expiration of the Restricted Period, the Registrar shall register any
         transfer of interests in any Regulation S Global Certificate or
         Regulation S Definitive Certificates without requiring any additional
         certification.  Until the expiration of the Restricted Period,
         interests in the






<PAGE>   43
                                                                              38

         Regulation S Global Certificate may only be held through Agent Members
         acting for and on behalf of Euroclear and Cedel.

                 (d)      Transfers to Non-U.S. Persons at Any Time.  The
         following provisions shall apply with respect to any registration of
         any transfer of an Initial Certificate to a Non-U.S. Person:

                          (i)     Prior to the expiration of the Restricted
                 Period, the Registrar shall register any proposed transfer of
                 an Initial Certificate to a Non-U.S.Person upon receipt of a
                 certificate substantially in the form set forth as Exhibit B
                 hereto from the proposed transferor.

                          (ii)    After the expiration of the Restricted
                 Period, the Registrar shall register any proposed transfer to
                 any Non-U.S. Person if the Certificate to be transferred is a
                 Restricted Definitive Certificate or an interest in a
                 Restricted Global Certificate, upon receipt of a certificate
                 substantially in the form of Exhibit B from the proposed
                 transferor.  The Registrar shall promptly send a copy of such
                 certificate to the Company.

                          (iii)   Upon receipt by the Registrar of (x) the
                 documents, if any, required by clause (ii) and (y)
                 instructions in accordance with DTC's and the Registrar's
                 procedures, the Registrar shall reflect on its books and
                 records the date of such transfer and a decrease in the
                 principal amount of such Restricted Global Certificate in an
                 amount equal to the principal amount of the beneficial
                 interest in such Restricted Global Certificate to be
                 transferred, and, upon receipt by the Registrar of
                 instructions given in accordance with DTC's and the
                 Registrar's procedures, the Registrar shall reflect on its
                 books and records the date and an increase in the principal
                 amount of the Regulation S Global Certificate in an amount
                 equal to the principal amount of the Restricted Definitive
                 Certificate or the Restricted Global Certificate, as the case
                 may be, to be transferred, and the Trustee shall cancel the
                 Definitive Certificate, if any, so






<PAGE>   44
                                                                              39

                 transferred or decrease the amount of such Restricted Global
Certificate.

                 (e)      Restricted Legend.  Upon the transfer, exchange or
         replacement of Certificates not bearing the Restricted Legend, the
         Registrar shall deliver Certificates that do not bear the Restricted
         Legend.  Upon the transfer, exchange or replacement of Certificates
         bearing the Restricted Legend, the Registrar shall deliver only
         Certificates that bear the Restricted Legend unless either (i) the
         circumstances contemplated by paragraph (d)(ii) of this Section 3.06
         exist or (ii) there is delivered to the Registrar an Opinion of
         Counsel to the effect that neither such legend nor the related
         restrictions on transfer are required in order to maintain compliance
         with the provisions of the Securities Act.
                 (f)      General.  By acceptance of any Certificate bearing
         the Restricted Legend, each Holder of such a Certificate acknowledges
         the restrictions on transfer of such Certificate set forth in this
         Agreement and agrees that it will transfer such Certificate only as
         provided in this Agreement.  The Registrar shall not register a
         transfer of any Certificate unless such transfer complies with the
         restrictions on transfer, if any, of such Certificate set forth in
         this Agreement.  In connection with any transfer of Certificates, each
         Certificateholder agrees by its acceptance of the Certificates to
         furnish the Registrar or the Trustee such certifications, legal
         opinions or other information as either of them may reasonably require
         to confirm that such transfer is being made pursuant to an exemption
         from, or a transaction not subject to, the registration requirements
         of the Securities Act and in accordance with the terms and provisions
         of this Article III; provided that the Registrar shall not be required
         to determine the sufficiency of any such certifications, legal
         opinions or other information.

                 Until such time as no Certificates remain Outstanding, the
Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 3.05 or this Section 3.06.  The
Trustee, if not the Registrar at such time, shall have the right to inspect and
make copies of all such letters, notices or other written communications at any






<PAGE>   45
                                                                              40

reasonable time upon the giving of reasonable written notice to the Registrar.

                 Section 3.07.  Mutilated, Destroyed, Lost or Stolen
Certificates.  If (a) any mutilated Certificate is surrendered to the Registrar
or the Registrar receives evidence to its satisfaction of the destruction, loss
or theft of any Certificate and (b) there is delivered to the Registrar and the
Trustee such security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the Registrar or the
Trustee that such destroyed, lost or stolen Certificate has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of the
Uniform Commercial Code in effect in any applicable jurisdiction are met, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.

                 In connection with the issuance of any new Certificate under
this Section 3.07, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Registrar) connected therewith.

                 Any duplicate Certificate issued pursuant to this Section 3.07
shall constitute conclusive evidence of the appropriate Fractional Undivided
Interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.

                 The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen
Certificates.

                 Section 3.08.  Persons Deemed Owners.  Prior to due
presentment of a Certificate for registration of transfer, the Trustee, the
Registrar and any Paying Agent may treat the Person in whose name any
Certificate is registered (as of the day of determination) as the owner of such
Certificate for the purpose of receiving distributions pursuant to Article IV
and for all other purposes whatsoever, and none of the Trustee, the Registrar






<PAGE>   46
                                                                              41

or any Paying Agent shall be affected by any notice to the contrary.

                 Section 3.09.  Cancellation.  All Certificates surrendered for
payment or transfer or exchange shall, if surrendered to the Trustee or any
agent of the Trustee other than the Registrar, be delivered to the Registrar
for cancellation and shall promptly be canceled by it.  No Certificates shall
be authenticated in lieu of or in exchange for any Certificates canceled as
provided in this Section, except as expressly permitted by this Agreement.  All
canceled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.

                 Section 3.10.  Temporary Certificates.  Until definitive
Certificates are ready for delivery, the Trustee shall authenticate temporary
Certificates.  Temporary Certificates shall be substantially in the form of
definitive Certificates but may have insertions, substitutions, omissions and
other variations determined to be appropriate by the officers executing the
temporary Certificates, as evidenced by their execution of such temporary
Certificates.  If temporary Certificates are issued, the Trustee will cause
definitive Certificates to be prepared without unreasonable delay.  After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee designated for such purpose
pursuant to Section 7.12, without charge to the Certificateholder.  Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall execute, authenticate and deliver in exchange therefor a like
face amount of definitive Certificates of authorized denominations.  Until so
exchanged, the temporary Certificates shall be entitled to the same benefits
under this Agreement as definitive Certificates.

                 Section 3.11.  Limitation of Liability for Payments.  All
payments and distributions made to Certificateholders in respect of the
Certificates shall be made only from the Trust Property and only to the extent
that the Trustee shall have sufficient income or proceeds from the Trust
Property to make such payments in accordance with the terms of Article IV of
this Agreement.  Each Certificateholder, by its acceptance of a Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Property for any payment or distribution






<PAGE>   47
                                                                              42

due to such Certificateholder pursuant to the terms of this Agreement and that
it will not have any recourse to the Company, the Trustee, the Loan Trustees,
the Liquidity Providers, the Owner Trustees or the Owner Participants, except
as otherwise expressly provided herein or in the Intercreditor Agreement.

                 The Company is a party to this Agreement solely for purposes
of meeting the requirements of the Trust Indenture Act, and therefore shall not
have any right, obligation or liability hereunder (except as otherwise
expressly provided herein).

                 Section 3.12     ERISA Restrictive Legend.  All Certificates
issued pursuant to this Agreement shall bear a legend to the following effect
(the "ERISA Legend") unless the Company and the Trustee determine otherwise
consistent with applicable law:

                 "BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT
         IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST
         AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING THE ASSETS OF ITS
         GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE, AND THE CONDITIONS OF
         PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY THE U.S.
         DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
         CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE PASS
         THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
         REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
         THE FOREGOING RESTRICTIONS."

                 By acceptance of any Certificate bearing the ERISA Legend,
each Holder of such a Certificate acknowledges the restrictions on transfer of
such Certificate set forth in this Agreement and agrees that it will transfer
such Certificate only as provided in this Agreement.  The Registrar shall not
register a transfer of any Certificate unless such transfer complies with the
restrictions on transfer, if any, of such Certificate set forth in such legend.

                                   ARTICLE IV

                          DISTRIBUTIONS; STATEMENTS TO

                               CERTIFICATEHOLDERS

                 Section 4.01.  Certificate Account and Special Payments
Account.  (a)  The Trustee shall establish and maintain on behalf






<PAGE>   48
                                                                              43

of the Certificateholders a Certificate Account as one or more
non-interest-bearing accounts.  The Trustee shall hold the Certificate Account
in trust for the benefit of the Certificateholders, and shall make or permit
withdrawals therefrom only as provided in this Agreement.  On each day when a
Scheduled Payment is made to the Trustee under the Intercreditor Agreement, the
Trustee upon receipt thereof shall immediately deposit the aggregate amount of
such Scheduled Payment in the Certificate Account.

                 (b)      The Trustee shall establish and maintain on behalf of
the Certificateholders a Special Payments Account as one or more accounts,
which shall be non-interest bearing except as provided in Section 4.04.  The
Trustee shall hold the Special Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom only as
provided in this Agreement.  On each day when one or more Special Payments are
made to the Trustee under the Intercreditor Agreement and upon the payment of
the Special Redemption Premium to the Trustee under the Note Purchase
Agreement, the Trustee, upon receipt thereof, shall immediately deposit the
aggregate amount of such Special Payments in the Special Payments Account.

                 (c)      The Trustee shall cause the Subordination Agent to
present to the related Loan Trustee of each Equipment Note such Equipment Note
on the date of its stated final maturity or, in the case of any Equipment Note
which is to be redeemed in whole pursuant to the related Indenture, on the
applicable redemption date under such Indenture.

                 Section 4.02.  Distributions from Certificate Account and
Special Payments Account.  (a)  On each Regular Distribution Date or as soon
thereafter as the Trustee has confirmed receipt of the payment of all or any
part of the Scheduled Payments due on such date, the Trustee shall distribute
out of the Certificate Account the entire amount deposited therein pursuant to
Section 4.01(a).  There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Regular Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by check
mailed to such Certificateholder, at the address appearing in the Register,
such Certificateholder's pro rata share (based on the Fractional Undivided
Interest in the Trust held by such Certificateholder) of the total amount in
the Certificate Account, except that, with respect to Certificates registered
on the Record Date in the name






<PAGE>   49
                                                                              44

of DTC, such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.

                 (b)      On each Special Distribution Date with respect to any
Special Payment or as soon thereafter as the Trustee has confirmed receipt of
any Special Payments due on the Equipment Notes held in the related Trust or
realized upon the sale of such Equipment Notes or receipt of the Special
Redemption Premium, the Trustee shall distribute out of the Special Payments
Account the entire amount of such Special Payment deposited therein pursuant to
Section 4.01(b).  There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Special Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by check
mailed to such Certificateholder, at the address appearing in the Register,
such Certificateholder's pro rata share (based on the Fractional Undivided
Interest in the Trust held by such Certificateholder) of the total amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of DTC,
such distribution shall be made by wire transfer in immediately available funds
to the account designated by DTC.

                 (c)      The Trustee shall, at the expense of the Company,
cause notice of each Special Payment to be mailed to each Certificateholder at
his address as it appears in the Register.  In the event of redemption or
purchase of Equipment Notes held in the Trust, such notice shall be mailed not
less than 20 days prior to the Special Distribution Date for the Special
Payment resulting from such redemption or purchase, which Special Distribution
Date shall be the date of such redemption or purchase.  In the event of the
payment of a Special Redemption Premium by the Company to the Trustee under the
Note Purchase Agreement, such notice shall be mailed, together with the notice
by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement, not less
than 20 days prior to the Special Distribution Date for such amount, which
Special Distribution Date shall be the Final Withdrawal Date.  In the case of
any other Special Payments, such notice shall be mailed as soon as practicable
after the Trustee has confirmed that it has received funds for such Special
Payment, stating the Special Distribution Date for such Special Payment which
shall occur not less than 20 days after the date of such notice and as soon as
practicable thereafter.  Notices mailed by the Trustee shall set forth:






<PAGE>   50
                                                                              45

                          (i)     the Special Distribution Date and the Record
                 Date therefor (except as otherwise provided in Section 11.01),

                          (ii)    the amount of the Special Payment for each
                 $1,000 face amount Certificate and the amount thereof
                 constituting principal, premium, if any, and interest,

                          (iii)   the reason for the Special Payment, and

                          (iv)    if the Special Distribution Date is the same
                 date as a Regular Distribution Date, the total amount to be
                 received on such date for each $1,000 face amount Certificate.

                 If the amount of (i) premium, if any, payable upon the
redemption or purchase of an Equipment Note or (ii) the Special Redemption
Premium, if any, has not been calculated at the time that the Trustee mails
notice of a Special Payment, it shall be sufficient if the notice sets forth
the other amounts to be distributed and states that any premium received will
also be distributed.

                 If any redemption of the Equipment Notes held in the Trust is
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.

                 Section 4.03. Statements to Certificateholders.  (a)  On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow
Agreement).  Such statement shall set forth (per $1,000 face amount Certificate
as to (ii), (iii), (iv) and (v) below) the following information:

                          (i)     the aggregate amount of funds distributed on
                 such Distribution Date hereunder and under the Escrow
                 Agreement, indicating the amount allocable to each source;

                          (ii)    the amount of such distribution hereunder
                 allocable to principal and the amount allocable to






<PAGE>   51
                                                                              46

                 premium (including the Special Redemption Premium), if any;

                          (iii)   the amount of such distribution hereunder
                 allocable to interest; and

                          (iv)    the amount of such distribution under the
                 Escrow Agreement allocable to interest;

                          (v)     the amount of such distribution under the
                 Escrow Agreement allocable to Deposits; and

                          (vi)    the Pool Balance and the Pool Factor.

                 With respect to the Certificates registered in the name of
DTC, on the Record Date prior to each Distribution Date, the Trustee will
request from DTC a securities position listing setting forth the names of all
Agent Members reflected on DTC's books as holding interests in the Certificates
on such Record Date.  On each Distribution Date, the Trustee will mail to each
such Agent Member the statement described above and will make available
additional copies as requested by such Agent Member for forwarding to holders
of interests in the Certificates.

                 (b)      Within a reasonable period of time after the end of
each calendar year but not later than the latest date permitted by law, the
Trustee shall furnish to each Person who at any time during such calendar year
was a Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which a Certificateholder shall reasonably request as necessary for
the purpose of such Certificateholder's preparation of its federal income tax
returns.  Such statement and such other items shall be prepared on the basis of
information supplied to the Trustee by the Agent Members and shall be delivered
by the Trustee to such Agent Members to be available for forwarding by such
Agent Members to the holders of interests in the Certificates in the manner
described in Section 4.03(a).

                 (c)  Promptly following (i) the Delivery Period Termination
Date, if there has been any change in the information






<PAGE>   52
                                                                              47

set forth in clauses (x), (y) and (z) below from that set forth in page 81 of
the Offering Circular, and (ii) any early redemption of purchase of, or any
default in the payment of principal or interest in respect of, any of the
Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee shall
furnish to Certificateholders of record on such date a statement setting forth
(x) the expected Pool Balances for each subsequent Regular Distribution Date
following the Delivery Period Termination Date, (y) the related Pool Factors
for such Regular Distribution Dates and (z) the expected principal distribution
schedule of the Equipment Notes, in the aggregate, held as Trust Property at
the date of such notice.  With respect to the Certificates registered in the
name of DTC, on the Delivery Period Termination Date, the Trustee will request
from DTC a securities position listing setting forth the names of all Agent
Members reflected on DTC's books as holding interests in the Certificates on
such date.  The Trustee will mail to each such Agent Member the statement
described above and will make available additional copies as requested by such
Agent Member for forwarding to holders of interests in the Certificates.

                 Section 4.04.    Investment of Special Payment Moneys.  Any
money received by the Trustee pursuant to Section 4.01(b) representing a
Special Payment which is not distributed on the date received shall, to the
extent practicable, be invested in Permitted Investments by the Trustee pending
distribution of such Special Payment pursuant to Section 4.02.  Any investment
made pursuant to this Section 4.04 shall be in such Permitted Investments
having maturities not later than the date that such moneys are required to be
used to make the payment required under Section 4.02 on the applicable Special
Distribution Date and the Trustee shall hold any such Permitted Investments
until maturity.  The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.04, other than by reason of the
willful misconduct or negligence of the Trustee.  All income and earnings from
such investments shall be distributed on such Special Distribution Date as part
of such Special Payment.

                                   ARTICLE V

                                  THE COMPANY

                 Section 5.01. Maintenance of Corporate Existence.  The
Company, at its own cost and expense, will do or cause to be done






<PAGE>   53
                                                                              48

all things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises, except as otherwise specifically
permitted in Section 5.02; provided, however, that the Company shall not be
required to preserve any right or franchise if the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company.

                 Section 5.02. Consolidation, Merger, etc.  The Company shall
not consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:

                 (a)      the corporation formed by such consolidation or into
         which the Company is merged or the Person that acquires by conveyance,
         transfer or lease substantially all of the assets of the Company as an
         entirety shall be (i) organized and validly existing under the laws of
         the United States of America or any state thereof or the District of
         Columbia, (ii) a "citizen of the United States" as defined in 49
         U.S.C. 40102(a)(15), as amended, and (iii) a United States
         certificated air carrier, if and so long as such status is a condition
         of entitlement to the benefits of Section 1110 of the Bankruptcy
         Reform Act of 1978, as amended (11 U.S.C. Section 1110), with respect
         to the Leases;

                 (b)      the corporation formed by such consolidation or into
         which the Company is merged or the Person which acquires by
         conveyance, transfer or lease substantially all of the assets of the
         Company as an entirety shall execute and deliver to the Trustee a duly
         authorized, valid, binding and enforceable agreement in form and
         substance reasonably satisfactory to the Trustee containing an
         assumption by such successor corporation or Person of the due and
         punctual performance and observance of each covenant and condition of
         this Agreement, the Other Pass Through Trust Agreements and each
         Financing Document to be performed or observed by the Company; and

                 (c)      the Company shall have delivered to the Trustee an
         Officer's Certificate of the Company and an Opinion of Counsel of the
         Company reasonably satisfactory to the Trustee, each stating that such
         consolidation, merger, conveyance, transfer or lease and the
         assumption agreement mentioned in clause (b) above comply with this
         Section 5.02






<PAGE>   54
                                                                              49

         and that all conditions precedent herein provided for relating to such
         transaction have been complied with.

                 Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all of the assets of the Company as an entirety in
accordance with this Section 5.02, the successor corporation or Person formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Agreement
with the same effect as if such successor corporation or Person had been named
as the Company herein.  No such conveyance, transfer or lease of substantially
all of the assets of the Company as an entirety shall have the effect of
releasing any successor corporation or Person which shall have become such in
the manner prescribed in this Section 5.02 from its liability in respect of
this Agreement and any Financing Document to which it is a party.

                                   ARTICLE VI

                                    DEFAULT

                 Section 6.01.    Events of Default.  (a)  Exercise of
Remedies.  Upon the occurrence and during the continuation of any Indenture
Default under any Indenture, the Trustee may, to the extent it is the
Controlling Party at such time (as determined pursuant to the Intercreditor
Agreement), direct the exercise of remedies as provided in the Intercreditor
Agreement.

                 (b)      Purchase Rights of Certificateholders.  (i)  At any
         time after the occurrence and during the continuation of a Triggering
         Event, each Certificateholder shall have the right to purchase all,
         but not less than all, of the Class A Certificates upon ten days'
         written notice to the Class A Trustee and each other
         Certificateholder, provided that (A) if prior to the end of such
         ten-day period any other Certificateholder notifies such purchasing
         Certificateholder that such other Certificateholder wants to
         participate in such purchase, then such other Certificateholder may
         join with the purchasing Certificateholder to purchase all, but not
         less than all, of the Class A Certificates pro rata based on the
         outstanding principal amount of the Certificates held by each such
         Certificateholder and (B) if prior to the end of such ten-day period
         any other






<PAGE>   55
                                                                              50

         Certificateholder fails to notify the purchasing Certificateholder of
         such other Certificateholder's desire to participate in such a
         purchase, then such other Certificateholder shall lose its right to
         purchase the Class A Certificates pursuant to this Section 6.01(b)(i).

                          (ii)    By acceptance of its Certificate, each
                 Certificateholder agrees that at any time after the occurrence
                 and during the continuation of a Triggering Event, each holder
                 of a Class C-I Certificate or Class C-II Certificate (a "Class
                 C Certificateholder") shall have the right (which shall not
                 expire upon any purchase of the Class A Certificates pursuant
                 to paragraph (i) above) to purchase all, but not less than
                 all, of the Class A Certificates and the Certificates upon ten
                 days' written notice to the Class A Trustee, the Trustee and
                 each other Class C Certificateholder, provided that (A) if
                 prior to the end of such ten-day period any other Class C
                 Certificateholder notifies such purchasing Class C
                 Certificateholder that such other Class C Certificateholder
                 wants to participate in such purchase, then such other Class C
                 Certificateholder may join with the purchasing Class C
                 Certificateholder to purchase all, but not less than all, of
                 the Class A Certificates and the Certificates pro rata based
                 on the Fractional Undivided Interest in the Class C-I Trust
                 and Class C-II Trust, taken as a whole, held by each such
                 Class C Certificateholder and (B) if prior to the end of such
                 ten-day period any other Class C Certificateholder fails to
                 notify the purchasing Class C Certificateholder of such other
                 Class C Certificateholder's desire to participate in such a
                 purchase, then such other Class C Certificateholder shall lose
                 its right to purchase the Class A Certificates and the
                 Certificates pursuant to this Section 6.01(b).

                 The purchase price with respect to the Certificates shall be
equal to the Pool Balance of the Certificates, together with accrued and unpaid
interest thereon to the date of such purchase, without premium, but including
any other amounts then due and payable to the Certificateholders under this
Agreement, the Intercreditor Agreement, the Escrow Agreement or any Financing
Document or on or in respect of the Certificates; provided, however, that (i)
if such purchase occurs after the






<PAGE>   56
                                                                              51

record date specified in Section 2.03(b) of the Escrow Agreement relating to
the distribution of unused Deposits and accrued and unpaid interest thereunder,
such purchase price shall be reduced by the aggregate amount of unused Deposits
and interest to be distributed under the Escrow Agreement (which deducted
amounts shall remain distributable to, and may be retained by, the
Certificateholder as of such Record Date) and (ii) if such purchase occurs
after a Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the related Distribution Date (which deducted amounts
shall remain distributable to, and may be retained by, the Certificateholder as
of such Record Date); provided, further, that no such purchase of Certificates
shall be effective unless the purchaser(s) shall certify to the Trustee that
contemporaneously with such purchase, such purchaser(s) is purchasing, pursuant
to the terms of this Agreement and the Other Pass Through Trust Agreements, the
Class A Certificates and the Certificates which are senior to the securities
held by such purchaser(s).  Each payment of the purchase price of the
Certificates referred to in the first sentence hereof shall be made to an
account or accounts designated by the Trustee and each such purchase shall be
subject to the terms of this Section 6.01(b).  Each Certificateholder agrees by
its acceptance of its Certificate that it will, subject to Section 3.04 hereof,
upon payment from such Class C Certificateholder(s) of the purchase price set
forth in the first sentence of this paragraph, forthwith sell, assign, transfer
and convey to the purchaser(s) thereof (without recourse, representation or
warranty of any kind except for its own acts), all of the right, title,
interest and obligation of such Certificateholder in this Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Financing Documents and all Certificates and Escrow Receipts held
by such Certificateholder (excluding all right, title and interest under any of
the foregoing to the extent such right, title or interest is with respect to an
obligation not then due and payable as respects any action or inaction or state
of affairs occurring prior to such sale) and the purchaser shall assume all of
such Certificateholder's obligations under this Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Financing Documents and all such Certificates and Escrow
Receipts.  The Certificates will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the
Certificateholders to deliver any Certificates (whether in the form of
Definitive Certificates or beneficial interests in Global






<PAGE>   57
                                                                              52

Certificates) and, upon such a purchase, (i) the only rights of the
Certificateholders will be to deliver the Certificates to the purchaser(s) and
receive the purchase price for such Certificates and (ii) if the purchaser(s)
shall so request, such Certificateholder will comply with all the provisions of
Section 3.04 hereof to enable new Certificates to be issued to the purchaser in
such denominations as it shall request.  All charges and expenses in connection
with the issuance of any such new Certificates shall be borne by the purchaser
thereof.

                 As used in this Section 6.01(b), the terms "Class", "Class A
Certificate", "Class A Trustee", "Class C- I Certificate", "Class C-II
Certificate", "Class C-I Trust" and "Class C-II Trust" shall have the
respective meanings assigned to such terms in the Intercreditor Agreement.

                 Section 6.02.    Incidents of Sale of Equipment Notes.  Upon
any sale of all or any part of the Equipment Notes made either under the power
of sale given under this Agreement or otherwise for the enforcement of this
Agreement, the following shall be applicable:

                 (1)      Certificateholders and Trustee May Purchase Equipment
         Notes.  Any Certificateholder, the Trustee in its individual or any
         other capacity or any other Person may bid for and purchase any of the
         Equipment Notes, and upon compliance with the terms of sale, may hold,
         retain, possess and dispose of such Equipment Notes in their own
         absolute right without further accountability.

                 (2)      Receipt of Trustee Shall Discharge Purchaser.  The
         receipt of the Trustee making such sale shall be a sufficient
         discharge to any purchaser for his purchase money, and, after paying
         such purchase money and receiving such receipt, such purchaser or its
         personal representative or assigns shall not be obliged to see to the
         application of such purchase money, or be in any way answerable for
         any loss, misapplication or non- application thereof.

                 (3)      Application of Moneys Received upon Sale.  Any moneys
         collected by the Trustee upon any sale made either under the power of
         sale given by this Agreement or otherwise for the enforcement of this
         Agreement shall be applied as provided in Section 4.02.






<PAGE>   58
                                                                              53

                 Section 6.03.    Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit.  If there shall be a failure to make payment of the
principal of, premium, if any, or interest on any Equipment Note, or if there
shall be any failure to pay Rent (as defined in the relevant Lease) under any
Lease when due and payable, then the Trustee, in its own name and as trustee of
an express trust, as holder of such Equipment Notes, to the extent permitted by
and in accordance with the terms of the Intercreditor Agreement and the
Financing Documents (subject to the rights of the applicable Owner Trustee or
Owner Participant to cure any such failure to pay principal of, premium, if
any, or interest on any Equipment Note or to pay Rent under any Lease in
accordance with the applicable Indenture), shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or otherwise, for
the collection of the sums so due and unpaid on such Equipment Notes or under
such Lease and may prosecute any such claim or proceeding to judgment or final
decree with respect to the whole amount of any such sums so due and unpaid.

                 Section 6.04.    Control by Certificateholders.  Subject to
Section 6.03 and the Intercreditor Agreement, the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee with respect to the Trust or pursuant to the terms of the
Intercreditor Agreement, or exercising any trust or power conferred on the
Trustee under this Agreement or the Intercreditor Agreement, including any
right of the Trustee as Controlling Party under the Intercreditor Agreement or
as holder of the Equipment Notes, provided that

                 (1)      such Direction shall not be in conflict with any rule
         of law or with this Agreement and would not involve the Trustee in
         personal liability or expense,

                 (2)      the Trustee shall not determine that the action so
         directed would be unjustly prejudicial to the Certificateholders not
         taking part in such Direction, and

                 (3)      the Trustee may take any other action deemed proper
         by the Trustee which is not inconsistent with such Direction.






<PAGE>   59
                                                                              54

                 Section 6.05.    Waiver of Past Defaults.  Subject to the
Intercreditor Agreement, the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust (i) may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the Trustee is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive any past Indenture Default under any Indenture and its
consequences, and thereby annul any Direction given by such Certificateholders
or the Trustee to such Loan Trustee with respect thereto, except a default:

                 (1)      in the deposit of any Scheduled Payment or Special
         Payment under Section 4.01 or in the distribution of any payment under
         Section 4.02 on the Certificates, or

                 (2)      in the payment of the principal of (premium, if any)
                          or interest on the Equipment Notes, or

                 (3)      in respect of a covenant or provision hereof which
         under Article IX cannot be modified or amended without the consent of
         each Certificateholder holding an Outstanding Certificate affected
         thereby.

                 Upon any such waiver, such default shall cease to exist with
respect to the Certificates and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose and any direction given by the
Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall
be annulled with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.  Upon any such waiver, the Trustee shall vote the Equipment Notes
issued under the relevant Indenture to waive the corresponding Indenture
Default.

                 Section 6.06.    Right of Certificateholders to Receive
Payments Not to Be Impaired.  Anything in this Agreement to the contrary
notwithstanding, including, without limitation, Section 6.07 hereof, but
subject to the Intercreditor Agreement, the right of any Certificateholder to
receive distributions of payments required pursuant to Section 4.02 hereof on
the Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be






<PAGE>   60
                                                                              55

impaired or affected without the consent of such Certificateholder.

                 Section 6.07.    Certificateholders May Not Bring Suit Except
Under Certain Conditions.  A Certificateholder shall not have the right to
institute any suit, action or proceeding at law or in equity or otherwise with
respect to this Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Agreement, unless:

                 (1)      such Certificateholder previously shall have given
         written notice to the Trustee of a continuing Event of Default;

                 (2)      Certificateholders holding Certificates evidencing
         Fractional Undivided Interests aggregating not less than 25% of the
         Trust shall have requested the Trustee in writing to institute such
         action, suit or proceeding and shall have offered to the Trustee
         indemnity as provided in Section 7.03(e);

                 (3)      the Trustee shall have refused or neglected to
         institute such an action, suit or proceeding for 60 days after receipt
         of such notice, request and offer of indemnity; and

                 (4)      no direction inconsistent with such written request
         shall have been given to the Trustee during such 60-day period by
         Certificateholders holding Certificates evidencing Fractional
         Undivided Interests aggregating not less than a majority in interest
         in the Trust.

                 It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on
any property subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all the Certificateholders subject to
the provisions of this Agreement.






<PAGE>   61
                                                                              56

                 Section 6.08.    Remedies Cumulative.  Every remedy given
hereunder to the Trustee or to any of the Certificateholders shall not be
exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter given by statute, law, equity or otherwise.

                                  ARTICLE VII

                                  THE TRUSTEE

                 Section 7.01.    Certain Duties and Responsibilities.  (a)
Except during the continuance of an Event of Default, the Trustee undertakes to
perform such duties as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against the
Trustee.

                 (b)      In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of its own affairs.

                 (c)      No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that

                 (1)      this Subsection shall not be construed to limit the
         effect of Subsection (a) of this Section; and

                 (2)      the Trustee shall not be liable for any error of
         judgment made in good faith by a Responsible Officer of the Trustee,
         unless it shall be proved that the Trustee was negligent in
         ascertaining the pertinent facts.

                 (d)      Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.

                 Section 7.02.    Notice of Defaults.  As promptly as
practicable after, and in any event within 90 days after, the occurrence of any
default (as such term is defined below) hereunder, the Trustee shall transmit
by mail to the Company, the Owner Trustees, the Owner Participants, the Loan
Trustees and the






<PAGE>   62
                                                                              57

Certificateholders in accordance with Section 313(c) of the Trust Indenture
Act, notice of such default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except in the case of
a default on the payment of the principal, premium, if any, or interest on any
Equipment Note held in the Trust, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee
or a trust committee of directors and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Certificateholders.  For the purpose of this Section, the term "default"
means any event that is, or after notice or lapse of time or both would become,
an Event of Default.

                 Section 7.03.    Certain Rights of Trustee.  Subject to the
provisions of Section 315 of the Trust Indenture Act:

                 (a)      the Trustee may rely and shall be protected in acting
         or refraining from acting in reliance upon any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         direction, consent, order, bond, debenture or other paper or document
         believed by it to be genuine and to have been signed or presented by
         the proper party or parties;

                 (b)      any request or direction of the Company mentioned
         herein shall be sufficiently evidenced by a written description of the
         subject matter thereof accompanied by an Officer's Certificate and an
         Opinion of Counsel as provided in Section 1.02 of this Agreement;

                 (c)      whenever in the administration of this Agreement the
         Trustee shall deem it desirable that a matter be proved or established
         prior to taking, suffering or omitting any action hereunder, the
         Trustee (unless other evidence be herein specifically prescribed) may,
         in the absence of bad faith on its part, rely upon an Officer's
         Certificate of the Company, any Owner Trustee or any Loan Trustee;

                 (d)      the Trustee may consult with counsel and the advice
         of such counsel or any Opinion of Counsel shall be full and complete
         authorization and protection in respect of any action taken, suffered
         or omitted by it hereunder in good faith and in reliance thereon;






<PAGE>   63
                                                                              58

                 (e)      the Trustee shall be under no obligation to exercise
         any of the rights or powers vested in it by this Agreement at the
         Direction of any of the Certificateholders pursuant to this Agreement,
         unless such Certificateholders shall have offered to the Trustee
         reasonable security or indemnity against the cost, expenses and
         liabilities which might be incurred by it in compliance with such
         Direction;

                 (f)      the Trustee shall not be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         direction, consent, order, bond, debenture or other paper or document;

                 (g)      the Trustee may execute any of the trusts or powers
         under this Agreement or perform any duties under this Agreement either
         directly or by or through agents or attorneys, and the Trustee shall
         not be responsible for any misconduct or negligence on the part of any
         agent or attorney appointed with due care by it under this Agreement;

                 (h)      the Trustee shall not be liable with respect to any
         action taken or omitted to be taken by it in good faith in accordance
         with the Direction of the Certificateholders holding Certificates
         evidencing Fractional Undivided Interests aggregating not less than a
         majority in interest in the Trust relating to the time, method and
         place of conducting any proceeding for any remedy available to the
         Trustee, or exercising any trust or power conferred upon the Trustee,
         under this Agreement; and

                 (i)      the Trustee shall not be required to expend or risk
         its own funds in the performance of any of its duties under this
         Agreement, or in the exercise of any of its rights or powers, if it
         shall have reasonable grounds for believing that repayment of such
         funds or adequate indemnity against such risk is not reasonably
         assured to it.

                 Section 7.04.    Not Responsible for Recitals or Issuance of
Certificates.  The recitals contained herein and in the Certificates, except
the certificates of authentication, shall not be taken as the statements of the
Trustee, and the Trustee assumes no responsibility for their correctness.
Subject to Section 7.15, the Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Equipment Notes,






<PAGE>   64
                                                                              59

the Intercreditor Agreement, the Deposit Agreement, the Escrow Agreement, the
Certificates or any other Financing Document, except that the Trustee hereby
represents and warrants that this Agreement has been, and the Intercreditor
Agreement, the Registration Rights Agreement, the Note Purchase Agreement, the
Escrow Agreement and each Certificate will be, executed, authenticated and
delivered by one of its officers who is duly authorized to execute,
authenticate and deliver such document on its behalf.

                 Section 7.05.    May Hold Certificates.  The Trustee, any
Paying Agent, Registrar or any of their Affiliates or any other agent in their
respective individual or any other capacity may become the owner or pledgee of
Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture
Act, if applicable, may otherwise deal with the Company, the Owner Trustees or
the Loan Trustees with the same rights it would have if it were not Trustee,
Paying Agent, Registrar or such other agent.

                 Section 7.06.    Money Held in Trust.  Money held by the
Trustee or the Paying Agent in trust hereunder need not be segregated from
other funds except to the extent required herein or by law and neither the
Trustee nor the Paying Agent shall have any liability for interest upon any
such moneys except as provided for herein.

                 Section 7.07.    Compensation and Reimbursement.  The Company
agrees:

                 (1)      to pay, or cause to be paid, to the Trustee from time
         to time reasonable compensation for all services rendered by it
         hereunder (which compensation shall not be limited by any provision of
         law in regard to the compensation of a trustee of an express trust);

                 (2)      except as otherwise expressly provided herein, to
         reimburse, or cause to be reimbursed, the Trustee upon its request for
         all reasonable out-of-pocket expenses, disbursements and advances
         incurred or made by the Trustee in accordance with any provision of
         this Agreement (including the reasonable compensation and the expenses
         and disbursements of its agents and counsel), except any such expense,
         disbursement or advance as may be attributable to its negligence,
         willful misconduct or bad faith or as may be






<PAGE>   65
                                                                              60

         incurred due to the Trustee's breach of its representations and
         warranties set forth in Section 7.15; and

                 (3)      to indemnify, or cause to be indemnified, the Trustee
         for, and to hold it harmless against, any loss, liability or expense
         (other than for or with respect to any tax) incurred without
         negligence, willful misconduct or bad faith, on its part, arising out
         of or in connection with the acceptance or administration of this
         Trust, including the costs and expenses of defending itself against
         any claim or liability in connection with the exercise or performance
         of any of its powers or duties hereunder, except for any such loss,
         liability or expense incurred by reason of the Trustee's breach of its
         representations and warranties set forth in Section 7.15; provided,
         however, that the foregoing paragraph (3) shall cease to have any
         further force or effect upon the execution and delivery by the Trustee
         of any Participation Agreement.

                 With respect to paragraph (3) above, the Trustee shall notify
the Company promptly of any claim for which it may seek indemnity.  The Company
shall defend the claim and the Trustee shall cooperate in the defense.  The
Trustee may have separate counsel with the consent of the Company and the
Company will pay the reasonable fees and expenses of such counsel.  The Company
need not pay for any settlement made, in settlement or otherwise, without its
consent.

                 The Trustee shall be entitled to reimbursement from, and shall
have a lien prior to the Certificates upon, the Trust Property for any tax
incurred without negligence, bad faith or willful misconduct, on its part,
arising out of or in connection with the acceptance or administration of such
Trust (other than any tax attributable to the Trustee's compensation for
serving as such), including any costs and expenses incurred in contesting the
imposition of any such tax.  If the Trustee reimburses itself from the Trust
Property of such Trust for any such tax, it will mail a brief report within 30
days setting forth the circumstances thereof to all Certificateholders as their
names and addresses appear in the Register.

                 Section 7.08.    Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible to act
as a trustee under Section 310(a) of the Trust Indenture Act and shall have a
combined capital and surplus of at






<PAGE>   66
                                                                              61

least $75,000,000 (or a combined capital and surplus in excess of $5,000,000
and the obligations of which, whether now in existence or hereafter incurred,
are fully and unconditionally guaranteed by a corporation organized and doing
business under the laws of the United States, any state or territory thereof or
of the District of Columbia and having a combined capital and surplus of at
least $75,000,000).  If such corporation publishes reports of conditions at
least annually, pursuant to law or to the requirements of federal, state,
territorial or District of Columbia supervising or examining authority, then
for the purposes of this Section 7.08, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published.

                 In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.

                 Section 7.09.    Resignation and Removal; Appointment of
Successor.  (a)  No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.10.

                 (b)      The Trustee may resign at any time as trustee by
giving prior written notice thereof to the Company, the Authorized Agents, the
Owner Trustees and the Loan Trustees.  If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Company, the Authorized
Agents, the Owner Trustees, the Loan Trustees and the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

                 (c)      The Trustee may be removed at any time by Direction
of the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee and to the Company, the Owner Trustees and the Loan
Trustees.

                 (d)      If at any time:






<PAGE>   67
                                                                              62

                 (1)      the Trustee shall fail to comply with Section 310 of
         the Trust Indenture Act, if applicable, after written request therefor
         by the Company or by any Certificateholder who has been a bona fide
         Certificateholder for at least six months; or

                 (2)      the Trustee shall cease to be eligible under Section
         7.08 and shall fail to resign after written request therefor by the
         Company or by any such Certificateholder; or

                 (3)      the Trustee shall become incapable of acting or shall
         be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
         its property shall be appointed or any public officer shall take
         charge or control of the Trustee or of its property or affairs for the
         purpose of rehabilitation, conservation or liquidation;

then, in any case, (i) the Company may, with the consent of the Owner
Participants, which consent may not be unreasonably withheld, remove the
Trustee or (ii) any Certificateholder who has been a bona fide
Certificateholder for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

                 (e)      If a Responsible Officer of the Trustee shall obtain
actual knowledge of an Avoidable Tax which has been or is likely to be
asserted, the Trustee shall promptly notify the Company and shall, within 30
days of such notification, resign hereunder unless within such 30-day period
the Trustee shall have received notice that the Company has agreed to pay such
tax.  The Company shall promptly appoint a successor Trustee in a jurisdiction
where there are no Avoidable Taxes.

                 (f)      If the Trustee shall resign, be removed or become
incapable of acting or if a vacancy shall occur in the office of the Trustee
for any cause, the Company shall promptly appoint a successor Trustee.  If,
within one year after such resignation, removal or incapability, or other
occurrence of such vacancy, a successor Trustee shall be appointed by Direction
of the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Company, the Owner Trustees, the Loan Trustees and the
retiring Trustee, and the Company approves such appointment, which approval
shall not be






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unreasonably withheld, then the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed as provided above.  If no successor
Trustee shall have been so appointed as provided above and accepted appointment
in the manner hereinafter provided, any Certificateholder who has been a bona
fide Certificateholder for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.

                 (g)      The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the successor Trustee
by mailing written notice of such event by first-class mail, postage prepaid,
to the Certificateholders as their names and addresses appear in the Register.
Each notice shall include the name of such successor Trustee and the address of
its Corporate Trust Office.

                 Section 7.10.    Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute and deliver to the
Company, the Authorized Agents, the Owner Trustees and the Loan Trustees and to
the retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee, such retiring
Trustee shall execute and deliver an instrument transferring to such successor
Trustee all such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all Trust Property
held by such retiring Trustee hereunder, subject nevertheless to its lien, if
any, provided for in Section 7.07. Upon request of any such successor Trustee,
the Company, the retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as shall be
necessary or desirable to transfer and confirm to, and for more fully and
certainly vesting in, such successor Trustee all such rights, powers and
trusts.

                 No institution shall accept its appointment as a Trustee
hereunder unless at the time of such acceptance such institution shall be
qualified and eligible under this Article VII.






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                 Section 7.11.    Merger, Conversion, Consolidation or
Succession to Business.  Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article VII, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.  In case any Certificates
shall have been executed or authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such execution or authentication and deliver
the Certificates so executed or authenticated with the same effect as if such
successor Trustee had itself executed or authenticated such Certificates.

                 Section 7.12.    Maintenance of Agencies.  (a)  There shall at
all times be ma