REGISTRATION NO. 333-___


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-3

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                           --------------------------

                           CONTINENTAL AIRLINES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                       4512                  74-2099724
 (STATE OR OTHER JURISDICTION  (PRIMARY STANDARD INDUSTRIAL   (I.R.S. EMPLOYER 
     OF INCORPORATION OR        CLASSIFICATION CODE NUMBER)     IDENTIFICATION
        ORGANIZATION)                                               NUMBER)

                         2929 ALLEN PARKWAY, SUITE 2010
                              HOUSTON, TEXAS 77019
                                 (713) 834-5000
    (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  only  securities being  registered  on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check  the following
box. |_|

     If any of the securities being registered on this Form  are so offered on a
delayed  or continuous  basis  pursuant to Rule 415 under  the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|


<TABLE>
<CAPTION>
                                    CALCULATION OF REGISTRATION FEE
=======================================================================================================
                                                  PROPOSED MAXIMUM      PROPOSED             
                                                       OFFERING          MAXIMUM            AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES    AMOUNT TO BE       PRICE       AGGREGATE OFFERING    REGISTRATION
        TO BE REGISTERED              REGISTERED     PER UNIT (1)        PRICE (2)            FEE (3)
- -------------------------------------------------------------------------------------------------------
<S>                                 <C>                                  <C>                 <C>    
Pass Through Certificates           $250,000,000                         $250,000,000        $75,758
=======================================================================================================
<FN>
(1)  Omitted pursuant to Rule 457(o).
(2)  Estimated solely for purposes of calculating the registration fee.
(3)  Pursuant to Rule 457(o),  the  registration  fee has been calculated on the
     basis of the maximum aggregate offering price of all securities listed.
</FN>
</TABLE>


     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>


                   SUBJECT TO COMPLETION - DATED JULY 15, 1997

PROSPECTUS

                                  $250,000,000
                           CONTINENTAL AIRLINES, INC.
                            PASS THROUGH CERTIFICATES

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

          Up to  $250,000,000  aggregate  public  offering price of Pass Through
Certificates  (the  "Certificates")  (or its equivalent (based on the applicable
exchange rate at the time of sale) in one or more foreign currencies or currency
units) may be offered for sale from time to time pursuant to this Prospectus and
related Prospectus Supplements (as defined below). Certificates may be issued in
one or more series in amounts,  at prices and on terms to be  determined  at the
time of the offering.  In respect of each offering of  Certificates,  a separate
Continental  Airlines Pass Through Trust for each series of  Certificates  being
offered  (each,  a "Trust") will be formed  pursuant to one or more Pass Through
Trust Agreements (each, a "Basic Agreement") and one or more supplements thereto
(each, a "Trust  Supplement")  relating to such Trust to be entered into between
Continental  Airlines,  Inc.  ("Continental"  or the  "Company") and the trustee
named therein (the "Trustee"),  as trustee under each Trust. Each Certificate in
a series will represent a fractional undivided interest in the related Trust and
will have no rights,  benefits or interests  in respect of any other Trust.  The
property of the Trusts will consist of equipment  notes issued on a  nonrecourse
basis  by one or more  owner  trustees  pursuant  to  separate  leveraged  lease
transactions  (the  "Equipment  Notes") to finance or refinance a portion of the
equipment  cost  of  aircraft  manufactured  by  EMBRAER-Empresa  Brasileira  de
Aeronautica S.A., including engines (each, an "Aircraft" and, collectively,  the
"Aircraft"),  which  have been or will be leased to  Continental  pursuant  to a
separate  lease  agreement  (each such  lease  agreement,  a  "Lease")  for each
Aircraft.

          The specific terms of the particular  Certificates in respect of which
this  Prospectus  is being  delivered  will be set forth in a supplement to this
Prospectus (the "Prospectus  Supplement")  which will be delivered together with
this Prospectus,  including, where applicable,  the specific designation,  form,
aggregate principal amount, initial public offering price and distribution dates
relating to such  Certificates,  the currency in which such Certificates will be
payable, the Trust or Trusts relating to such Certificates,  the Equipment Notes
to be purchased by such Trust or Trusts, the Aircraft relating to such Equipment
Notes,  the leveraged  lease  transactions  relating to such Equipment Notes and
other special terms relating to such  Certificates and the net proceeds from the
offering of such  Certificates.  The Certificates  shall be issued in registered
form only and may, if so specified in the applicable Prospectus  Supplement,  be
issued in accordance with a book-entry system.

          With respect to one or more Aircraft,  Equipment  Notes may be issued,
each of which  may have a  different  interest  rate,  final  maturity  date and




<PAGE>

ranking in respect of priority of payment. For each series of Certificates,  the
Trustee will purchase one or more Equipment  Notes issued with respect to one or
more  Aircraft  such that all of the  Equipment  Notes held in the related Trust
will have identical ranking and identical  interest rates (in each case equal to
the rate applicable to the Certificates issued by such Trust), and such that the
latest  maturity date for such Equipment Notes will occur on or before the final
distribution  date for such  Certificates.  Interest paid on the Equipment Notes
held in each Trust will be passed  through  to the  holders of the  Certificates
relating  to such  Trust on the dates and at the rate per annum set forth in the
Prospectus Supplement relating to such Certificates until the final distribution
date for such Trust, subject to the effect of any cross-subordination provisions
described in the Prospectus  Supplement for a series of Certificates.  Principal
paid on the  Equipment  Notes held in each  Trust will be passed  through to the
holders of the Certificates  relating to such Trust in scheduled  amounts on the
dates set forth in the Prospectus Supplement relating to such Certificates until
the  final  distribution  date for such  Trust,  subject  to the  effect  of any
cross-subordination  provisions  described in the  Prospectus  Supplement  for a
series of Certificates.  The Equipment Notes issued with respect to any Aircraft
will be  secured  by a  security  interest  in such  Aircraft  and by a security
interest in the Lease relating  thereto,  including the right to receive rentals
payable in respect of such Aircraft by Continental.

          The  Certificates  may be sold  to or  through  underwriters,  through
dealers or agents or directly to  purchasers.  See "Plan of  Distribution."  The
Prospectus  Supplement will set forth the names of any underwriters,  dealers or
agents  involved  in the sale of the  Certificates  in  respect  of  which  this
Prospectus is being delivered,  the proposed amounts, if any, to be purchased by
underwriters and the compensation,  if any, of such underwriters or agents.  See
"Plan of  Distribution"  for  information  concerning  secondary  trading of the
Certificates.

          THIS  PROSPECTUS MAY NOT BE USED TO CONSUMMATE  SALES OF  CERTIFICATES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.

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

          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 [________________].

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.




<PAGE>

                             AVAILABLE INFORMATION

          Continental has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all amendments
and exhibits, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Certificates offered hereby.
This  Prospectus  does  not  contain  all of the  information  set  forth in the
Registration  Statement,  certain parts of which are omitted in accordance  with
the rules and  regulations of the  Commission,  and to which reference is hereby
made.  Statements  made in this  Prospectus  as to the contents of any contract,
agreement  or other  document  referred to are not  necessarily  complete.  With
respect to each such  contract,  agreement or other document filed as an exhibit
to the  Registration  Statement,  reference  is made to the  exhibit  for a more
complete description of the matter involved.

          Continental  is  subject  to  the  informational  requirements  of the
Securities  Exchange  Act of 1934,  as  amended  (the  "Exchange  Act"),  and in
accordance  therewith  files  periodic  reports and other  information  with the
Commission.  Such  reports and other  information,  as well as the  Registration
Statement, including exhibits and schedules filed therewith, may be inspected at
the  public  reference  facilities  maintained  by the  Commission  at 450 Fifth
Street, N.W., Washington,  D.C. 20549, Room 1024, and at the regional offices of
the Commission located at Citicorp Center, 500 West Madison Street,  Suite 1400,
Chicago,  Illinois 60661 and at 7 World Trade Center,  13th Floor, New York, New
York 10048.  Copies of such materials may be obtained from the Public  Reference
Section of the Commission,  450 Fifth Street,  N.W.,  Washington,  D.C. 20549 at
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 on April 27,  1993.  Holdings had also
been subject to the informational requirements of the Exchange Act.

                 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,  filed on
February  24, 1997,  (ii)  Continental's  Quarterly  Report on Form 10-Q for the
quarterly  period  ended  March  31,  1997,  filed on April  28,  1997 and (iii)
Continental's  Current  Reports on Form 8-K filed January 6, March 21, April 18,
May 28, June 10 and June 25, 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  Certificates  offered hereby shall be deemed to be incorporated
by reference  into this  Prospectus  and to be a part hereof from the respective


<PAGE>


dates 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.

          Continental  will provide  without charge to any person to whom a copy
of this Prospectus has been delivered,  upon written or oral request,  a copy of
any or all of the foregoing  documents  incorporated  herein by reference (other
than  exhibits  to  such  documents   unless  such  exhibits  are   specifically
incorporated by reference into such  documents).  Requests should be directed to
Continental  Airlines,  Inc.,  2929 Allen Parkway,  Suite 2010,  Houston,  Texas
77019, Attention: Secretary, telephone (713) 834-2950.



<PAGE>

                                   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 five  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 195
airports worldwide as of June 12, 1997.

          The Company operates its route system primarily  through domestic hubs
at Newark, George Bush Intercontinental in Houston, 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%,  54%  and  68%  of  average  daily  jet  departures,
respectively, as of June 12, 1997.

          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.

                       GENERAL OUTLINE OF TRUST STRUCTURE

          In respect of each offering of  Certificates,  one or more Trusts will
be formed,  and the related  Certificates  issued,  pursuant  to separate  Trust
Supplements to be entered into between the Trustee and Continental in accordance
with the terms of the  Basic  Agreement.  Concurrently  with the  execution  and
delivery of each Trust  Supplement,  the Trustee,  on behalf of the Trust formed
thereby, will enter into one or more purchase or refunding agreements (each such
agreement being herein referred to as a "Note Purchase  Agreement")  pursuant to
which it will agree to purchase one or more  Equipment  Notes relating to one or
more of the Aircraft described in the applicable Prospectus Supplement. Pursuant
to the  applicable  Note  Purchase  Agreement or Note Purchase  Agreements,  the
Trustee, on behalf of each Trust, will purchase one or more Equipment Notes such
that the Equipment  Notes that  constitute  the property of such Trust will have
identical  interest  rates (in each  case  equal to the rate  applicable  to the
Certificates issued by such Trust) and identical priority of payment relative to
each of the other  Equipment  Notes  issued  under the  Related  Indentures  (as
defined below). The maturity dates of the Equipment Notes acquired by each Trust
will  occur  on  or  before  the  final  distribution  date  applicable  to  the
Certificates  that will be issued by such Trust. The Trustee will distribute the
amount of payments of principal, premium, if any, and interest received by it as
holder of the Equipment  Notes to the registered  holders of Certificates of the
Trust (the "Certificateholders") in which such Equipment Notes are held, subject
to the effect of any cross-subordination  provisions described in the Prospectus
Supplement for a series of Certificates.  See "Description of the  Certificates"
and "Description of the Equipment Notes."



<PAGE>

                                 USE OF PROCEEDS

          Except as set forth in a Prospectus Supplement for a specific offering
of  Certificates,  the  Certificates  will be issued in order to facilitate  the
financing  or  refinancing  of the debt  portion  and,  in  certain  cases,  the
refinancing  of some of the  equity  portion of one or more  separate  leveraged
lease transactions  entered into by Continental,  as lessee, with respect to the
Aircraft as described in the  applicable  Prospectus  Supplement.  Except as set
forth in a Prospectus  Supplement for a specific  offering of Certificates,  the
proceeds from the sale of the Certificates will be used by the Trustee on behalf
of the  applicable  Trust or Trusts to purchase  Equipment  Notes  issued by the
respective Owner Trustee or Owner Trustees to finance or refinance (as specified
in the applicable  Prospectus  Supplement) the related Aircraft.  Any portion of
the proceeds from the sale of  Certificates  not used by the Trustee to purchase
Equipment  Notes on or prior to the date  specified  therefor in the  applicable
Prospectus  Supplement  will be distributed on a Special  Distribution  Date (as
defined  below)  to the  applicable  Certificateholder  holders,  together  with
interest,  but without  premium.  See  "Description  of  Certificates -- Special
Distribution Upon Unavailability of Aircraft."

          The Equipment  Notes will be issued under  separate  trust  indentures
(the "Indentures")  between a bank, trust company or other institution specified
in the related Prospectus  Supplement,  as trustee thereunder (in such capacity,
herein referred to as the "Loan Trustee"),  and an institution  specified in the
related Prospectus Supplement acting, not in its individual capacity, but solely
as owner trustee (an "Owner Trustee") of a separate trust for the benefit of one
or more institutional investors (each, an "Owner Participant").  With respect to
each Leased Aircraft,  the related Owner  Participant will have provided or will
provide from sources other than the  Equipment  Notes a portion of the equipment
cost of the related Aircraft. No Owner Participant,  however, will be personally
liable for any amount payable under the related Indenture or the Equipment Notes
issued  thereunder.  Simultaneously  with the acquisition of each Aircraft,  the
related  Owner  Trustee  will  have  leased  or  will  lease  such  Aircraft  to
Continental pursuant to a separate Lease, and Continental will have subleased or
will sublease such Aircraft to Express.

                       RATIO 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


<PAGE>


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, respectively, 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 representative of interest expense and amortization of
previously  capitalized interest.  Fixed charges consist of interest expense and
the portion of rental expense representative of interest expense.

                         DESCRIPTION OF THE CERTIFICATES

          In connection with each offering of Certificates, one or more separate
Trusts  will be formed  and one or more  series of  Certificates  will be issued
pursuant to the Basic Agreement and one or more separate Trust Supplements to be
entered into between Continental and the Trustee. The statements made under this
caption are summaries  and  reference is made to the detailed  provisions of the
Basic  Agreement,  the  form of  which  has  been  filed  as an  exhibit  to the
Registration  Statement of which this Prospectus is a part. The summaries relate
to the Basic  Agreement  and each of the  Trust  Supplements,  the  Trusts to be
formed  thereby and the  Certificates  to be issued by each Trust  except to the
extent,  if  any,  described  in  the  applicable  Prospectus  Supplement.   The
Prospectus  Supplement that accompanies  this Prospectus  contains a glossary of
the  material  terms used with respect to the  specific  series of  Certificates
being  offered  thereby.  The  Trust  Supplement  relating  to  each  series  of
Certificates  and the forms of the related Note Purchase  Agreement,  Indenture,
Lease, Trust Agreement,  Participation  Agreement,  intercreditor  agreement and
liquidity  facility  agreement,  as  applicable,  will be filed as exhibits to a
post-effective  amendment to the Registration Statement of which this Prospectus
is a part, a Current  Report on Form 8-K, a Quarterly  Report on Form 10-Q or an
Annual  Report  on Form  10-K,  as  applicable,  filed by  Continental  with the
Commission.

          The  Certificates  offered pursuant to this Prospectus will be limited
to $250,000,000 aggregate public offering price (or its equivalent (based on the
applicable  exchange rate at the time of sale) in one or more foreign currencies
or currency units).

          To the extent  that any  provision  in any  Prospectus  Supplement  is
inconsistent  with  any  provision  in  this  summary,  the  provision  of  such
Prospectus Supplement will control.

GENERAL

          Each Certificate will represent a fractional undivided interest in the
Trust created by the Trust  Supplement  pursuant to which such  Certificate  was
issued and all  payments and  distributions  shall be made only from the related
Trust  Property  (as  defined  below).  The  property  of each Trust (the "Trust
Property")  will  include  (i) the  Equipment  Notes  held in such Trust and all
monies at any time paid thereon and all monies due and to become due thereunder,
subject to the effect of any  cross-subordination  provisions  described  in the
Prospectus Supplement for a series of Certificates, (ii) funds from time to time


<PAGE>


deposited  with the Trustee in  accounts  relating to such Trust and (iii) if so
specified  in the  Prospectus  Supplement  related to a series of  Certificates,
rights   under   intercreditor   agreements   relating  to   cross-subordination
arrangements and monies receivable under a liquidity facility.  Each Certificate
will  represent  a pro rata  share of the  outstanding  principal  amount of the
Equipment Notes held in the related Trust and, unless otherwise specified in the
applicable  Prospectus  Supplement,  will be issued in minimum  denominations of
$1,000 or any integral  multiple  thereof  except that one  Certificate  of each
series  may be issued  in a  different  denomination.  The  Certificates  do not
represent an interest in or obligation of Continental,  the Trustee,  any of the
Loan  Trustees  or Owner  Trustees  in their  individual  capacities,  any Owner
Participant,  or any  affiliate of any thereof.  Each  Certificateholder  by its
acceptance  of a  Certificate  agrees to look solely to the income and  proceeds
from the Trust  Property as provided in the Basic  Agreement and the  applicable
Trust Supplement.

          The Equipment Notes issued under an Indenture may be held in more than
one Trust and one Trust may hold  Equipment  Notes  issued  under  more than one
Indenture  (each  Indenture the Equipment  Notes of which are held in a Trust, a
"Related Indenture"). Unless otherwise provided in a Prospectus Supplement, only
Equipment  Notes having the same priority of payment (the Equipment Notes of any
such priority, a "Class") may be held in the same Trust.

          Interest will be passed through to Certificateholders of each Trust at
the rate per annum  payable on the  Equipment  Notes held in such Trust,  as set
forth for such Trust on the cover page of the applicable Prospectus  Supplement,
subject to the effect of any  cross-subordination  provisions  described  in the
Prospectus Supplement for a series of Certificates.

          Reference is made to the Prospectus  Supplement that  accompanies this
Prospectus  for a  description  of the  specific  series of  Certificates  being
offered  thereby,  including:  (1) the  specific  designation  and title of such
Certificates;  (2) the Regular Distribution Dates (as defined below) and Special
Distribution Dates (as defined below) applicable to such  Certificates;  (3) the
currency or currencies (including currency units) in which such Certificates may
be denominated; (4) the specific form of such Certificates, including whether or
not such  Certificates are to be issued in accordance with a book-entry  system;
(5) a  description  of the  Equipment  Notes  to be  purchased  by  such  Trust,
including (a) the period or periods within which,  the price or prices at which,
and the terms and  conditions  upon  which such  Equipment  Notes may or must be
redeemed or defeased in whole or in part, by the Owner Trustee,  (b) the payment
priority of such Equipment Notes in relation to any other Equipment Notes issued
with respect to the related Aircraft,  (c) any additional  security or liquidity
enhancements  therefor and (d) any  intercreditor or other rights or limitations
between or among the holders of Equipment Notes of different  priorities  issued
by the same Owner  Trustee;  (6) a description  of the related  Aircraft;  (7) a
description  of the related  Note  Purchase  Agreement  and Related  Indentures,
including a description  of the events of default under the Related  Indentures,
the remedies  exercisable  upon the occurrence of such events of default and any
limitations  on the exercise of such  remedies  with  respect to such  Equipment
Notes; (8) a description of the related Lease, Trust Agreement and Participation
Agreement,  including  (a)  the  names  of the  related  Owner  Trustees,  (b) a
description  of the events of default  under the related  Leases,  the  remedies
exercisable upon the occurrence of such events of default and any limitations on


<PAGE>


the exercise of such remedies with respect to such Equipment  Notes, and (c) the
rights of the related Owner Trustee,  if any, and/or Owner Participant,  if any,
to cure failures of  Continental  to pay rent under the related  Lease;  (9) the
extent, if any, to which the provisions of the operative documents applicable to
such Equipment  Notes may be amended by the parties  thereto without the consent
of the  holders  of, or only upon the  consent  of the  holders  of a  specified
percentage  of  aggregate  principal  amount  of,  such  Equipment  Notes;  (10)
cross-default or  cross-collateralization  provisions in the Related Indentures;
(11) subordination  provisions among the holders of Certificates,  including any
cross-subordination  provisions  among the holders of  Certificates  in separate
Trusts; and (12) any other special terms pertaining to such Certificates.

          If any Certificates are denominated in one or more foreign  currencies
or currency units,  the  restrictions,  certain United States federal income tax
considerations,  specific  terms  and other  information  with  respect  to such
Certificates  and such foreign  currency or currency  units will be set forth in
the applicable Prospectus Supplement.

BOOK-ENTRY REGISTRATION

      GENERAL

          If specified in the applicable Prospectus Supplement, the Certificates
will be subject to the  provisions  described  below and under the  caption  "--
Definitive  Certificates."  Upon issuance,  each series of Certificates  will be
represented  by  one  or  more  fully  registered  global  certificates.  Unless
otherwise provided in a Prospectus  Supplement,  each global certificate will be
deposited  with,  or on behalf of, The  Depository  Trust  Company  ("DTC")  and
registered  in the name of CEDE & Co.  ("Cede"),  the  nominee of DTC. No person
acquiring  an  interest  in  such  Certificates  ("Certificate  Owner")  will be
entitled to receive a certificate  representing  such person's  interest in such
Certificates,  except as set forth  below  under "--  Definitive  Certificates."
Unless  and  until   Definitive   Certificates  are  issued  under  the  limited
circumstances  described herein, all references to actions by Certificateholders
shall refer to actions taken by DTC upon  instructions from DTC Participants (as
defined below), and all references herein to distributions, notices, reports and
statements  to   Certificateholders   shall  refer,  as  the  case  may  be,  to
distributions, notices, reports and statements to DTC or Cede, as the registered
holder  of  such  Certificates,  or to  DTC  Participants  for  distribution  to
Certificate Owners in accordance with DTC procedures.

          Continental  has been  advised  that DTC is a  limited  purpose  trust
company  organized  under  the laws of the  State of New  York,  a member of the
Federal Reserve System, a "clearing  corporation"  within the meaning of the New
York  Uniform  Commercial  Code and  "clearing  agency"  registered  pursuant to
section 17A of the  Exchange  Act.  DTC was created to hold  securities  for its
participants ("DTC Participants") and to facilitate the clearance and settlement
of  securities   transactions   between  DTC  Participants   through  electronic
book-entries,   thereby   eliminating   the  need  for   physical   transfer  of
certificates.  DTC Participants  include securities brokers and dealers,  banks,
trust  companies and clearing  corporations.  Indirect  access to the DTC system
also is available to others such as banks, brokers,  dealers and trust companies


<PAGE>


that clear through or maintain a custodial  relationship  with a DTC Participant
either directly or indirectly ("Indirect Participants").

          Certificate   Owners  that  are  not  DTC   Participants  or  Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, the Certificates may do so only through DTC Participants and
Indirect  Participants.  In  addition,   Certificate  Owners  will  receive  all
distributions   of  principal  and  interest   from  the  Trustee   through  DTC
Participants  or Indirect  Participants,  as the case may be. Under a book-entry
format,  Certificate  Owners  may  experience  some  delay in their  receipt  of
payments,  because such  payments  will be forwarded by the Trustee to Cede,  as
nominee  for DTC.  DTC will  forward  such  payments  in  same-day  funds to DTC
Participants  who are credited  with  ownership of the  Certificates  in amounts
proportionate to the principal amount of each such DTC Participant's  respective
holdings of beneficial  interests in the  Certificates.  DTC  Participants  will
thereafter forward payments to Indirect  Participants or Certificate  Owners, as
the case may be, in accordance with customary industry practices. The forwarding
of such  distributions to the Certificate  Owners will be the  responsibility of
such DTC Participants.  Unless and until the Definitive  Certificates are issued
under the limited circumstances  described herein, the only  "Certificateholder"
will be Cede,  as nominee of DTC.  Certificate  Owners will not be recognized by
the Trustee as Certificateholders,  as such term is used in the Basic Agreement,
and   Certificate   Owners  will  be   permitted   to  exercise  the  rights  of
Certificateholders only indirectly through DTC and DTC Participants.

          Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"),  DTC is required to make book-entry  transfers
of the Certificates  among DTC Participants on whose behalf it acts with respect
to the  Certificates  and to receive and transmit  distributions  of  principal,
premium, if any, and interest with respect to the Certificates. DTC Participants
and Indirect  Participants  with which  Certificate  Owners have  accounts  with
respect to the Certificates  similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective  customers.
Accordingly,  although Certificate Owners will not possess the Certificates, the
Rules provide a mechanism by which Certificate  Owners will receive payments and
will be able to transfer their interests.

          Because  DTC can only act on behalf of DTC  Participants,  who in turn
act on behalf of Indirect  Participants,  the ability of a Certificate  Owner to
pledge the  Certificates  to persons or entities that do not  participate in the
DTC  system,  or to  otherwise  act with  respect to such  Certificates,  may be
limited due to the lack of a physical certificate for such Certificates.

          DTC has advised  Continental that it will take any action permitted to
be taken by a Certificateholder  under the Basic Agreement only at the direction
of one or more DTC  Participants to whose accounts with DTC the Certificates are
credited. Additionally, DTC has advised Continental that in the event any action
requires approval by  Certificateholders  of a certain  percentage of beneficial
interest in each Trust,  DTC will take such action only at the  direction of and
on behalf of DTC  Participants  whose holders include  undivided  interests that
satisfy any such percentage.  DTC may take  conflicting  actions with respect to


<PAGE>


other undivided interests to the extent that such actions are taken on behalf of
DTC Participants whose holders include such undivided interests.

          Neither  Continental  nor the Trustee will have any  liability for any
aspect of the  records  relating to or  payments  made on account of  beneficial
ownership interests in the Certificates held by Cede, as nominee for DTC, or for
maintaining,  supervising or reviewing any records  relating to such  beneficial
ownership interests.

          The  applicable  Prospectus  Supplement  will  specify any  additional
book-entry registration  procedures applicable to Certificates  denominated in a
currency other than United States dollars.

      SAME-DAY SETTLEMENT AND PAYMENT

          So long as the  Certificates  are registered in the name of DTC or its
nominee,  all payments made by  Continental  to the Loan Trustee under any Lease
will be in  immediately  available  funds.  Such  payments,  including the final
distribution of principal with respect to the Certificates of any Trust, will be
passed through to DTC in immediately available funds.

          Secondary  trading in  long-term  notes and  debentures  of  corporate
issuers is generally  settled in  clearinghouse  or next-day funds. In contrast,
secondary  trading  in  pass  through   certificates  is  generally  settled  in
immediately available or same-day funds. Any Certificates registered in the name
of DTC or its nominee will trade in DTC's Same-Day Funds Settlement System until
maturity,  and  secondary  market  trading  activity  in the  Certificates  will
therefore  be  required  by DTC to settle in  immediately  available  funds.  No
assurance can be given as to the effect, if any, of settlement in same-day funds
on trading activity in the Certificates.

      DEFINITIVE CERTIFICATES

          Certificates   will  be  issued  in  certificated   form  ("Definitive
Certificates")  to Certificate  Owners or their nominees,  rather than to DTC or
its nominee,  only if (i) Continental advises the Trustee in writing that DTC is
no  longer  willing  or able  to  discharge  properly  its  responsibilities  as
depository with respect to such Certificates and Continental is unable to locate
a qualified successor, (ii) Continental,  at its option, elects to terminate the
book-entry system through DTC or (iii) after the occurrence of certain events of
default  or  other  events  specified  in  the  related  Prospectus  Supplement,
Certificate Owners with fractional undivided interests aggregating not less than
a majority in interest in such Trust  advise the  Trustee,  Continental  and DTC
through DTC Participants in writing that the continuation of a book-entry system
through DTC (or a successor  thereto)  is no longer in the  Certificate  Owners'
best interest.

          Upon  the  occurrence  of  any  event  described  in  the  immediately
preceding  paragraph,  the Trustee  will be  required to notify all  Certificate
Owners through DTC Participants of the availability of Definitive  Certificates.
Upon surrender by DTC of the  certificates  representing  the  Certificates  and
receipt of  instructions  for  re-registration,  the  Trustee  will  reissue the
Certificates as Definitive Certificates to Certificate Owners.



<PAGE>



          Distributions of principal, premium, if any, and interest with respect
to Certificates  will  thereafter be made by the Trustee  directly in accordance
with the  procedures set forth in the Basic  Agreement and the applicable  Trust
Supplements,  to  holders  in  whose  names  the  Definitive  Certificates  were
registered  at the  close  of  business  on the  applicable  record  date.  Such
distributions  will be made by check  mailed to the address of such holder as it
appears on the  register  maintained  by the Trustee.  The final  payment on any
Certificate,  however, will be made only upon presentation and surrender of such
Certificate  at  the  office  or  agency   specified  in  the  notice  of  final
distribution to Certificateholders.

          Definitive  Certificates will be freely  transferable and exchangeable
at the office of the Trustee upon compliance with the  requirements set forth in
the Basic Agreement and the applicable Trust Supplements. No service charge will
be imposed for any  registration  of transfer or exchange,  but payment of a sum
sufficient to cover any tax or other governmental charge shall be required.

PAYMENTS AND DISTRIBUTIONS

          Subject to the effect of any cross-subordination  provisions set forth
in  the  Prospectus  Supplement  for  a  series  of  Certificates,  payments  of
principal,  premium,  if any, and interest with respect to the  Equipment  Notes
held  in each  Trust  will be  distributed  by the  Trustee,  upon  receipt,  to
Certificateholders  of such Trust on the dates and in the currency  specified in
the applicable Prospectus  Supplement,  except in certain cases when some or all
of such Equipment Notes are in default as described in the applicable Prospectus
Supplement.  Payments of principal  of, and  interest  on, the unpaid  principal
amount  of the  Equipment  Notes  held in each  Trust  will be  scheduled  to be
received  by the Trustee on the dates  specified  in the  applicable  Prospectus
Supplement  (such scheduled  payments of interest and principal on the Equipment
Notes to the Trustee are herein  referred to as  "Scheduled  Payments,"  and the
dates  specified in the applicable  Prospectus  Supplement for  distribution  of
Scheduled   Payments  to  the  Trustee  are  herein   referred  to  as  "Regular
Distribution  Dates").  See  "Description  of the  Equipment  Notes -- General."
Subject to the  effect of any  cross-subordination  provisions  set forth in the
Prospectus  Supplement for a series of Certificates,  each  Certificateholder of
each Trust will be entitled to receive a pro rata share of any  distribution  in
respect of Scheduled  Payments of principal  and interest  made on the Equipment
Notes held in the Trust.

          Payments of principal,  premium,  if any, and interest received by the
Trustee on account  of the early  redemption,  if any,  of the  Equipment  Notes
relating  to one or more  Aircraft  held in a Trust,  and  payments,  other than
Scheduled  Payments received on a Regular  Distribution Date or within five days
thereafter,  received by the Trustee  following  default in respect of Equipment
Notes held in a Trust relating to one or more Aircraft ("Special Payments") will
be distributed  on the date  determined  pursuant to the  applicable  Prospectus
Supplement  (a  "Special  Distribution  Date")  except  that,  unless  otherwise
specified in the  applicable  Prospectus  Supplement,  payments  received by the
Trustee  following  default  in  respect  of the  Equipment  Notes on a  Regular
Distribution  Date as a  result  of a  drawing  under  any  liquidity  facility,
specified  in  the  applicable   Prospectus   Supplement   (each,  a  "Liquidity
Facility"),  provided  for  the  benefit  of  the  Certificateholders  shall  be
distributed on such Regular  Distribution  Date. The Trustee will mail notice to


<PAGE>


the  Certificateholders  of record of the applicable Trust not less than 15 days
prior to the Special Distribution Date on which any Special Payment is scheduled
to be distributed by the Trustee stating such anticipated  Special  Distribution
Date.

POOL FACTORS

          Unless otherwise  described in the applicable  Prospectus  Supplement,
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 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  as of any  Regular
Distribution  Date or Special  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
that date.

          Unless otherwise  described in the applicable  Prospectus  Supplement,
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  aggregate  original  face
amount of the  Certificates of such Trust.  The Pool Factor for each Trust as of
any Regular  Distribution  Date or Special  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  distribution  thereof to be made
on that  date.  The Pool  Factor for each Trust  will  initially  be  1.0000000;
thereafter,  the Pool Factor for each Trust 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 original  denomination 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.  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.

          Unless there has been an early  redemption,  a purchase of an issue of
Equipment  Notes by the related  Owner  Trustee  after an Indenture  Default (as
defined below),  a default in the payment of principal in respect of one or more
issues of the Equipment Notes held in a Trust or certain actions have been taken
following  a  default  thereon,  as  described  in  the  applicable   Prospectus
Supplement,  the Pool Factor for the Trusts will  decline in  proportion  to the
scheduled  repayments of principal on the Equipment  Notes held in such Trust as
described  in the  applicable  Prospectus  Supplement.  In  the  event  of  such
redemption,  purchase or default,  the Pool Factor and the Pool  Balance of each
Trust so affected  will be  recomputed  after giving  effect  thereto and notice
thereof will be mailed to the  Certificateholders of such Trust. Each Trust will
have a separate Pool Factor.

REPORTS TO CERTIFICATEHOLDERS

          On each Regular  Distribution Date and Special  Distribution Date, the
Trustee will include with each  distribution  of a Scheduled  Payment or Special


<PAGE>


Payment to Certificateholders of the related Trust a statement, giving effect to
such  distribution  to be made  on such  Regular  Distribution  Date or  Special
Distribution Date, setting forth the following information (per $1,000 aggregate
principal amount of Certificate for such Trust, as to (i) and (ii) below):

          (i) the amount of such  distribution  allocable to  principal  and the
     amount allocable to premium, if any;

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

          (iii) the Pool Balance and the Pool Factor for such Trust.

          So long as the  Certificates  are registered in the name of DTC or its
nominee on the record date prior to each Regular  Distribution  Date and Special
Distribution  Date,  the 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 Regular
Distribution  Date and Special  Distribution  Date, the applicable  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 Certificate Owners.

          In addition,  after the end of each  calendar  year,  the Trustee will
prepare  for  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) and (ii)  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 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 report
and such other items shall be prepared on the basis of  information  supplied to
the Trustee by the DTC  Participants  and shall be  delivered  by the Trustee to
such DTC Participants to be available for forwarding by such DTC Participants to
Certificate Owners in the manner described above.

          At such time,  if any, as the  Certificates  are issued in the form of
Definitive  Certificates,  the Trustee will prepare and deliver the  information
described  above to each  Certificateholder  of record of each Trust as the name
and period of  beneficial  ownership  of such  Certificateholder  appears on the
records of the registrar of the Certificates.

VOTING OF EQUIPMENT NOTES

          Subject to the effect of any cross-subordination  provisions set forth
in the related Prospectus  Supplement,  the Trustee,  as holder of the Equipment
Notes held in each Trust,  has the right to vote and give  consents  and waivers
with respect to such  Equipment  Notes under the Related  Indentures.  The Basic
Agreement and related Trust Supplement set forth (i) the  circumstances in which
the  Trustee  may  direct  any  action  or cast  any vote as the  holder  of the
Equipment  Notes held in the applicable  Trust at its own  discretion,  (ii) the
circumstances   in  which  the  Trustee   shall  seek   instructions   from  the
Certificateholders  of such Trust and (iii) the percentage of Certificateholders
required  to direct the Trustee to take any such  action.  If  specified  in the



<PAGE>


related Prospectus Supplement,  the right of a Trustee to vote and give consents
and waivers with respect to the  Equipment  Notes held in the related Trust may,
in the circumstances  set forth in an intercreditor  agreement to be executed by
such Trustee,  be  exercisable by another  person  specified in such  Prospectus
Supplement.

EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT

          The Prospectus Supplement will specify the events of default under the
Basic  Agreement  (an  "Event  of  Default")  and  the  Related  Indentures  (an
"Indenture  Default").  The Indenture  Defaults  will include  events of default
under the  related  Leases (a "Lease  Event of  Default").  With  respect to any
Equipment  Notes which are  supported  by a Liquidity  Facility,  the  Indenture
Defaults or Events of Default may include events of default under such Liquidity
Facility.  Unless  otherwise  provided in a  Prospectus  Supplement,  all of the
Equipment  Notes  issued  under the same  Indenture  will  relate to a  specific
Aircraft  and  there  will  be  no   cross-collateralization   or  cross-default
provisions in the Indentures, and events resulting in an Indenture Default under
any particular  Indenture will not  necessarily  result in an Indenture  Default
occurring  under any other  Indenture.  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 made as  originally  scheduled.  As  described  below  under "--
Cross-Subordination  Issues," a Prospectus  Supplement  may provide the terms of
any cross-subordination  provisions among Certificateholders of separate Trusts.
If  such  provisions  are so  provided,  payments  made  pursuant  to a  Related
Indenture  under which an Indenture  Default has not occurred may be distributed
first to the holders of the Certificates  issued under the Trust which holds the
most senior Equipment Notes issued under all Related Indentures.

          The ability of the applicable Owner Trustee or Owner Participant under
the Related Indenture to cure Indenture  Defaults,  including Indenture Defaults
that result from the  occurrence  of a Lease Event of Default  under the related
Lease, will be described in the Prospectus Supplement. Unless otherwise provided
in a Prospectus Supplement,  with respect to any Certificates or Equipment Notes
entitled  to the  benefits  of a Liquidity  Facility,  a drawing  under any such
Liquidity  Facility  for the purpose of making a payment of interest as a result
of the failure by Continental to have made a corresponding payment will not cure
an Indenture Default related to such failure by Continental.

          The Prospectus  Supplement  related to a series of  Certificates  will
describe the circumstances under which the Trustee of the related Trust may vote
some  or all of  the  Equipment  Notes  held  in  such  Trust.  Such  Prospectus
Supplement  also will set forth the  percentage  of  Certificateholders  of such
Trust  entitled to direct the  Trustee to take any action  with  respect to such
Equipment Notes. If the Equipment Notes  outstanding under an Indenture are held
by more than one Trust, then the ability of the  Certificateholders  issued with
respect to any one Trust to cause the Loan Trustee with respect to any Equipment
Notes held in such Trust to  accelerate  the  Equipment  Notes under the Related
Indenture or to direct the  exercise of remedies by the Loan  Trustee  under the
Related  Indenture  will  depend,  in part,  upon  the  proportion  between  the


<PAGE>


aggregate  principal  amount  of the  Equipment  Notes  outstanding  under  such
Indenture  and held in such  Trust  and the  aggregate  principal  amount of all
Equipment   Notes   outstanding   under  such   Indenture.   In   addition,   if
cross-subordination  provisions  are  applicable to any series of  Certificates,
then the ability of the  Certificateholders  of any one Trust holding  Equipment
Notes issued under Related  Indentures to cause the Loan Trustee with respect to
any Equipment  Notes held in such Trust to accelerate the Equipment  Notes under
the Related  Indenture or to direct the exercise of remedies by the Loan Trustee
under the Related  Indenture will depend,  in part,  upon the Class of Equipment
Notes held in such Trust. If the Equipment Notes  outstanding under an Indenture
are held by more than one Trust,  then each Trust will hold Equipment Notes with
different  terms from the Equipment Notes held in the other Trusts and therefore
the  Certificateholders  of a Trust may have divergent or conflicting  interests
from those of the Certificateholders of the other Trusts holding Equipment Notes
issued under the same Indenture.  In addition,  so long as the same  institution
acts as  Trustee  of  each  Trust,  in the  absence  of  instructions  from  the
Certificateholders  of any such Trust,  the Trustee for such Trust could for the
same reason be faced with a potential  conflict  of interest  upon an  Indenture
Default.  In such  event,  the  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 Basic Agreement.

          The Prospectus  Supplement for a series of  Certificates  will specify
whether and under what  circumstances  the Trustee may or shall sell for cash to
any person all or part of the  Equipment  Notes held in the related  Trust.  Any
proceeds  received by the Trustee  upon any such sale shall be  deposited  in an
account established by the Trustee for the benefit of the  Certificateholders of
such Trust for the  deposit of such  Special  Payments  (the  "Special  Payments
Account") and shall be distributed to the  Certificateholders of such Trust on a
Special Distribution Date. The market for Equipment Notes in default may be very
limited,  and there can be no assurance that they could be sold for a reasonable
price. Furthermore,  so long as the same institution acts as Trustee of multiple
Trusts,  it may be faced with a conflict  in  deciding  from which Trust to sell
Equipment  Notes to available  buyers.  If the Trustee sells any such  Equipment
Notes with  respect  to which an  Indenture  Default  exists for less than their
outstanding principal amount, the  Certificateholders of such Trust will receive
a smaller amount of principal  distributions  than anticipated and will not have
any claim for the  shortfall  against  Continental,  any  Owner  Trustee,  Owner
Participant   or  the  Trustee.   Furthermore,   neither  the  Trustee  nor  the
Certificateholders  of such  Trust  could take any  action  with  respect to any
remaining  Equipment  Notes held in such Trust so long as no Indenture  Defaults
exist with respect thereto.

          Any  amount,  other  than  Scheduled  Payments  received  on a Regular
Distribution  Date,  distributed to the Trustee of any Trust by the Loan Trustee
under any  Indenture  on  account  of the  Equipment  Notes  held in such  Trust
following an Indenture  Default under such  Indenture  shall be deposited in the
Special  Payments  Account  for  such  Trust  and  shall be  distributed  to the
Certificateholders of such Trust on a Special Distribution Date. In addition, if
a Prospectus  Supplement  provides that the applicable  Owner Trustee may, under
circumstances  specified therein,  redeem or purchase the outstanding  Equipment
Notes issued under the Related  Indenture,  the price paid by such Owner Trustee
to the Trustee of any Trust for the Equipment  Notes issued under such Indenture


<PAGE>


and held in such Trust shall be  deposited in the Special  Payments  Account for
such Trust and shall be distributed to the Certificateholders of such Trust on a
Special Distribution Date.

          Any funds representing payments received with respect to any Equipment
Notes held in a Trust in default,  or the proceeds  from the sale by the Trustee
of any such Equipment Notes, held by the Trustee in the Special Payments Account
for such Trust shall, to the extent  practicable,  be invested and reinvested by
the Trustee in Permitted Investments pending the distribution of such funds on a
Special  Distribution  Date.  "Permitted  Investments"  will be specified in the
related Prospectus Supplement.

          The Basic  Agreement  provides  that the Trustee of each Trust  shall,
within 90 days after the occurrence of a default in respect of such Trust,  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 the payment of  principal,  premium,  if
any, or interest on any of the Equipment  Notes held in such Trust,  the Trustee
shall 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.  The term "default" as used in this paragraph only means the
occurrence  of an Indenture  Default  with respect to Equipment  Notes held in a
Trust as described above,  except that in determining whether any such Indenture
Default has occurred,  any grace period or notice in connection  therewith shall
be disregarded.

          The Basic Agreement contains a provision entitling the Trustee of each
Trust,  subject  to the duty of the  Trustee  during a  default  to act with the
required standard of care, to be offered reasonable security or indemnity by the
Certificateholders  of such Trust  before  proceeding  to exercise  any right or
power under the Basic Agreement at the request of such Certificateholders.

          The Prospectus  Supplement for a series of  Certificates  will specify
the  percentage  of  Certificateholders  entitled to waive,  or to instruct  the
Trustee to waive,  any past Event of Default  with respect to such Trust and its
consequences.  The Prospectus  Supplement for a series of Certificates also will
specify the  percentage of  Certificateholders  (and whether of such Trust or of
any other  Trust  holding  Equipment  Notes  issued  under  Related  Indentures)
entitled to waive, or to instruct the Trustee or the Loan Trustee to waive,  any
past  Indenture  Default  under any  Related  Indenture  and  thereby  annul any
direction given with respect thereto.

MERGER, CONSOLIDATION AND TRANSFER  OF ASSETS

          Continental will be 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  validly  existing  under the laws of the
United States or any state thereof,  (b) be a "citizen of the United States" (as
defined in Section  40102 of Title 49 of the United  States  Code,  relating  to
aviation (the  "Transportation  Code")) holding a carrier operating  certificate
issued by the Secretary of  Transportation  pursuant to Chapter 447 of Title 49,
United  States  Code,  if,  and so  long  as,  such  status  is a  condition  of
entitlement  to the benefits of Section  1110 of the  Bankruptcy  Code,  and (c)
expressly  assume all of the  obligations of Continental  contained in the Basic
Agreement  and any  Trust  Supplement,  the  Note  Purchase  Agreements  and the


<PAGE>


Participation  Agreements and the Leases, and any other operative documents; and
(ii)  Continental  shall have delivered a certificate and an opinion or opinions
of counsel  indicating  that such  transaction,  in effect,  complies  with such
conditions.

MODIFICATIONS OF THE BASIC AGREEMENT

          The Basic Agreement contains provisions permitting Continental and the
Trustee of each Trust to enter into a supplemental trust agreement,  without the
consent of the holders of any of the Certificates of such Trust, including among
other things (i) to provide for the  formation of such Trust and the issuance of
a series of Certificates, (ii) to evidence the succession of another corporation
to  Continental  and  the  assumption  by  such   corporation  of  Continental's
obligations under the Basic Agreement and the applicable Trust Supplement, (iii)
to add to the  covenants  of  Continental  for the  benefit  of  holders of such
Certificates,  or to  surrender  any  right  or  power  in the  Basic  Agreement
conferred upon Continental,  (iv) to cure any ambiguity or correct or supplement
any defective or inconsistent provision of the Basic Agreement or the applicable
Trust  Supplement  or to make any other  provisions  with  respect to matters or
questions  arising  thereunder,   provided  such  action  shall  not  materially
adversely affect the interests of the holders of such  Certificates,  or to cure
any ambiguity or correct any mistake or (without  limitation of the  foregoing),
to give effect or provide for replacement liquidity facilities, if applicable to
such  Certificates,  (v) to comply with any requirement of the  Commission,  any
applicable  law,  rules or  regulations  of any exchange or quotation  system on
which any  Certificates may be listed or of any regulatory body, (vi) to modify,
eliminate or add to the provisions of the Basic Agreement to the extent as shall
be necessary to continue the qualification of the Basic Agreement (including any
supplemental  agreement)  under the Trust Indenture Act of 1939, as amended (the
"Trust  Indenture Act") and to add to the Basic Agreement such other  provisions
as may be expressly permitted by the Trust Indenture Act, (vii) to provide for a
successor Trustee or to add to or change any provision of the Basic Agreement as
shall be necessary to facilitate the  administration of the Trusts thereunder by
more than one Trustee and (viii) to make any other  amendments or  modifications
to the Basic  Agreement,  provided such amendments or  modifications  shall only
apply to Certificates  issued thereafter;  provided,  in the case of clauses (i)
through (viii) above, that no such supplemental  trust agreement shall adversely
affect the status of any Trust as a grantor  trust for U.S.  federal  income tax
purposes.

          The Basic Agreement also contains  provisions  permitting  Continental
and the Trustee of each Trust,  with the  consent of the  Certificateholders  of
such 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),  to  execute
supplemental   trust  agreements   adding  any  provisions  to  or  changing  or
eliminating any of the provisions of the Basic Agreement, to the extent relating
to such Trust, and the applicable Trust  Supplement,  or modifying the rights of
the  Certificateholders,  except that no such supplemental  trust agreement may,
without the consent of each Certificateholder so affected thereby, (a) reduce in
any manner the amount of, or delay the timing of, any  receipt by the Trustee of
payments on the Equipment Notes 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


<PAGE>


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 the Basic Agreement or the applicable Trust
Supplement,  or otherwise  deprive any  Certificateholder  of the benefit of the
ownership of the applicable  Equipment  Notes,  (c) reduce the percentage of the
aggregate  fractional undivided interests of the Trust provided for in the Basic
Agreement  or the  applicable  Trust  Supplement,  the consent of the holders of
which is required for any such  supplemental  trust  agreement or for any waiver
provided for in the Basic Agreement or such Trust Supplement,  (d) 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, (e) alter the priority of
distributions  specified in any applicable  intercreditor  agreement in a manner
materially adverse to the interests of the  Certificateholders  of such Trust or
(f) adversely affect the status of any Trust as a grantor trust for U.S. federal
income tax purposes.

MODIFICATION OF INDENTURE AND RELATED AGREEMENTS

          The Prospectus  Supplement  will specify the Trustee's  obligations in
the event  that the  Trustee,  as the  holder of any  Equipment  Notes held in a
Trust,  receives a request for its  consent to any  amendment,  modification  or
waiver under the Indenture or other  documents  relating to such Equipment Notes
(including any Lease or any Liquidity Facility).

CROSS-SUBORDINATION ISSUES

          The Equipment Notes issued under an Indenture may be held in more than
one Trust and one Trust may hold  Equipment  Notes  issued  under  more than one
Related Indenture.  Unless otherwise provided in a Prospectus  Supplement,  only
Equipment Notes of the same series may be held in the same Trust. In such event,
payments made on account of a subordinate  class of Certificates  issued under a
Prospectus  Supplement  may, under  circumstances  described in such  Prospectus
Supplement,  be  subordinated  to the  prior  payment  of all  amounts  owing to
Certificateholders  of a Trust which holds senior  Equipment  Notes issued under
any Related  Indentures.  The  Prospectus  Supplement  related to an issuance of
Certificates  will describe any such  "cross-subordination"  provisions  and any
related terms,  including the percentage of  Certificateholders  under any Trust
which  are  permitted  to (i)  grant  waivers  of  defaults  under  any  Related
Indenture,  (ii)  consent  to the  amendment  or  modification  of  any  Related
Indenture  or (iii) direct the  exercise of remedial  actions  under any Related
Indenture.

TERMINATION OF THE TRUSTS

          The obligations of Continental and the 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 Basic  Agreement and
the applicable Trust Supplement and the disposition of all property held in such
Trust.  In no event shall any Trust continue beyond 110 years following the date
of the  execution  of the  applicable  Trust  Supplement  (or such  other  final
expiration date as may be specified in such Trust Supplement).  The Trustee will
send to each Certificateholder of record of such Trust notice of the termination


<PAGE>


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 Trustee specified in such notice of termination.

DELAYED PURCHASE

          In the event that,  on the delivery date of any  Certificates,  all of
the  proceeds  from the sale of such  Certificates  are not used to purchase the
Equipment  Notes  contemplated  to be held in the related Trust,  such Equipment
Notes  may be  purchased  by the  Trustee  at any  time on or  prior to the date
specified in the applicable  Prospectus  Supplement.  In such event, the Trustee
will hold the proceeds from the sale of such  Certificates  not used to purchase
Equipment Notes in an escrow account pending the purchase of the Equipment Notes
not so  purchased.  Such proceeds will be invested at the direction and risk of,
and for the  account of, such  person as shall be  specified  in the  applicable
Prospectus   Supplement   (the   "Responsible   Party")  in  certain   specified
investments, which may include: (i) obligations of, or guaranteed by, the United
States Government or agencies thereof,  (ii) open market commercial paper of any
corporation  incorporated  under the laws of the United States of America or any
State thereof rated at least P-2 or its equivalent by Moody's Investors Service,
Inc. or at least A-2 or its equivalent by Standard & Poor's Ratings Services,  a
division of the  McGraw-Hill  Companies,  Inc.,  (iii)  certificates  of deposit
issued by commercial  banks  organized under the laws of the United States or of
any  political  subdivision  thereof  having a combined  capital  and surplus in
excess of $100,000,000 which banks or their holding companies have a rating of A
or its  equivalent  by Moody's  Investors  Service,  Inc.  or  Standard & Poor's
Ratings  Services,  a division of the  McGraw-Hill  Companies,  Inc.,  provided,
however,  that the aggregate  amount at any one time so invested in certificates
of deposit issued by any one bank shall not exceed 5% of such bank's capital and
surplus,  (iv) U.S.  dollar-denominated  offshore certificates of deposit issued
by, or offshore time deposits  with,  any  commercial  bank  described in clause
(iii) above or any  subsidiary  thereof and (v) repurchase  agreements  with any
financial   institution   having  combined  capital  and  surplus  of  at  least
$100,000,000  with any of the obligations  described in clauses (i) through (iv)
above  as  collateral;  provided  that  if  all  of the  above  investments  are
unavailable,  the entire amounts to be invested may be used to purchase  federal
funds from an entity  described in clause (iii) above; and provided further that
no  investment  shall be  eligible as a  specified  investment  unless the final
maturity  date or date of return  of such  investment  is on or  before  (x) the
scheduled date for the purchase of such Equipment  Notes,  or (y) if no date has
been scheduled for the purchase of such Equipment  Notes, the next Business Day,
or (z) if the Responsible  Party has given notice that such Equipment Notes will
not be purchased,  the next applicable Special  Distribution  Date.  Earnings on
such  investments  in the  escrow  account  for each  Trust  will be paid to the
Responsible  Party  periodically,  and the Responsible Party will be responsible
for any losses.

          On the next Regular  Distribution  Date  specified  in the  applicable
Prospectus  Supplement,  the Responsible Party will pay to the Trustee an amount
equal to the interest that would have accrued on any Equipment  Notes  purchased
after  the  date of the  issuance  of such  Certificates  from  the  date of the


<PAGE>


issuance of such  Certificates  to, but  excluding,  the date of the purchase of
such Equipment Notes by the Trustee.

SPECIAL DISTRIBUTION UPON UNAVAILABILITY OF AIRCRAFT

          To the extent that,  due to a casualty to, or other event  causing the
unavailability  of, one or more  Aircraft,  the full amount of the proceeds from
the sale of any  Certificates  held in the escrow account referred to above will
not be (as notified to the Trustee), or is not, used to purchase Equipment Notes
on or prior to the date specified in the applicable  Prospectus  Supplement,  an
amount equal to the unused  proceeds will be  distributed  by the Trustee to the
holders of record of such Certificates on a pro rata basis upon not less than 15
days'  prior  notice  to them on a  Special  Distribution  Date,  together  with
interest  thereon at a rate equal to the rate  applicable to such  Certificates,
but without premium,  and the Responsible  Party will pay to the Trustee on such
date an amount equal to such interest.

LIQUIDITY FACILITY

          The  related  Prospectus  Supplement  may  provide  that  one or  more
payments of interest on the Certificates of one or more series will be supported
by a  Liquidity  Facility  issued by an  institution  identified  in the related
Prospectus Supplement. The provider of such Liquidity Facility will have a claim
senior  to  the  Certificateholders'  as  specified  in the  related  Prospectus
Supplement.

THE TRUSTEE

          Unless otherwise provided in the Prospectus  Supplement for any series
of Certificates,  the Trustee for each series of Certificates will be Wilmington
Trust Company. With certain exceptions,  the Trustee makes no representations as
to the validity or sufficiency of the Basic  Agreement,  the Trust  Supplements,
the  Certificates,  the Equipment  Notes,  the  Indentures,  the Leases or other
related documents. The Trustee shall not be liable with respect to any series of
Certificates, for any action taken or omitted to be taken by it in good faith in
accordance  with the direction of the holders of a majority in principal  amount
of  outstanding  Certificates  of such series issued under the Basic  Agreement.
Subject  to such  provisions,  such  Trustee  shall be under  no  obligation  to
exercise any of its rights or powers under the Basic Agreement at the request of
any holders of Certificates  issued thereunder unless they shall have offered to
the Trustee indemnity  satisfactory to it. The Basic Agreement provides that the
Indenture  Trustee in its  individual or any other capacity may acquire and hold
Certificates issued thereunder and, subject to certain conditions, may otherwise
deal with Continental and, with respect to the Aircraft,  with any Owner Trustee
with the same rights it would have if it were not the Trustee.

          The Trustee may resign with respect to any or all of the Trusts at any
time,  in which  event  Continental  will be  obligated  to appoint a  successor
trustee.  If the 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 remove such Trustee, or any Certificateholder of such
Trust for at least six months may, on behalf of himself and all others similarly
situated,  petition any court of competent  jurisdiction for the removal of such


<PAGE>


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.  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.

          The Basic Agreement  provides that  Continental will pay the Trustee's
Fees and expenses and indemnify the Trustee against certain liabilities.

                       DESCRIPTION OF THE EQUIPMENT NOTES

          The statements  made under this caption are summaries and reference is
made  to  the  entire  Prospectus  and  detailed  information  appearing  in the
applicable Prospectus Supplement.

          To the extent  that any  provision  in any  Prospectus  Supplement  is
inconsistent  with  any  provision  in  this  summary,  the  provision  of  such
Prospectus Supplement will control.

GENERAL

          All Equipment Notes will be issued under a separate  Indenture between
the related  Owner  Trustee of a trust for the benefit of the Owner  Participant
who is the  beneficial  owner of the  related  Aircraft,  and the  related  Loan
Trustee.  The Equipment Notes will be nonrecourse  obligations of the applicable
Owner Trustee.  Each Equipment Note will be authenticated  under an Indenture by
the Loan  Trustee.  All  Equipment  Notes issued under the same  Indenture  will
relate to, and be secured by, one or more Aircraft  identified  and described in
the related Prospectus  Supplement and which are leased to Continental  pursuant
to a Lease  between  the Owner  Trustee  under the  applicable  Owner  Trust and
Continental.

          With respect to each Aircraft,  the related Owner Trustee has acquired
or will acquire such Aircraft from the  manufacturer of such Aircraft or from an
interim owner established by such manufacturer,  as the case may be, has granted
or will grant a security  interest in such  Aircraft to the related Loan Trustee
as security for the payments of the related  Equipment  Notes, and has leased or
will lease such Aircraft to Continental  pursuant to the related Lease which has
been or will be  assigned  to the related  Loan  Trustee.  Pursuant to each such
Lease,  Continental  will be  obligated  to make or cause to be made  rental and
other  payments  to the  related  Loan  Trustee on behalf of the  related  Owner
Trustee in amounts specified in the applicable Prospectus Supplement.

PRINCIPAL AND INTEREST PAYMENTS

          Interest  received by the Trustee 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  in  the  applicable  Prospectus
Supplement until the final  distribution for such Trust.  Principal  received by


<PAGE>


the Trustee 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
in the applicable  Prospectus  Supplement until the final  distribution date for
such Trust.

          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

          The applicable  Prospectus Supplement will describe the circumstances,
whether  voluntary  or  involuntary,  under  which  the  Equipment  Notes may be
redeemed or purchased prior to the stated maturity date thereof,  in whole or in
part, the premium,  if any, applicable upon certain redemptions or purchases and
other terms applying to the redemptions or purchases of such Equipment Notes.

SECURITY

          The  Equipment  Notes  will be  secured  by (i) an  assignment  by the
related Owner Trustee to the related Loan Trustee of such Owner Trustee's rights
(except for certain rights,  including those described below) under the Lease or
Leases with  respect to the  related  Aircraft,  including  the right to receive
payments of rent  thereunder,  (ii) a mortgage  granted to such Loan  Trustee in
such Aircraft,  subject to the rights of Continental  under such Lease or Leases
and (iii) an assignment to such Loan Trustee of certain of such Owner  Trustee's
rights  with  respect to such  Aircraft  under the  purchase  agreement  between
Express  and  the  related   manufacturer.   Under  the  terms  of  each  Lease,
Continental's  obligations in respect of each Aircraft will be those of a lessee
under a "net lease."  Accordingly,  Continental  will be obligated,  among other
things and at its expense, to cause each Aircraft to be duly registered,  to pay
all costs of  operating  such  Aircraft  and to  maintain,  service,  repair and
overhaul (or cause to be maintained,  serviced,  repaired and  overhauled)  such
Aircraft.  With respect to the  Aircraft,  the  assignment  by the related Owner
Trustee to the related Loan  Trustee of its rights under the related  Lease will
exclude,  among other things, rights of such Owner Trustee and the related Owner
Participant  relating to  indemnification  by Continental  for certain  matters,
insurance proceeds payable to such Owner Trustee in its individual  capacity and
to such Owner  Participant under liability  insurance  maintained by Continental
pursuant  to 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 pursuant to such Lease and any rights of
such Owner Participant or such Owner Trustee to enforce payment of the foregoing
amounts and their respective rights to the proceeds of the foregoing.

          The Prospectus Supplement will specify the required insurance coverage
with respect to the Aircraft.

          Continental will be required,  except under certain circumstances,  to
keep each Aircraft  registered under the Transportation  Code, and to record the


<PAGE>


Indenture and the Lease, if applicable,  among other documents,  with respect to
each Aircraft under the Transportation  Code. Such recordation of the Indenture,
the  Lease and other  documents  with  respect  to each  Aircraft  will give the
related  Loan  Trustee a perfected  security  interest  in the related  Aircraft
whenever  it is  located  in the  United  States or any of its  territories  and
possessions;  the  Convention  on the  International  Recognition  of  Rights in
Aircraft (the "Convention") provides that such security will also be recognized,
with certain limited  exceptions,  in those  jurisdictions that have ratified or
adhere to the Convention.  Continental  will have the right,  subject to certain
conditions, at its own expense to register each Aircraft in countries other than
the United  States.  Each Aircraft may also be operated by  Continental or under
sublease or  interchange  arrangements  in countries that are not parties to the
Convention.  The extent to which the related Loan  Trustee's  security  interest
would be recognized  in an Aircraft  located in a country that is not a party to
the  Convention,  and the  extent  to  which  such  security  interest  would be
recognized  in a  jurisdiction  adhering to the  Convention  if the  Aircraft is
registered  in a  jurisdiction  not a party  to the  Convention,  is  uncertain.
Moreover,  in the case of an Indenture 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.

          Unless otherwise  specified in the applicable  Prospectus  Supplement,
the  Equipment  Notes  will not be  cross-collateralized  and  consequently  the
Equipment Notes issued in respect of any one Aircraft will not be secured by any
other  Aircraft  or the Lease  related  thereto.  Unless and until an  Indenture
Default with respect to an Aircraft has occurred and is continuing,  the related
Loan Trustee may exercise only limited rights of the related Owner Trustee under
the related Lease.

          Funds, if any, held from time to time by the Loan Trustee with respect
to any  Aircraft,  prior  to the  distribution  thereof,  will be  invested  and
reinvested by such Loan Trustee. Such investment and reinvestment will be at the
direction of  Continental  (except in the case of a Lease Event of Default under
the  applicable  Lease),  in  certain  investments   described  in  the  Related
Indenture.  The net amount of any loss resulting from any such  investments will
be paid by Continental.

          Section 1110 of the Bankruptcy  Code provides that, in  reorganization
cases  under  Chapter  11 of the  Bankruptcy  Code,  the right of a lessor  with
respect to, and of the holder of a security  interest  in,  aircraft  capable of
carrying 10 or more  individuals  or 6,000  pounds or more of cargo leased to or
subject to a  security  interest  granted by a citizen of the United  States (as
defined in the Transportation Code) holding an air carrier operating certificate
issued by the Secretary of Transportation  pursuant to the  Transportation  Code
for such aircraft (a certificate  which  Continental  and Express each presently
possesses) to take possession of such aircraft in compliance with the provisions
of the lease or security  agreement  is not affected by (a) the  automatic  stay
provision of the Bankruptcy Code, which provision  generally  enjoins the taking
of any  action  against  a  debtor  by a  creditor,  (b)  the  provision  of the
Bankruptcy  Code  allowing the trustee or  debtor-in-possession  to use, sell or
lease property of the estate and (c) any power of the bankruptcy court to enjoin
a repossession.  Section 1110 provides,  however,  that the right of a lessor or
secured  party  to  take  possession  of an  aircraft  in  compliance  with  the
provisions of the lease or security  agreement in the event of a default may not
be  exercised  for  60  days   following  the  date  of   commencement   of  the


<PAGE>


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 or  debtor-in-possession  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).

          In connection with any issuance of Certificates  under this Prospectus
and the  applicable  Prospectus  Supplement,  it is a condition to the Trustee's
obligation  to  purchase  Equipment  Notes with  respect to each  Aircraft  that
outside  counsel to  Continental  provide its opinion to such  Trustee  that the
Owner  Trustee,  as  lessor  under the  Lease  for such  Aircraft,  and the Loan
Trustee, as assignee of such Owner Trustee's rights under such Lease pursuant to
the Related  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 so long as Continental continues to be a "citizen of the United States"
as defined in Section  40102 of Title 49 of the  Transportation  Code holding an
air carrier  operating  certificate  issued by the  Secretary of  Transportation
pursuant  to Chapter  447 of Title 49 of the  Transportation  Code for  aircraft
capable of carrying  10 or more  individuals  or 6,000  pounds or more of cargo.
Such opinions will not address the possible  replacement of an Aircraft after an
Event of Loss (as defined in the Indenture) in the future.

RANKING OF EQUIPMENT NOTES

          Some  of the  Equipment  Notes  related  to one or more  Aircraft,  as
described in the related Prospectus  Supplement,  may be subordinated and junior
in right of payment to other Equipment  Notes related to the same Aircraft.  The
terms of such subordination, if any, will be described in the related Prospectus
Supplement.

PAYMENTS AND LIMITATION OF LIABILITY

          Each  Aircraft  will  be  leased  by  the  related  Owner  Trustee  to
Continental  for a term  commencing  on the delivery  date thereof to such Owner
Trustee and expiring on a date not earlier than the latest  maturity date of the
related Equipment Notes, unless previously  terminated as permitted by the terms
of the related  Lease.  The basic rent and other  payments under each such Lease
will be payable by  Continental  in accordance  with the terms  specified in the
applicable  Prospectus  Supplement,  and will be assigned  by the related  Owner
Trustee  under the Related  Indenture  to the Loan  Trustee.  The balance of any
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 applicable Owner Participant.  Continental's  obligation to pay
rent and to cause  other  payments  to be made  under each Lease will be general
obligations of  Continental.  The Equipment Notes will not be obligations of, or
guaranteed by, Continental.

          None  of the  Owner  Trustees,  the  Owner  Participants  or the  Loan
Trustees shall be personally  liable to any holder of such  Equipment  Notes for
amounts  payable  under such  Equipment  Notes,  or,  except as  provided in the
Indentures  relating  thereto  in the case of the  Owner  Trustees  and the Loan
Trustees,  for any liability under such Indentures.  Except in the circumstances


<PAGE>


referred to above,  all amounts  payable under any  Equipment  Notes (other than
payments  made in  connection  with an  optional  redemption  or purchase by the
related Owner Trustee or the related Owner  Participant)  will be made only from
(i) the assets subject to the lien of the Related Indenture with respect to such
Aircraft  or the  income and  proceeds  received  by the  related  Loan  Trustee
therefrom  (including  rent payable by  Continental  under the related Lease) or
(ii)  if so  provided  in the  related  Prospectus  Supplement,  the  applicable
Liquidity Facility.

LIQUIDITY FACILITY

          The  related  Prospectus  Supplement  may  provide  that  one or  more
payments of interest  on the  related  Equipment  Notes of one or more series or
distributions  made by the Trustee of the related  Trust will be  supported by a
Liquidity Facility issued by an institution identified in the related Prospectus
Supplement.  Unless otherwise provided in the related Prospectus Supplement, the
provider  of the  Liquidity  Facility  will have a senior  claim upon the assets
securing the Equipment Notes.

INTERCREDITOR ISSUES

          Equipment Notes may be issued in different  Classes,  which means that
the Equipment Notes may have different  payment  priorities even though they are
issued by the same Owner Trustee and relate to the same Aircraft. In such event,
the related  Prospectus  Supplement will describe the priority of  distributions
among such Equipment Notes (and any Liquidity Facilities therefor),  the ability
of any Class to exercise  and/or enforce any or all remedies with respect to the
related  Aircraft,  the Lease related  thereto and certain  other  intercreditor
terms and provisions.

          CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

GENERAL

          Unless otherwise  indicated in the applicable  Prospectus  Supplement,
the  following   summary   describes  the  principal  U.S.  federal  income  tax
consequences to Certificateholders of the purchase, ownership and disposition of
the Certificates offered hereby and in the opinion of Hughes Hubbard & Reed LLP,
special tax counsel to Continental ("Tax Counsel"),  is accurate in all material
respects  with  respect to the matters  discussed  therein.  Except as otherwise
specified,  the summary is addressed to beneficial owners of Certificates ("U.S.
Certificateholders")  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  therein,  or estates or trusts the
income of which is subject to U.S.  federal  income  taxation  regardless of its
source ("U.S.  Persons") that will hold the Certificates as capital assets. This
summary does not address the tax treatment of U.S.  Certificateholders  that may
be subject to special tax rules, such as banks, insurance companies,  dealers in
securities  or  commodities,   tax-exempt  entities,   holders  that  will  hold
Certificates as part of a straddle or holders that have a "functional  currency"
other  than the U.S.  Dollar,  nor does it  address  the tax  treatment  of U.S.
Certificateholders  that do not  acquire  Certificates  as  part of the  initial
offering thereof. The summary does not purport to be a comprehensive description
of all of the tax considerations  that may be relevant to a decision to purchase


<PAGE>


Certificates.  This summary does not describe any tax consequences arising under
the laws of any state,  locality  or taxing  jurisdiction  other than the United
States.

          The  summary  is based  upon the tax laws and  practice  of the United
States as in  effect on the date of this  Prospectus,  as well as  judicial  and
administrative  interpretations thereof (in final or proposed form) available on
or before such date.  All of the foregoing  are subject to change,  which change
could apply  retroactively.  Prospective  investors  should note that no rulings
have been sought from the Internal  Revenue  Service (the "IRS") with respect to
the federal income tax  consequences  discussed  below, and no assurances can be
given  that  the IRS will not take  contrary  positions.  PROSPECTIVE  INVESTORS
SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL,  STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES TO THEM OF THE PURCHASE,  OWNERSHIP AND DISPOSITION
OF THE CERTIFICATES.

TAX STATUS OF THE TRUSTS

          In the  opinion of Tax  Counsel,  each Trust will be  classified  as a
grantor trust for U.S. federal income tax purposes.

TAXATION OF CERTIFICATEHOLDERS GENERALLY

          A U.S.  Certificateholder  will be  treated  as  owning  its pro  rata
undivided interest in each of the Equipment Notes and any other property held by
the related Trust. Accordingly,  each U.S. Certificateholder's share of interest
paid on the Equipment Notes will be taxable as ordinary income, as it is paid or
accrued, in accordance with such U.S.  Certificateholder's  method of accounting
for U.S. federal income tax purposes,  and a U.S.  Certificateholder's  share of
premium,  if any,  paid on  redemption  of an Equipment  Note will be treated as
capital  gain.  In the event that a Trust is supported by a Liquidity  Facility,
any amounts  received by the Trust under the Liquidity  Facility with respect to
unpaid  interest will be treated for U.S.  federal income tax purposes as having
the same characteristics as the payments they replace.

          Each U.S.  Certificateholder  will be entitled  to deduct,  consistent
with its method of  accounting,  its pro rata share of fees and expenses paid or
incurred  by the  corresponding  Trust as  provided in Section 162 or 212 of the
Internal  Revenue  Code of 1986,  as  amended  (the  "Code").  Certain  fees and
expenses,  including  fees paid to the Trustee and the provider of the Liquidity
Facility   (if   applicable),   will  be  borne  by   parties   other  than  the
Certificateholders.  It is possible  that such fees and expenses will be treated
as constructively received by the Trust, in which event a U.S. Certificateholder
will be  required  to include in income and will be  entitled  to deduct its pro
rata  share  of  such  fees  and  expenses.  If a U.S.  Certificateholder  is an
individual,  estate or trust, the deduction for such holder's share of such fees
or  expenses  will be  allowed  only to the  extent  that  all of such  holder's
miscellaneous  itemized  deductions,  including such holder's share of such fees
and expenses,  exceed 2% of such holder's adjusted gross income. In addition, in
the  case of U.S.  Certificateholders  who are  individuals,  certain  otherwise
allowable   itemized   deductions  will  be  subject   generally  to  additional
limitations on itemized deductions under applicable provisions of the Code.


<PAGE>


EFFECT OF SUBORDINATION OF SUBORDINATED CERTIFICATEHOLDERS

          In the event that any Trust (such Trust being a  "Subordinated  Trust"
and the related Certificates being "Subordinated  Certificates") is subordinated
in right of payment to any other Trust and the Subordinated  Trust receives less
than the full amount of the receipts of interest, principal or premium paid with
respect to the Equipment  Notes held by it (any shortfall in such receipts being
the  "Shortfall  Amounts")  because  of the  subordination  of such  Trust,  the
corresponding  owners of beneficial  interests in the Subordinated  Certificates
(the  "Subordinated  Certificateholders")  would probably be treated for federal
income tax  purposes  as if they had (1)  received as  distributions  their full
share  of such  receipts,  (2)  paid  over to the  relevant  preferred  class of
Certificateholders  an amount equal to their share of such Shortfall Amount, and
(3) retained the right to  reimbursement of such amounts to the extent of future
amounts  payable to such  Subordinated  Certificateholders  with respect to such
Shortfall Amount.

          Under this analysis, (1) Subordinated  Certificateholders  incurring a
Shortfall  Amount would be required to include as current income any interest or
other income of the corresponding Subordinated Trust that was a component of the
Shortfall  Amount,  even  though  such  amount was in fact paid to the  relevant
preferred class of Certificateholders,  (2) a loss would only be allowed to such
Subordinated  Certificateholders  when their right to receive  reimbursement  of
such Shortfall Amount becomes  worthless (I.E., when it becomes clear that funds
will  not be  available  from  any  source  to  reimburse  such  loss),  and (3)
reimbursement  of such Shortfall  Amount prior to such a claim of  worthlessness
would not be taxable  income to  Subordinated  Certificateholders  because  such
amount was previously included in income. These results should not significantly
affect  the  inclusion  of income  for  Subordinated  Certificateholders  on the
accrual  method of  accounting,  but  could  accelerate  inclusion  of income to
Subordinated  Certificateholders on the cash method of accounting by, in effect,
placing them on the accrual method.

ORIGINAL ISSUE DISCOUNT

          The  Equipment  Notes  may be  issued  with  original  issue  discount
("OID"), which may require U.S.  Certificateholders to include such OID in gross
income in advance of the  receipt  or  accrual  of the stated  interest  on such
Equipment  Notes.  The  Prospectus  Supplement  will state whether any Equipment
Notes to be held by the  related  Trust will be issued  with OID.  Generally,  a
holder of a debt  instrument  issued with original issue discount that is not de
minimis must include such original  issue  discount in income for federal income
tax purposes as it accrues,  in advance of the receipt of the cash  attributable
to such  income,  under a method  that takes into  account  the  compounding  of
interest.

SALE OR OTHER DISPOSITION OF THE CERTIFICATES

          Upon the sale, exchange or other disposition of a Certificate,  a U.S.
Certificateholder  generally  will  recognize  capital gain or loss equal to the
difference between the amount realized on the disposition (other than any amount
attributable to accrued  interest which will be taxable as ordinary  income) and
the U.S.  Certificateholder's  adjusted tax basis in the related Equipment Notes
and any other property held by the corresponding Trust. Any gain or loss will be


<PAGE>


long-term  capital gain or loss to the extent  attributable  to property held by
the Trust for more than one year.

FOREIGN CERTIFICATEHOLDERS

          Subject to the  discussion of backup  withholding  below,  payments of
principal  and  interest  on the  Equipment  Notes  to,  or on  behalf  of,  any
beneficial  owner  of a  Certificate  that  is not a U.S.  Person  (a  "Non-U.S.
Certificateholder")  will  not be  subject  to  U.S.  federal  withholding  tax;
provided, in the case of interest, that (i) such Non-U.S. Certificateholder does
not  actually or  constructively  own 10% or more of the total  combined  voting
power  of  all  classes  of  the  stock  of  Continental,   (ii)  such  Non-U.S.
Certificateholder  is not a controlled foreign corporation for U.S. tax purposes
that is  related  to an Owner  Participant  and (iii)  either  (A) the  Non-U.S.
Certificateholder  certifies,  under penalties of perjury, that it is not a U.S.
Person  and  provides  its  name  and  address  or  (B)  a  securities  clearing
organization,   bank  or  other  financial  institution  that  holds  customers'
securities  in the  ordinary  course  of its  trade or  business  (a  "financial
institution") and holds the Certificate  certifies,  under penalties of perjury,
that such statement has been received from the Non-U.S.  Certificateholder by it
or by another financial institution and furnishes the payor with a copy thereof.
Regulations  proposed by the  Internal  Revenue  Service on April 15,  1996,  if
finalized in their current  form,  would modify the  certification  requirements
described in clause (iii) with respect to certain  payments  after  December 31,
1997.

          Any capital gain realized upon the sale, exchange, retirement or other
disposition  of a  Certificate  or upon  receipt of premium paid on an Equipment
Note by a Non-U.S.  Certificateholder will not be subject to U.S. federal income
or withholding  taxes if (i) such gain is not effectively  connected with a U.S.
trade or  business  of the  holder and (ii) in the case of an  individual,  such
holder is not  present in the United  States for 183 days or more in the taxable
year of the sale, exchange, retirement or other disposition or receipt.

BACKUP WITHHOLDING

          Payments  made on the  Certificates  and  proceeds  from  the  sale of
Certificates  will not be subject to a backup  withholding tax of 31% unless, in
general, the Certificateholder fails to comply with certain reporting procedures
or otherwise  fails to establish  an  exemption  from such tax under  applicable
provisions of the Code.

                              ERISA CONSIDERATIONS

          Unless otherwise  indicated in the applicable  Prospectus  Supplement,
the Certificates  may, subject to certain legal  restrictions,  be purchased and
held by an employee  benefit plan (a "Plan")  subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended  ("ERISA"),  or an individual
retirement  account or an employee  benefit  plan subject to section 4975 of the
Code.  A fiduciary of a Plan must  determine  that the purchase and holding of a
Certificate  is consistent  with its  fiduciary  duties under ERISA and does not
result in a non-exempt prohibited transaction as defined in section 406 of ERISA
or section 4975 of the Code. Employee benefit plans which are governmental plans


<PAGE>


(as defined in section  3(32) of ERISA) and certain  church plans (as defined in
section  3(33) of ERISA) are not subject to Title I of ERISA or section  4975 of
the Code.  The  Certificates  may,  subject to certain  legal  restrictions,  be
purchased and held by such plans.

                              PLAN OF DISTRIBUTION

          Certificates  may be  sold  to one or  more  underwriters  for  public
offering and sale by them or to investors or other  persons  directly or through
one or more dealers or agents. Any such underwriter, dealer or agent involved in
the offer and sale of the Certificates will be named in an applicable Prospectus
Supplement.

          The Certificates may be sold at a fixed price or prices,  which may be
changed,  or from time to time at market prices  prevailing at the time of sale,
at prices  related to such  prevailing  market prices or at  negotiated  prices.
Dealer  trading  may  take  place  in  certain  of the  Certificates,  including
Certificates not listed on any securities exchange.  Continental does not intend
to apply for  listing of the  Certificates  on a national  securities  exchange.
Continental  also  may,  from  time to time,  authorize  underwriters  acting as
Continental's  agents  to offer  and sell the  Certificates  upon the  terms and
conditions  as shall be set forth in any  Prospectus  Supplement.  In connection
with the sale of  Certificates,  underwriters  may be  deemed  to have  received
compensation  from  Continental  in  the  form  of  underwriting   discounts  or
commissions and may also receive commissions from purchasers of Certificates for
whom they may act as agent.  Underwriters  may sell  Certificates  to or through
dealers,  and such dealers may receive  compensation  in the form of  discounts,
concessions or commissions from the underwriters  and/or  commissions (which may
be  changed  from  time to time)  from the  purchasers  for whom they may act as
agent.

          If  a  dealer  is  used  directly  by   Continental  in  the  sale  of
Certificates in respect of which this Prospectus is delivered, such Certificates
will be sold to the  dealer,  as  principal.  The  dealer may then  resell  such
Certificates  to the public at varying prices to be determined by such dealer at
the time of resale.  Any such  dealer and the terms of any such sale will be set
forth in the Prospectus Supplement relating thereto.

          Certificates  may be offered and sold  through  agents  designated  by
Continental  from time to time.  Any such agent involved in the offer or sale of
the  Certificates in respect of which this Prospectus is delivered will be named
in, and any  commissions  payable by Continental to such agent will be set forth
in, the applicable  Prospectus  Supplement.  Unless  otherwise  indicated in the
applicable  Prospectus  Supplement,  any such  agent  will be  acting  on a best
efforts basis for the period of its appointment.

          Offers  to  purchase   Certificates  may  be  solicited   directly  by
Continental   and  sales  thereof  may  be  made  by  Continental   directly  to
institutional  investors or others who may be deemed to be  underwriters  within
the meaning of the Securities Act with respect to any resale thereof.  The terms
of any such  sales  will be  described  in the  Prospectus  Supplement  relating
thereto.  Except  as set  forth  in the  applicable  Prospectus  Supplement,  no
director,  officer  or  employee  of  Continental  will  solicit  or  receive  a
commission in connection  with direct sales by Continental of the  Certificates,


<PAGE>


although  such  persons may respond to inquiries  by  potential  purchasers  and
perform ministerial and clerical work in connection with any such direct sales.

          Any  underwriting  compensation  paid by Continental to  underwriters,
dealers or agents in  connection  with the  offering  of  Certificates,  and any
discounts,  concessions or commissions  allowed by underwriters to participating
dealers, will be set forth in an applicable Prospectus Supplement. Underwriters,
dealers and agents  participating in the distribution of the Certificates may be
deemed to be  underwriters,  and any discounts and commissions  received by them
and any profit realized by them on resale of the  Certificates  may be deemed to
be   underwriting   discounts  and   commissions   under  the  Securities   Act.
Underwriters,  dealers  and  agents  may  be  entitled,  under  agreements  with
Continental,  to indemnification  against and contribution  toward certain civil
liabilities,   including   liabilities   under  the   Securities   Act,  and  to
reimbursement by Continental for certain expenses.

          Underwriters,  dealers and agents may engage in transactions  with, or
perform services for, Continental and its subsidiaries in the ordinary course of
business.

          If so indicated in an applicable  Prospectus Supplement and subject to
existing  market  conditions,  Continental  will  authorize  dealers  acting  as
Continental's  agents to solicit  offers by  certain  institutions  to  purchase
Certificates  at  the  public  offering  price  set  forth  in  such  Prospectus
Supplement  pursuant to Delayed Delivery Contracts  ("Contracts")  providing for
payment and delivery on the date or dates stated in such Prospectus  Supplement.
Each Contract will be for an amount not less than,  and the aggregate  principal
amount of  Certificates  sold  pursuant to Contracts  shall not be less nor more
than, the respective amounts stated in such Prospectus Supplement.  Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of Continental.  Contracts will not be subject to any conditions
except  the  purchase  by an  institution  of the  Certificates  covered  by its
Contracts shall not at the time of delivery be prohibited  under the laws of any
jurisdiction  in the  United  States to which such  institution  is  subject.  A
commission indicated in the applicable  Prospectus Supplement will be granted to
underwriters  and  agents  soliciting  purchases  of  Certificates  pursuant  to
Contracts  accepted  by  Continental.  Agents  and  underwriters  will  have  no
responsibility in respect of the delivery or performance of Contracts.

          If an  underwriter  or  underwriters  are  utilized in the sale of any
Certificates,  the applicable  Prospectus Supplement will contain a statement as
to the intention,  if any, of such  underwriters  at the date of such Prospectus
Supplement to make a market in the Certificates. No assurances can be given that
there will be a market for the Certificates.

          The place and time of  delivery  for the  Certificates  in  respect of
which  this  Prospectus  is  delivered  will  be set  forth  in  the  applicable
Prospectus Supplement.



<PAGE>

                                 LEGAL OPINIONS

          Unless otherwise  indicated in the applicable  Prospectus  Supplement,
the validity of the  Certificates  will be passed upon for Continental by Hughes
Hubbard & Reed LLP, One Battery Park Plaza, New York, New York. Unless otherwise
indicated in the  applicable  Prospectus  Supplement,  Hughes Hubbard & Reed LLP
will rely on the  opinion of  counsel  for the  Trustee  as to  certain  matters
relating to the  authorization,  execution and delivery of such Certificates by,
and the valid and binding effect thereof on, such Trustee.

                                     EXPERTS

         The consolidated  financial  statements  (including financial statement
schedules) 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
reports thereon  included  therein and  incorporated  herein by reference.  Such
consolidated  financial  statements  are,  and  audited  consolidated  financial
statements to be included in subsequently filed documents will be,  incorporated
herein  in  reliance  upon  reports  of Ernst & Young  LLP  pertaining  (to such
consolidated  financial  statements to the extent covered by consents filed with
the  Commission)  given upon the authority of such firm as experts in accounting
and auditing.



<PAGE>



                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

          The estimated  expenses in connection  with this offering,  other than
underwriting discounts and commissions, are:


<TABLE>
<CAPTION>
<S>                                                                   <C>    
Securities and Exchange Commission registration filing fee.........   $ 75,758
Printing and engraving expenses....................................    150,000*
Trustee fees and expenses..........................................     25,000*
Accounting fees and expenses.......................................     60,000*
Rating Agency fees.................................................     60,000*
Legal fees and expenses............................................    200,000*
Miscellaneous......................................................     29,242*
                                                                      --------
         Total.....................................................    600,000*
                                                                      ========

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

<FN>
* Estimates.
</FN>
</TABLE>


ITEM 15.  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.



<PAGE>

          (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 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  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.



<PAGE>

          (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 of 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 of the Company 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:



<PAGE>

          "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 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 16.  EXHIBITS.

          Reference is made to the Exhibit Index which immediately  precedes the
exhibits filed with this Registration Statement, which is incorporated herein by
reference.

ITEM 17.  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  l0(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;


<PAGE>


PROVIDED, HOWEVER, that paragraphs (1)(i) and (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 of 1933, each such post-effective 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
plan's 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
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.



<PAGE>


                                   SIGNATURES

          Pursuant  to the  requirements  of the  Securities  Act of  1933,  the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and 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 July 15, 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 July 15, 1997.

<TABLE>
<CAPTION>

          SIGNATURE                                    TITLE
          ---------                                    -----

<S>                                 <C>
              *              
- -----------------------------       Chairman of the Board and Chief Executive
     Gordon M. Bethune                     Officer (Principal Executive


              *
- -----------------------------       Executive Vice President and Chief Financial
     Lawrence W. Kellner            Officer (Principal Financial Officer)


              *
- -----------------------------       Vice President and Controller
     Michael P. Bonds               (Principal Accounting Officer)
         


              *
- -----------------------------       Director
     Thomas J. Barrack, Jr.


              *
- -----------------------------       President, Chief Operating Officer and
     Gregory D. Brenneman           Director


              *
- -----------------------------       Director
     Lloyd M. Bentsen, Jr.


              *
- -----------------------------       Director
     David Bonderman


              *
- -----------------------------        Director
     Patrick Foley
</TABLE>





<PAGE>



<TABLE>
<CAPTION>
<S>                                 <C>
              *
- -----------------------------        Director
     Douglas H. McCorkindale


              *
- -----------------------------        Director
     George G.C. Parker


              *
- -----------------------------        Director
     Richard W. Pogue


              *
- -----------------------------        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>





<PAGE>



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

EXHIBIT NO.          EXHIBIT
- -----------          -------

<S>                  <C>
4.1                  Form of Pass Through Trust Agreement

5.1                  Opinion of Hughes Hubbard & Reed LLP

12.1                 Computation of Ratio of Earnings to Fixed Charges

23.1                 Consent of Ernst & Young LLP

23.1                 Consent of Hughes Hubbard & Reed LLP (included in its
                     opinion filed as exhibit 5.1)

24.1                 Powers of Attorney

25.1                 Statement of Eligibility of Wilmington Trust Company on Form T-1

</TABLE>





                                                                    EXHIBIT 4.1


                      FORM OF PASS THROUGH TRUST AGREEMENT


<PAGE>


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



                          PASS THROUGH TRUST AGREEMENT

                              Dated as of [ ], 1997

                                     between

                           CONTINENTAL AIRLINES, INC.

                                       and

                            WILMINGTON TRUST COMPANY,

                                   as Trustee

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





<PAGE>

                                TABLE OF CONTENTS
 
                                                                            Page

                             ARTICLE I - DEFINITIONS

Section 1.01   Definitions ....................................................2
Section 1.02   Compliance Certificates and Opinions ..........................11
Section 1.03   Form of Documents Delivered to Trustee ........................12
Section 1.04   Directions of Certificateholders ..............................12

                 ARTICLE II - ORIGINAL ISSUANCE OF CERTIFICATES:
                          ACQUISITION OF TRUST PROPERTY

Section 2.01   Amount Unlimited; Issuable in Series ..........................14
Section 2.02   Acquisition of Equipment Notes ................................16
Section 2.03   Acceptance by Trustee .........................................17
Section 2.04   Limitation of Powers ..........................................18

                         ARTICLE III - THE CERTIFICATES

Section 3.01   Form, Denomination and Execution of Certificates ..............18
Section 3.02   Authentication of Certificates ................................18
Section 3.03   Temporary Certificates ........................................19
Section 3.04   Transfer and Exchange .........................................19
Section 3.05   Book-Entry and Definitive Certificates ........................20
Section 3.06   Mutilated, Destroyed, Lost or Stolen Certificates .............22
Section 3.07   Persons Deemed Owners .........................................22
Section 3.08   Cancellation ..................................................23
Section 3.09   Limitation of Liability for Payments ..........................23

          ARTICLE IV - DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS

Section 4.01   Certificate
 Account and Special Payments Account ..............23
Section 4.02   Distributions from Certificate Account and Special Payments
               Account .......................................................24
Section 4.03   Statements to Certificateholders ..............................26
Section 4.04   Investment of Special Payment Moneys ..........................26

                             ARTICLE V - THE COMPANY

Section 5.01   Maintenance of Corporate Existence ............................27
Section 5.02   Consolidation, Merger, Etc. ...................................27

                              ARTICLE VI - DEFAULT

Section 6.01   Events of Default .............................................28



<PAGE>

                                TABLE OF CONTENTS
                                  (Continued)

                                                                            Page

Section 6.02   Incidents of Sale of Equipment Notes ..........................29
Section 6.03   Judicial Proceedings Instituted by Trustee; Trustee May
               Bring Suit ....................................................30
Section 6.04   Control by Certificateholders .................................30
Section 6.05   Waiver of Past Defaults .......................................31
Section 6.06   Right of Certificateholders to Receive Payments 
               Not to Be Impaired ............................................31
Section 6.07   Certificateholders May Not Bring Suit Except Under
               Certain Conditions ............................................31
Section 6.08   Remedies Cumulative ...........................................32
Section 6.09   Undertaking for Costs .........................................32

                            ARTICLE VII - THE TRUSTEE

Section 7.01   Certain Duties and Responsibilities ...........................33
Section 7.02   Notice of Defaults ............................................33
Section 7.03   Certain Rights of Trustee .....................................34
Section 7.04   Not Responsible for Recitals or Issuance of Certificates ......35
Section 7.05   May Hold Certificates .........................................35
Section 7.06   Money Held in Trust ...........................................35
Section 7.07.  Compensation and Reimbursement ................................35
Section 7.08   Corporate Trustee Required; Eligibility .......................36
Section 7.09   Resignation and Removal; Appointment of Successor .............36
Section 7.10   Acceptance of Appointment by Successor ........................38
Section 7.11   Merger, Conversion, Consolidation or Succession
               to Business ...................................................39
Section 7.12   Maintenance of Agencies .......................................39
Section 7.13   Money for Certificate Payments to Be Held in Trust ............40
Section 7.14   Registration of Equipment Notes in Trustee's Name .............41
Section 7.15   Representations and Warranties of Trustee .....................41
Section 7.16   Withholding Taxes; Information Reporting ......................42
Section 7.17   Trustee's Liens ...............................................42
Section 7.18   Preferential Collection of Claims .............................42

        ARTICLE VIII - CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE

Section 8.01   The Company to Furnish Trustee with Names and Addresses of
               Certificateholders ............................................43
Section 8.02   Preservation of Information; Communications to 
               Certificateholders ............................................43
Section 8.03   Reports by Trustee ............................................43
Section 8.04   Reports by the Company ........................................43




<PAGE>

                                TABLE OF CONTENTS
                                  (Continued)

                                                                            Page
                      ARTICLE IX - SUPPLEMENTAL AGREEMENTS

Section 9.01   Supplemental Agreements Without Consent of
               Certificateholders ............................................44
Section 9.02   Supplemental Agreements with Consent of Certificateholders ....46
Section 9.03   Documents Affecting Immunity or Indemnity .....................47
Section 9.04   Execution of Supplemental Agreements ..........................47
Section 9.05   Effect of Supplemental Agreements .............................47
Section 9.06   Conformity with Trust Indenture Act ...........................47
Section 9.07   Reference in Certificates to Supplemental Agreements ..........47

             ARTICLE X - AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS

Section 10.01  Amendments and Supplements to Indenture and 
               Other Note Documents ..........................................48

                       ARTICLE XI - TERMINATION OF TRUSTS

Section 11.01  Termination of the Trusts .....................................49

                     ARTICLE XII - MISCELLANEOUS PROVISIONS

Section 12.01  Limitation on Rights of Certificateholders ....................50
Section 12.02  Liabilities of Certificateholders .............................50
Section 12.03  Registration of Equipment Notes in Name of 
               Subordination Agent ...........................................50
Section 12.04  Notices .......................................................50
Section 12.05  Governing Law .................................................51
Section 12.06  Severability of Provisions ....................................52
Section 12.07  Trust Indenture Act Controls ..................................52
Section 12.08  Effect of Headings and Table of Contents ......................52
Section 12.09  Successors and Assigns ........................................52
Section 12.10  Benefits of Agreement .........................................52
Section 12.11  Legal Holidays ................................................52
Section 12.12  Counterparts ..................................................52
Section 12.13  Communication by Certificateholders with Other
               Certificateholders ............................................53
Section 12.14  Intention of Parties ..........................................53

                                    EXHIBITS

Exhibit A      Form of Certificate



<PAGE>

Reconciliation  and  tie  between   Continental   Airlines  Pass  Through  Trust
Agreement,  dated as of [ ],  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)                                7.07
                (a)(2)                                7.07
             312(a)                                   3.05; 8.01; 8.02
             313(a)                                   7.07
             314(a)                                   8.04(a) - (c)
                (a)(4)                                8.04(d)
                (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)                    1.01(c)
                (a)(1)(A)                             6.04
                (a)(1)(B)                             6.05
                (b)                                   6.06
                (c)                                   1.04(d)
             317(a)(1)                                6.03
                (b)                                   7.13
             318(a)                                  12.05
</TABLE>




<PAGE>

                          PASS THROUGH TRUST AGREEMENT

         This PASS THROUGH  TRUST  AGREEMENT,  dated as of [ ], 1997 (the "BASIC
AGREEMENT"),  between CONTINENTAL  AIRLINES,  INC., a Delaware  corporation (the
"COMPANY"),  and WILMINGTON TRUST COMPANY, a Delaware trust company, as Trustee,
is made with respect to the formation from time to time of separate  Continental
Airlines  Pass Through  Trusts,  and the issuance  from time to time of separate
series of Pass Through Certificates  representing fractional undivided interests
in the respective Trusts.

                                   WITNESSETH:

         WHEREAS,  from time to time, the Company and the Trustee may enter into
a Trust Supplement (this and certain other defined terms used herein are defined
in Section  1.01)  pursuant to which the Trustee shall declare the creation of a
separate Trust for the benefit of the Holders of the series of  Certificates  to
be issued in respect of such Trust,  and the initial Holders of the Certificates
of such series,  as the grantors of such Trust, by their respective  acceptances
of the  Certificates  of such  series,  shall join in the creation of such Trust
with the Trustee;

         WHEREAS,  all  Certificates  to be issued in respect  of each  separate
Trust will be issued as a  separate  series  pursuant  to this  Agreement,  will
evidence  fractional  undivided interests in such Trust and will have no rights,
benefits or  interests  in respect of any other  separate  Trust or the property
held therein, subject, however, to the provisions of any Intercreditor Agreement
to which one or more Trusts may be a party;

         WHEREAS,  from time to time,  pursuant to the terms and  conditions  of
this Agreement with respect to each separate Trust formed hereunder, the Trustee
on behalf of such Trust shall  purchase  one or more issues of  Equipment  Notes
having the same  interest rate as, and final  maturity  dates not later than the
final Regular Distribution Date of, the series of Certificates issued in respect
of such Trust and, subject to the terms of any related Intercreditor  Agreement,
shall   hold   such   Equipment   Notes  in  trust  for  the   benefit   of  the
Certificateholders of such Trust;

         WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase
of Equipment  Notes by, the Trustee on behalf of each Trust created from time to
time pursuant to this  Agreement,  the Company as the "ISSUER",  as such term is
defined in and solely for purposes of the Securities Act of 1933, as amended, of
the Certificates to be issued in respect of each Trust and as the "OBLIGOR",  as
such term is defined in and solely for  purposes of the Trust  Indenture  Act of
1939, as amended,  has duly  authorized the execution and delivery of this Basic
Agreement and each Trust Supplement with respect to all such Certificates and is
undertaking to perform certain  administrative  and ministerial duties hereunder
and is also undertaking to pay the fees and expenses of the Trustee; and

         WHEREAS,  this Basic Agreement,  as supplemented  from time to time, is
subject to the  provisions of the Trust  Indenture Act of 1939, as amended,  and
shall, to the extent applicable, be governed by such provisions;



<PAGE>

         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 Basic  Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

               (1) the terms used herein that are defined in this Article I have
          the  meanings  assigned  to them in this  Article I, 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  Basic   Agreement  to  designated
          "ARTICLES",  "SECTIONS",  "SUBSECTIONS" and other  subdivisions are to
          the designated Articles, Sections,  Subsections and other subdivisions
          of this Basic Agreement;

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

               (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"; and

               (6) the term "THIS AGREEMENT" (as distinguished  from "THIS BASIC
          AGREEMENT")  refers,  unless the context otherwise  requires,  to this
          Basic  Agreement as supplemented  by the Trust  Supplement  creating a
          particular Trust and establishing the series of Certificates issued or
          to be issued in respect thereof, with reference to such Trust and such
          series of Certificates, as this Basic Agreement as so supplemented may
          be further  supplemented with respect to such Trust and such series of
          Certificates.

               ACT:  Has the  meaning,  with  respect to any  Certificateholder,
          specified in Section 1.04(a).

               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",  when
          used with respect to any specified Person,  means the power,  directly


<PAGE>

          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.

               AIRCRAFT: Means one or more aircraft, including engines therefor,
          owned by or leased to the Company and securing  one or more  Equipment
          Notes.

               AUTHORIZED AGENT:  Means, with respect to the Certificates of any
          series,  any Paying Agent or Registrar  for the  Certificates  of such
          series.

               BASIC AGREEMENT:  Means this Pass Through Trust Agreement, as the
          same may from time to time be supplemented,  amended or modified,  but
          does not include any Trust Supplement.

               BOOK-ENTRY CERTIFICATES:  Means, with respect to the Certificates
          of any  series,  a  beneficial  interest in the  Certificates  of such
          series,  ownership  and  transfers of which shall be made through book
          entries as described in Section 3.05.

               BUSINESS  DAY:  Means,  with respect to the  Certificates  of any
          series,  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,  or, so long as any  Certificate  of such
          series is outstanding,  the city and state in which the Trustee or any
          related Loan Trustee  maintains its Corporate Trust Office or receives
          and disburses funds.

               CERTIFICATE:  Means  any  one of the  certificates  executed  and
          authenticated  by the Trustee,  substantially in the form of Exhibit A
          hereto.

               CERTIFICATE  ACCOUNT:  Means, with respect to the Certificates of
          any series,  the account or accounts  created and  maintained for such
          series pursuant to Section 4.01(a) and the related Trust Supplement.

               CERTIFICATEHOLDER   OR  HOLDER:   Means,   with  respect  to  the
          Certificates of any series,  the Person in whose name a Certificate of
          such series is  registered  in the Register for  Certificates  of such
          series.

               CERTIFICATE OWNER: Means, with respect to the Certificates of any
          series, for purposes of Section 3.05, the Person who owns a Book-Entry
          Certificate of such series.

               CLEARING AGENCY: Means an organization  registered as a "clearing
          agency"  pursuant to Section  17A of the  Securities  Exchange  Act of
          1934, as amended.

               CLEARING AGENCY PARTICIPANT:  Means a broker, dealer, bank, other
          financial  institution  or other  Person  for whom from time to time a
          Clearing Agency effects, directly or indirectly,  book-entry transfers
          and pledges of securities deposited with the Clearing Agency.



<PAGE>

               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, when such reference
          is required for purposes of compliance  with the Trust  Indenture Act)
          any other  "obligor"  (within the meaning of the Trust  Indenture Act)
          with respect to the Certificates of any series.

               CONTROLLING  PARTY:  Means  the  Person  entitled  to act as such
          pursuant to the terms of any Intercreditor Agreement.

               CORPORATE TRUST OFFICE: Means, with respect to the Trustee or any
          Loan  Trustee,  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,  with respect to the  Certificates  of any
          series,   the  date  designated  as  such  in  the  Trust   Supplement
          establishing such series.

               DEFINITIVE  CERTIFICATES:  Has the  meaning,  with respect to the
          Certificates of any series, specified in Section 3.05.

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

               EQUIPMENT NOTES:  Means,  with respect to the Certificates of any
          series, all of the equipment notes issued under the Indentures related
          to such series of Certificates.

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

               ESCROW ACCOUNT: Has the meaning, with respect to the Certificates
          of any series, specified in Section 2.02(b).

               ESCROWED  FUNDS:  Has the  meaning,  with  respect  to any Trust,
          specified in Section 2.02(b).

               EVENT OF DEFAULT:  Means,  in respect of any Trust,  an Indenture
          Event of Default under any Indenture pursuant to which Equipment Notes
          held by such Trust were issued.

               FRACTIONAL  UNDIVIDED  INTEREST:  Means the fractional  undivided
          interest in a Trust that is  evidenced  by a  Certificate  relating to
          such Trust.

               INDENTURE:  Means,  with respect to any Trust, each of the one or
          more  separate  trust  indenture  and  security  agreements  or  trust
          indenture  and  mortgages or similar  documents  described in, or on a
          schedule  attached to, the Trust  Supplement  and an indenture  having
          substantially  the  same  terms  and  conditions  which  relates  to a
          Substitute  Aircraft,  as  each  such  indenture  may  be  amended  or
          supplemented in accordance with its respective terms; and "INDENTURES"
          means all of such agreements.



<PAGE>

               INDENTURE EVENT OF DEFAULT: Means, with respect to any Indenture,
          any  Indenture  Event of  Default  (as such  term is  defined  in such
          Indenture).

               INITIAL REGULAR  DISTRIBUTION  DATE:  Means,  with respect to the
          Certificates  of any series,  the first Regular  Distribution  Date on
          which a Scheduled Payment is to be made.

               INTERCREDITOR  AGREEMENT:  Means any  agreement  by and among the
          Trustee,  as trustee hereunder with respect to one or more Trusts, one
          or more Liquidity Providers and a Subordination Agent providing, among
          other  things,  for the  distribution  of payments  made in respect of
          Equipment Notes held by such Trusts.

               ISSUANCE DATE:  Means,  with respect to the  Certificates  of any
          series, the date of the issuance of such Certificates.

               LEASE:  Means any 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; and "LEASES" means all such Leases.

               LETTER  OF   REPRESENTATIONS:   Means,   with   respect   to  the
          Certificates  of any  series,  an  agreement  among the  Company,  the
          Trustee and the initial Clearing Agency.

               LIQUIDITY  FACILITY:  Means,  with respect to the Certificates of
          any  series,  any  revolving  credit  agreement,  letter  of credit or
          similar facility relating to the Certificates of such series between a
          bank or other  financial  institution  and a  Subordination  Agent, as
          amended,  replaced,  supplemented  or otherwise  modified from time to
          time in accordance  with its terms and the terms of any  Intercreditor
          Agreement.

               LIQUIDITY  PROVIDER:  Means,  with respect to the Certificates of
          any  series,  a bank or other  financial  institution  that  agrees to
          provide  a  Liquidity  Facility  for the  benefit  of the  holders  of
          Certificates of such series.

               LOAN TRUSTEE:  Means,  with respect to any Equipment  Note or the
          Indenture  applicable thereto, the bank or trust company designated as
          loan or indenture  trustee under such Indenture,  and any successor to
          such Loan Trustee as such trustee;  and "LOAN  TRUSTEES"  means all of
          the Loan Trustees under the Indentures.

               NOTE DOCUMENTS:  Means,  with respect to the  Certificates of any
          series,  the Equipment  Notes with respect to such  Certificates  and,
          with respect to such  Equipment  Notes,  the related  Indenture,  Note
          Purchase  Agreement  and,  if the  related  Aircraft  is leased to the
          Company,  the related Lease and the related Owner  Trustee's  Purchase
          Agreement.

               NOTE PURCHASE AGREEMENT:  Means, with respect to the Certificates
          of any series, any note purchase, refunding,  participation or similar


<PAGE>

          agreement providing for, among other things, the purchase of Equipment
          Notes by the  Trustee  on  behalf  of the  relevant  Trust;  and "NOTE
          PURCHASE AGREEMENTS" means all such agreements.

               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 the Trustee or an Owner Trustee or a
          Loan  Trustee,  a  Responsible  Officer  of the  Trustee or 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 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 AGREEMENTS: Has the meaning specified in Section 6.01(b).

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

                    (i) Certificates of such series theretofore cancelled by the
               Registrar  or  delivered  to the  Trustee  or the  Registrar  for
               cancellation;

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

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

               OWNER PARTICIPANT: Means, with respect to any Equipment Note, the
          "Owner Participant",  if any, 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.



<PAGE>

               OWNER  TRUSTEE:  Means,  with respect to any Equipment  Note, the
          "Owner Trustee",  if any, 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 related Indentures.

               OWNER TRUSTEE'S PURCHASE AGREEMENT: Has the meaning, with respect
          to the Certificates of any series if the related Aircraft is leased to
          the Company, specified therefor in the related Lease.

               PAYING  AGENT:  Means,  with respect to the  Certificates  of any
          series, the paying agent maintained and appointed for the Certificates
          of such series pursuant to Section 7.12.

               PERMITTED INVESTMENTS:  Means obligations of the United States of
          America or  agencies or  instrumentalities  thereof 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,  with respect to the  Certificates  of any
          series as of any date,  (i) the original  aggregate face amount of the
          Certificates  of any  series  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.  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 the Trust and the  distribution  thereof to be
          made on such Distribution Date.

               POOL FACTOR: Means, with respect to any series of Certificates as
          of any date,  the  quotient  (rounded  to the seventh  decimal  place)
          computed  by dividing  (i) the Pool  Balance of such series as at such
          date by (ii) the original aggregate face amount of the Certificates of
          such  series.  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 held in the Trust and the
          distribution thereof to be made on such Distribution Date.

               POSTPONED NOTES:  Means, with respect to any Trust or the related
          series of  Certificates,  the Equipment Notes to be held in such Trust
          as to which a Postponement  Notice shall have been delivered  pursuant
          to Section 2.02(b).



<PAGE>

               POSTPONEMENT  NOTICE:  Means,  with  respect  to any Trust or the
          related  series  of  Certificates,  an  Officer's  Certificate  of the
          Company  signed by an officer of the Company (1)  requesting  that the
          Trustee  temporarily  postpone purchase of the related Equipment Notes
          to a date later than the Issuance Date of such series of Certificates,
          (2)  identifying  the  amount  of the  purchase  price  of  each  such
          Equipment Note and the aggregate purchase price for all such Equipment
          Notes,  (3) setting  forth the reasons for such  postponement  and (4)
          with  respect  to each such  Equipment  Note,  either  (a)  setting or
          resetting  a new  Transfer  Date  (which  shall  be on or prior to the
          applicable  Cut-off  Date) for payment by the Trustee of such purchase
          price  and  issuance  of  the  related   Equipment  Note  (subject  to
          subsequent  change from time to time in  accordance  with the relevant
          Note Purchase  Agreement),  or (b)  indicating  that such new Transfer
          Date (which shall be on or prior to the applicable  Cut-off Date) will
          be set by  subsequent  written  notice not less than one  Business Day
          prior to such new Transfer  Date  (subject to  subsequent  change from
          time to time in accordance with the relevant Note Purchase Agreement).

               POTENTIAL  PURCHASER:  Has  the  meaning,  with  respect  to  any
          Certificateholder, specified in Section 6.01(b).

               PTC EVENT OF DEFAULT:  Means, with respect to the Certificates of
          any  series,  any failure to pay within ten  Business  Days of the due
          date  thereof:  (i) the  outstanding  Pool  Balance of such  series of
          Certificates  on the date  specified in any Trust  Supplement for such
          payment or (ii) interest due on the Certificates of such series on any
          Distribution Date (unless the related  Subordination  Agent shall have
          made an  Interest  Drawing or  Drawings  (as  defined  in the  related
          Intercreditor Agreement), or a withdrawal or withdrawals pursuant to a
          cash  collateral  account  under such  Intercreditor  Agreement,  with
          respect thereto in an aggregate amount sufficient to pay such interest
          and shall have distributed such amount to the Trustee).

               PURCHASING  CERTIFICATEHOLDER:  Has the meaning,  with respect to
          any Certificateholder, specified in Section 6.01(b).

               RECORD  DATE:  Means,  with  respect to any Trust or the  related
          series of Certificates,  (i) for Scheduled  Payments to be distributed
          on any Regular  Distribution  Date, other than the final  distribution
          with respect to such  series,  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 with respect to such series, the 15th day
          (whether or not a Business Day)  preceding  such Special  Distribution
          Date.

               REGISTER  and  REGISTRAR:   Means,   each  with  respect  to  the
          Certificates of any series, the register  maintained and the registrar
          appointed pursuant to Sections 3.04 and 7.12.

               REGULAR  DISTRIBUTION  DATE: Means, with respect to distributions
          of Scheduled  Payments in respect of any series of Certificates,  each
          date  designated as such in this  Agreement,  until payment of all the
          Scheduled  Payments to be made under the  Equipment  Notes held in the
          Trust have been made.



<PAGE>

               REQUEST: Means a request by the Company setting forth the subject
          matter of the request  accompanied by an Officer's  Certificate and an
          Opinion  of  Counsel  as  provided  in  Section  1.02  of  this  Basic
          Agreement.

               RESPONSIBLE OFFICER: Means, with respect to any Trustee, any Loan
          Trustee  and any Owner  Trustee,  any officer in the  Corporate  Trust
          Department 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.

               RESPONSIBLE PARTY: Means, with respect to the Certificates of any
          series, the person designated as such in the related Trust Supplement.

               SCHEDULED PAYMENT: Means, with respect to any Equipment Note, (i)
          any payment of  principal  or interest on such  Equipment  Note (other
          than any such payment  which is not in fact received by the Trustee or
          any  Subordination  Agent  within  five days of the date on which such
          payment is  scheduled  to be made) or (ii) any  payment of interest on
          the  Certificates  of any series with funds drawn under the  Liquidity
          Facility for such series,  which payment represents the installment of
          principal  on such  Equipment  Note  at the  stated  maturity  of such
          installment,  the payment of regularly  scheduled  interest accrued on
          the unpaid principal amount of such Equipment Note, or both; PROVIDED,
          HOWEVER,  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  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.

               SELLING  CERTIFICATEHOLDER:  Has the meaning, with respect to any
          Certificateholder, specified in Section 6.01(b).

               SPECIAL   DISTRIBUTION   DATE:   Means,   with   respect  to  the
          Certificates of any series, each date on which a Special Payment is to
          be distributed as specified in this Agreement.

               SPECIAL  PAYMENT:  Means (i) 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),  (ii) the
          amounts  required to be distributed  pursuant to the last paragraph of
          Section  2.02(b)  or (iii)  the  amounts  required  to be  distributed
          pursuant to the penultimate paragraph of Section 2.02(b).



<PAGE>

               SPECIAL PAYMENTS ACCOUNT: Means, with respect to the Certificates
          of any series, the account or accounts created and maintained for such
          series pursuant to Section 4.01(b) and the related Trust Supplement.

               SPECIFIED  INVESTMENTS:  Means, with respect to any Trust, unless
          otherwise  specified in the related Trust Supplement,  (i) obligations
          of, or  guaranteed  by,  the  United  States  Government  or  agencies
          thereof,   (ii)  open  market  commercial  paper  of  any  corporation
          incorporated  under the laws of the  United  States of  America or any
          state  thereof  rated  at  least  P-2 or  its  equivalent  by  Moody's
          Investors Service,  Inc. or at least A-2 or its equivalent by Standard
          & Poor's Ratings  Services,  a division of The McGraw-Hill  Companies,
          Inc.,  (iii)  certificates  of  deposit  issued  by  commercial  banks
          organized  under the laws of the  United  States  or of any  political
          subdivision thereof having a combined capital and surplus in excess of
          $100,000,000 which banks or their holding companies have a rating of A
          or its  equivalent by Moody's  Investors  Service,  Inc. or Standard &
          Poor's  Ratings  Services,  a division of The  McGraw-Hill  Companies,
          Inc.; PROVIDED,  HOWEVER, that the aggregate amount at any one time so
          invested in  certificates  of deposit issued by any one bank shall not
          exceed   5%  of  such   bank's   capital   and   surplus,   (iv)  U.S.
          dollar-denominated  offshore  certificates  of  deposit  issued by, or
          offshore time deposits with,  any commercial  bank described in clause
          (iii) above or any subsidiary  thereof and (v)  repurchase  agreements
          with any financial  institution having combined capital and surplus of
          at least $100,000,000 with any of the obligations described in clauses
          (i) through (iv) above as collateral;  PROVIDED FURTHER that if all of
          the above  investments  are  unavailable,  the  entire  amounts  to be
          invested  may be  used  to  purchase  federal  funds  from  an  entity
          described in clause (iii) above.

               SUBORDINATION  AGENT: Has the meaning  specified  therefor in any
          Intercreditor Agreement.

               SUBSTITUTE  AIRCRAFT:  Means,  with  respect  to any  Trust,  any
          Aircraft of a type specified in this Agreement and, at the election of
          the Company, substituted prior to the applicable Cut-off Date, if any,
          pursuant to the terms of this Agreement.

               TRANSFER  DATE:  Has the meaning  assigned to that term or any of
          the terms "Delivery Date",  "Funding Date" or "Closing Date" in a Note
          Purchase Agreement, and in any event refers to any such date as it may
          be changed from time to time in accordance with the terms of such Note
          Purchase Agreement.

               TRIGGERING  EVENT:  Has the  meaning  specified  therefor  in any
          Intercreditor Agreement.

               TRUST: Means, with respect to the Certificates of any series, the
          trust under this Agreement.

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



<PAGE>

               TRUST  INDENTURE  ACT:  Except as  otherwise  provided in Section
          9.06,  means,  with respect to any particular Trust, the United States
          Trust  Indenture  Act of 1939, as in force at the date as of which the
          related Trust Supplement was executed.

               TRUST PROPERTY:  Means, with respect to any Trust, (i) subject to
          any related Intercreditor  Agreement,  the Equipment Notes held as the
          property  of such Trust,  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 related  Escrow  Account,  the  related  Certificate
          Account and the related Special  Payments  Account and, subject to the
          related  Intercreditor  Agreement,  any proceeds  from the sale by the
          Trustee  pursuant  to  Article VI hereof of any such  Equipment  Note,
          (iii) all  rights  of such  Trust  and the  Trustee,  on behalf of the
          Trust,   under  any  Intercreditor   Agreement,   including,   without
          limitation,  all monies receivable in respect of such rights, and (iv)
          all monies receivable under any Liquidity Facility for such Trust.

               TRUST SUPPLEMENT: Means an agreement supplemental hereto pursuant
          to which  (i) a  separate  Trust is  created  for the  benefit  of the
          Holders of the  Certificates  of a series,  (ii) the  issuance  of the
          Certificates  of  such  series   representing   fractional   undivided
          interests  in such  Trust is  authorized  and  (iii)  the terms of the
          Certificates of such series are established.

         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  Basic  Agreement  or, in  respect  of the
Certificates of any series, 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 Basic  Agreement  or 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 Basic  Agreement  or 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 Basic Agreement or, in respect of the
Certificates of any series,  this Agreement  (other than a certificate  provided
pursuant to Section 8.04(d)) or any Trust Supplement shall include:

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

          (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 Basic Agreement or, in respect of the Certificates of any
series,  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 in respect of the  Certificates  of any series 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,
when it is hereby expressly required pursuant to this Agreement,  to the Company
or any Loan Trustee.  Such  instrument or instruments  (and the action  embodied
therein and evidenced  thereby) are herein sometimes referred to as the "ACT" of
the  Certificateholders  signing  such  instrument  or  instruments.   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 Trust Agreement and conclusive
in favor of the Trustee,  the Company and the related Loan  Trustee,  if made in
the manner provided in this Section 1.04.

         (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.



<PAGE>

         (c) In  determining  whether the  Certificateholders  of the  requisite
Fractional  Undivided  Interests of Certificates of any series  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  of any series
Outstanding,  such  Certificates  shall not be so  disregarded,  and (ii) if any
amount  of  Certificates  of any  series 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) The  Company  may,  at its  option,  by  delivery  of an  Officer's
Certificate   to  the   Trustee,   set  a   record   date   to   determine   the
Certificateholders  in respect of the  Certificates  of any series,  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  of the  applicable  series  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  of the
applicable  series 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 of
such series 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,  however,  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.

         (e) 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.

         (f) Except as otherwise  provided in Section  1.04(c),  Certificates of
any  series  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  of such
series.

                                   ARTICLE II

                       ORIGINAL ISSUANCE OF CERTIFICATES:
                          ACQUISITION OF TRUST PROPERTY

         Section 2.01. AMOUNT UNLIMITED;  ISSUABLE IN SERIES.  (a) The aggregate
principal amount of Certificates  which may be authenticated and delivered under
this Basic Agreement is unlimited.  The  Certificates may be issued from time to
time in one or more  series  and  shall be  designated  generally  as the  "PASS
THROUGH  CERTIFICATES",  with such further designations added or incorporated in


<PAGE>

such title for the Certificates of each series as specified in the related Trust
Supplement.  Each  Certificate  shall  bear  upon its face  the  designation  so
selected for the series to which it belongs. All Certificates of the same series
shall be  substantially  identical  except that the Certificates of a series may
differ  as to  denomination  and as  may  otherwise  be  provided  in the  Trust
Supplement  establishing  the  Certificates  of  such  series.  Each  series  of
Certificates   issued  pursuant  to  this  Agreement  will  evidence  fractional
undivided  interests in the related Trust and, except as may be contained in any
Intercreditor  Agreement,  will have no rights, benefits or interests in respect
of any other Trust or the Trust Property held therein.  All  Certificates of the
same  series  shall be in all  respects  equally  and  ratably  entitled  to the
benefits  of this  Agreement  without  preference,  priority or  distinction  on
account of the  actual  time or times of  authentication  and  delivery,  all in
accordance with the terms and provisions of this Agreement.

         (b) The  following  matters  shall be  established  with respect to the
Certificates of each series issued hereunder by a Trust Supplement  executed and
delivered by and among the Company and the Trustee:

          (1) the  formation of the Trust as to which the  Certificates  of such
     series represent  fractional undivided interests and its designation (which
     designation  shall  distinguish  such Trust from each other  Trust  created
     under this Basic Agreement and a Trust Supplement);

          (2) the specific title of the Certificates of such series (which title
     shall distinguish the Certificates of such series from each other series of
     Certificates created under this Basic Agreement and a Trust Supplement);

          (3) any limit upon the aggregate  principal amount of the Certificates
     of such series which may be authenticated  and delivered (which limit shall
     not pertain to Certificates  authenticated  and delivered upon registration
     of transfer of, or in exchange  for, or in lieu of, other  Certificates  of
     the series pursuant to Sections 3.03, 3.04 and 3.06);

          (4) the Cut-off Date with respect to the Certificates of such series;

          (5) the Regular  Distribution  Dates applicable to the Certificates of
     such series;

          (6) the Special  Distribution  Dates applicable to the Certificates of
     such series;

          (7) if other than as provided in Section 7.12(b), the Registrar or the
     Paying  Agent  for  the   Certificates   of  such  series,   including  any
     Co-Registrar or additional Paying Agent;

          (8) if other than as provided in Section 3.02,  the  denominations  in
     which the Certificates of such series shall be issuable;

          (9) if other than United  States  dollars,  the currency or currencies
     (including  currency units) in which the  Certificates of such series shall
     be denominated;



<PAGE>

          (10) the specific form of the  Certificates of such series  (including
     the interest rate  applicable  thereto) and whether or not  Certificates of
     such  series  are to be  issued as  Book-Entry  Certificates  and,  if such
     Certificates  are to be  Book-Entry  Certificates,  the form of  Letter  of
     Representations, if any (or, in the case of any Certificates denominated in
     a currency  other than United States  dollars and if other than as provided
     in Section  3.05,  whether and the  circumstances  under  which  beneficial
     owners of  interests  in such  Certificates  in  permanent  global form may
     exchange such interests for  Certificates  of such series and of like tenor
     of any authorized form and denomination);

          (11) a description  of the Equipment  Notes to be acquired and held in
     the related Trust and of the related Aircraft and Note Documents;

          (12)  provisions  with respect to the terms for which the  definitions
     set forth in Article I hereof or the terms of Section  11.01 hereof  permit
     or require further specification in the related Trust Supplement;

          (13) any restrictions (including legends) in respect of ERISA;

          (14) whether such series will be subject to an Intercreditor Agreement
     and, if so, the specific designation of such Intercreditor Agreement;

          (15) whether such series will have the benefit of a Liquidity Facility
     and, if so, any terms appropriate thereto;

          (16) whether  there will be a deposit  agreement or other  arrangement
     prior  to the  delivery  of one or more  Aircraft  and,  if so,  any  terms
     appropriate thereto; and

          (17) any other terms of the  Certificates  of such series (which terms
     shall not be inconsistent  with the provisions of the Trust Indenture Act),
     including  any  terms  of the  Certificates  of such  series  which  may be
     required or advisable  under United States laws or regulations or advisable
     in connection with the marketing of Certificates of the series.

         (c) At any time and from time to time after the  execution and delivery
of this Basic Agreement and a Trust Supplement  forming a Trust and establishing
the terms of  Certificates  of a series,  Certificates  of such series  shall be
executed,  authenticated  and  delivered by the Trustee to the Person or Persons
specified by the Company upon  request of the Company and upon  satisfaction  or
waiver of any conditions  precedent set forth in such Trust Supplement or in any
other  document to which a Trustee is a party  relating  to the  issuance of the
Certificates of such series.

         Section 2.02.  ACQUISITION  OF EQUIPMENT  NOTES.  (a) Unless  otherwise
specified in the related Trust  Supplement,  on or prior to the Issuance Date of
the Certificates of a series,  the Trustee shall execute and deliver the related
Note Purchase Agreements in the form delivered to the Trustee by the Company and
shall,  subject to the respective terms thereof,  perform its obligations  under
such  Note  Purchase   Agreements.   The  Trustee  shall  issue  and  sell  such
Certificates,  in  authorized  denominations  and in such  Fractional  Undivided


<PAGE>

Interests, so as to result in the receipt of consideration in an amount equal to
the aggregate purchase price of the Equipment Notes contemplated to be purchased
by the Trustee  under the related Note  Purchase  Agreements  and,  concurrently
therewith,  the Trustee shall purchase,  pursuant to the terms and conditions of
the Note Purchase Agreements,  such Equipment Notes at a purchase price equal to
the amount of such  consideration  so  received.  Except as provided in Sections
3.03,  3.04 and 3.06  hereof,  the Trustee  shall not execute,  authenticate  or
deliver  Certificates of such series in excess of the aggregate amount specified
in this  paragraph.  The  provisions of this  Subsection  (a) are subject to the
provisions of Subsection (b) below.

         (b) If on or prior to the  Issuance  Date with  respect  to a series of
Certificates  the Company  shall  deliver to the Trustee a  Postponement  Notice
relating to one or more Postponed Notes, the Trustee shall postpone the purchase
of such  Postponed  Notes and shall  deposit into an escrow  account (as to such
Trust,  the "ESCROW  ACCOUNT") to be  maintained as part of the related Trust an
amount  equal to the  purchase  price of such  Postponed  Notes  (the  "ESCROWED
FUNDS").  The portion of the  Escrowed  Funds so  deposited  with respect to any
particular  Postponed  Notes  shall be  invested  by the  Trustee at the written
direction  and  risk  of,  and for the  benefit  of,  the  Responsible  Party in
Specified  Investments  (i) maturing no later than any  scheduled  Transfer Date
relating  to such  Postponed  Notes  or (ii) if no such  Transfer  Date has been
scheduled,  maturing on the next Business Day, or (iii) if the Company has given
notice to the Trustee that such Postponed Notes will not be issued,  maturing on
the  next  applicable  Special   Distribution  Date,  if  such  investments  are
reasonably  available for purchase.  The Trustee shall make withdrawals from the
Escrow Account only as provided in this  Agreement.  Upon request of the Company
on one  or  more  occasions  and  the  satisfaction  or  waiver  of the  closing
conditions  specified in the applicable Note Purchase  Agreements on or prior to
the related  Cut-off Date, the Trustee shall  purchase the applicable  Postponed
Notes with the Escrowed Funds  withdrawn from the Escrow  Account.  The purchase
price shall equal the principal amount of such Postponed Notes.

         The Trustee  shall hold all  Specified  Investments  until the maturity
thereof  and will not  sell or  otherwise  transfer  Specified  Investments.  If
Specified  Investments  held in an Escrow Account mature prior to any applicable
Transfer  Date,  any  proceeds  received  on  the  maturity  of  such  Specified
Investments (other than any earnings thereon) shall be reinvested by the Trustee
at the written  direction  and risk of, and for the benefit of, the  Responsible
Party in Specified Investments maturing as provided in the preceding paragraph.

         Any earnings on Specified Investments received from time to time by the
Trustee shall be promptly  distributed to the Responsible Party. The Responsible
Party shall pay to the Trustee for  deposit to the  relevant  Escrow  Account an
amount equal to any losses on such  Specified  Investments  as incurred.  On the
Initial Regular  Distribution Date in respect of the Certificates of any series,
the Responsible  Party will pay (in immediately  available funds) to the Trustee
an amount equal to the interest that would have accrued on any  Postponed  Notes
with respect to such Certificates,  if any, purchased after the Issuance Date if
such Postponed  Notes had been purchased on the Issuance Date, from the Issuance
Date to, but not including,  the date of the purchase of such Postponed Notes by
the Trustee.



<PAGE>

         If, in respect of the Certificates of any series,  the Company notifies
the  Trustee  prior to the  Cut-off  Date that any  Postponed  Notes will not be
issued  on or prior to the  Cut-off  Date for any  reason,  on the next  Special
Distribution  Date  for  such  Certificates  occurring  not  less  than  15 days
following the date of such notice,  (i) the  Responsible  Party shall pay to the
Trustee for deposit in the related  Special  Payments  Account,  in  immediately
available  funds, an amount equal to the interest that would have accrued on the
Postponed  Notes  designated in such notice at a rate equal to the interest rate
applicable to such  Certificates  from the Issuance Date to, but not  including,
such Special  Distribution  Date and (ii) the Trustee  shall  transfer an amount
equal to that amount of Escrowed Funds that would have been used to purchase the
Postponed Notes designated in such notice and the amount paid by the Responsible
Party pursuant to the  immediately  preceding  clause (i) to the related Special
Payments  Account for  distribution  as a Special Payment in accordance with the
provisions hereof.

         If,  on such  Cut-off  Date,  an  amount  equal to less than all of the
Escrowed  Funds  (other  than  Escrowed  Funds  referred  to in the  immediately
preceding paragraph) has been used to purchase Postponed Notes, on the next such
Special Distribution Date occurring not less than 15 days following such Cut-off
Date (i) the  Responsible  Party  shall pay to the  Trustee  for deposit in such
Special Payments Account, in immediately available funds, an amount equal to the
interest  that would have accrued on such  Postponed  Notes  contemplated  to be
purchased with such unused Escrowed Funds (other than Escrowed Funds referred to
in the immediately  preceding paragraph) but not so purchased at a rate equal to
the interest rate applicable to such Certificates from the Issuance Date to, but
not  including,  such  Special  Distribution  Date and (ii)  the  Trustee  shall
transfer such unused Escrowed Funds and the amount paid by the Responsible Party
pursuant  to the  immediately  preceding  clause  (i) to such  Special  Payments
Account for  distribution as a Special Payment in accordance with the provisions
hereof.

         Section 2.03.  ACCEPTANCE BY TRUSTEE.  The Trustee,  upon the execution
and delivery of a Trust Supplement creating a Trust and establishing a series of
Certificates,  shall acknowledge its acceptance of all right, title and interest
in and to the Trust Property to be acquired  pursuant to Section 2.02 hereof and
the related Note  Purchase  Agreements  and shall declare that the Trustee holds
and will hold such right, title and interest for the benefit of all then present
and future Certificateholders of such series, upon the trusts herein and in such
Trust Supplement set forth. By the acceptance of each Certificate of such series
issued to it under this Agreement, each initial Holder of such series as grantor
of such Trust shall thereby join in the creation and declaration of such Trust.

         Section  2.04.  LIMITATION OF POWERS.  Each Trust shall be  constituted
solely for the purpose of making the investment in the Equipment  Notes provided
for in the  related  Trust  Supplement,  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>

                                   ARTICLE III

                                THE CERTIFICATES

         Section 3.01. FORM,  DENOMINATION  AND EXECUTION OF  CERTIFICATES.  The
Certificates  of each series  shall be issued in fully  registered  form without
coupons and shall be  substantially  in the form  attached  hereto as Exhibit A,
with  such  omissions,  variations  and  insertions  as are  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  on which such  Certificates  may be
listed or to conform to any usage in respect  thereof,  or as may,  consistently
herewith,   be  determined  by  the  Trustee  or  the  officers  executing  such
Certificates, as evidenced by the Trustee's or respective officers' execution of
the Certificates.

         Except as provided in Section 3.05, the definitive Certificates of such
series  shall be typed,  printed,  lithographed  or  engraved or produced by any
combination of these methods or may be produced in any other manner permitted by
the rules of any securities  exchange on which the  Certificates  may be listed,
all as determined by the officers executing such  Certificates,  as evidenced by
their execution of such Certificates.

         Except as  otherwise  provided in the  related  Trust  Supplement,  the
Certificates of each series shall be issued in minimum  denominations  of $1,000
or integral  multiples thereof except that one Certificate of such series may be
issued in a different denomination.

         The  Certificates  of such  series  shall be  executed on behalf of the
Trustee  by  manual or  facsimile  signature  of a  Responsible  Officer  of the
Trustee. Certificates of any series bearing the manual or facsimile signature of
an individual who was, at the time when such  signature was affixed,  authorized
to sign on behalf of the Trustee shall be valid and binding  obligations  of the
Trustee,  notwithstanding  that such  individual  has ceased to be so authorized
prior to the  authentication  and delivery of such  Certificates or did not hold
such office at the date of such Certificates.

         Section 3.02. AUTHENTICATION OF CERTIFICATES. (a) On the Issuance Date,
the Trustee shall duly execute,  authenticate  and deliver  Certificates of each
series in  authorized  denominations  equalling in the  aggregate  the aggregate
principal  amount of the  Equipment  Notes that may be  purchased by the Trustee
pursuant to the related Note  Purchase  Agreements,  and  evidencing  the entire
ownership of the related  Trust.  Thereafter,  the Trustee  shall duly  execute,
authenticate and deliver the Certificates of such series as herein provided.

         (b) No Certificate of any series shall be entitled to any benefit under
this  Agreement,  or be valid for any  purpose,  unless  there  appears  on such
Certificate a certificate of authentication  substantially in the form set forth
in  Exhibit A hereto  executed  by the  Trustee  by manual  signature,  and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence,  that such  Certificate has been duly  authenticated  and
delivered  hereunder.  All Certificates of any series shall be dated the date of
their authentication.



<PAGE>

         Section 3.03. TEMPORARY CERTIFICATES. Until definitive Certificates are
ready  for  delivery,  the  Trustee  shall  execute,  authenticate  and  deliver
temporary  Certificates  of each series.  Temporary  Certificates of each series
shall be substantially in the form of definitive Certificates of such series but
may have insertions, substitutions, omissions and other variations determined to
be  appropriate  by the officers  executing the temporary  Certificates  of such
series,  as evidenced  by their  execution of such  temporary  Certificates.  If
temporary  Certificates  of any  series  are  issued,  the  Trustee  will  cause
definitive  Certificates  of such  series to be  prepared  without  unreasonable
delay.  After the  preparation of definitive  Certificates  of such series,  the
temporary  Certificates  shall be exchangeable for definitive  Certificates upon
surrender of such 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 like  series,  in
authorized  denominations and of a like Fractional Undivided Interest.  Until so
exchanged,  such temporary  Certificates  shall be entitled to the same benefits
under this Agreement as definitive Certificates.

         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")  for each series of Certificates in
which, subject to such reasonable  regulations as it may prescribe,  the Trustee
shall  provide  for the  registration  of  Certificates  of such  series  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 of each series and transfers and exchanges of such
Certificates as herein provided.

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

         Upon surrender for  registration  of transfer of any Certificate at the
Corporate  Trust  Office or such  other  office or  agency,  the  Trustee  shall
execute,  authenticate and deliver, in the name of the designated  transferee or
transferees,  one or  more  new  Certificates  of  like  series,  in  authorized
denominations of a like aggregate Fractional Undivided Interest.

         At the option of a Certificateholder, Certificates may be exchanged for
other  Certificates of like series,  in authorized  denominations  and of a like
aggregate Fractional  Undivided Interest,  upon surrender of the Certificates to
be exchanged  at any such office or agency.  Whenever  any  Certificates  are so
surrendered for exchange,  the Trustee shall execute,  authenticate  and deliver
the Certificates that the  Certificateholder  making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange  shall be duly endorsed or  accompanied  by a written  instrument of
transfer in form  satisfactory to the Trustee and the Registrar duly executed by
the Certificateholder thereof or its attorney duly authorized in writing.



<PAGE>

         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
cancelled and subsequently destroyed by the Trustee.

         Section  3.05.   BOOK-ENTRY  AND  DEFINITIVE   CERTIFICATES.   (a)  The
Certificates of any series may be issued in the form of one or more  typewritten
Certificates  representing  the Book-Entry  Certificates  of such series,  to be
delivered to The Depository Trust Company,  the initial Clearing Agency,  by, or
on behalf of,  the  Company.  In such  case,  the  Certificates  of such  series
delivered to The Depository  Trust Company shall  initially be registered on the
Register in the name of CEDE & Co., the nominee of the initial  Clearing Agency,
and no Certificate Owner will receive a definitive certificate representing such
Certificate  Owner's  interest in the  Certificates  of such  series,  except as
provided  above and in  Subsection  (d)  below.  As to the  Certificates  of any
series,  unless  and  until  definitive,   fully  registered  Certificates  (the
"DEFINITIVE CERTIFICATES") have been issued pursuant to Subsection (d) below:

          (i) the  provisions  of this  Section  3.05 shall be in full force and
     effect;

          (ii) the Company,  the Paying Agent, the Registrar and the Trustee may
     deal with the Clearing Agency  Participants for all purposes (including the
     making  of   distributions   on  the   Certificates)   as  the   authorized
     representatives of the Certificate Owners;

          (iii) to the extent that the  provisions of this Section 3.05 conflict
     with any other  provisions of this Agreement  (other than the provisions of
     any Trust Supplement  expressly  amending this Section 3.05 as permitted by
     this Basic Agreement), the provisions of this Section 3.05 shall control;

          (iv) the rights of Certificate  Owners shall be exercised only through
     the Clearing  Agency and shall be limited to those  established  by law and
     agreements   between  such  Certificate  Owners  and  the  Clearing  Agency
     Participants;  and until  Definitive  Certificates  are issued  pursuant to
     Subsection (d) below,  the Clearing Agency will make  book-entry  transfers
     among  the   Clearing   Agency   Participants   and  receive  and  transmit
     distributions  of  principal,   interest  and  premium,   if  any,  on  the
     Certificates to such Clearing Agency Participants; and

          (v) whenever this  Agreement  requires or permits  actions to be taken
     based upon instructions or directions of  Certificateholders of such series
     holding  Certificates of such series  evidencing a specified  percentage of
     the  Fractional  Undivided  Interests  in the related  Trust,  the Clearing
     Agency shall be deemed to represent such percentage only to the extent that
     it  has  received   instructions   to  such  effect  from  Clearing  Agency
     Participants owning or representing, respectively, such required percentage
     of the beneficial interest in Certificates of such series and has delivered
     such  instructions to the Trustee.  The Trustee shall have no obligation to
     determine  whether  the  Clearing  Agency  has in fact  received  any  such
     instructions.



<PAGE>

         (b) Whenever notice or other communication to the Certificateholders of
such  series is  required  under this  Agreement,  unless  and until  Definitive
Certificates  shall have been  issued  pursuant  to  Subsection  (d) below,  the
Trustee shall give all such notices and  communications  specified  herein to be
given to Certificateholders of such series to the Clearing Agency.

         (c) Unless  and until  Definitive  Certificates  of a series are issued
pursuant to Subsection  (d) below,  on the Record Date prior to each  applicable
Regular  Distribution  Date and Special  Distribution  Date,  the  Trustee  will
request from the Clearing Agency a securities position listing setting forth the
names of all Clearing  Agency  Participants  reflected on the Clearing  Agency's
books as holding interests in the Certificates on such Record Date.

         (d) If with respect to the  Certificates  of any series (i) the Company
advises the Trustee in writing that the Clearing  Agency is no longer willing or
able to discharge properly its  responsibilities  and the Trustee or the Company
is unable to locate a  qualified  successor,  (ii) the  Company,  at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through  the  Clearing  Agency  or (iii)  after  the  occurrence  of an Event of
Default, Certificate Owners of Book-Entry Certificates of such series evidencing
Fractional Undivided Interests  aggregating not less than a majority in interest
in the related Trust, by Act of such Certificate Owners delivered to the Company
and the Trustee, advise the Company, the Trustee and the Clearing Agency through
the  Clearing  Agency  Participants  in  writing  that  the  continuation  of  a
book-entry  system through the Clearing Agency  Participants is no longer in the
best interests of the Certificate Owners of such series,  then the Trustee shall
notify all Certificate  Owners of such series,  through the Clearing Agency,  of
the  occurrence  of  any  such  event  and  of the  availability  of  Definitive
Certificates.  Upon  surrender  to the Trustee of all the  Certificates  of such
series held by the Clearing  Agency,  accompanied by  registration  instructions
from  the  Clearing   Agency   Participants   for   registration  of  Definitive
Certificates  in the names of  Certificate  Owners of such  series,  the Trustee
shall issue and deliver the Definitive Certificates of such series in accordance
with  the  instructions  of  the  Clearing  Agency.  Neither  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 of such series,  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) Except as otherwise  provided in the related Trust Supplement,  the
Trustee shall enter into the applicable Letter of  Representations  with respect
to such series of Certificates and fulfill its responsibilities thereunder.

         (f) The provisions of this Section 3.05 may be made inapplicable to any
series  or may be  amended  with  respect  to any  series in the  related  Trust
Supplement.

         Section 3.06. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a)
any mutilated  Certificate is  surrendered  to the  Registrar,  or the Registrar


<PAGE>

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,  HOWEVER, 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 of like series, 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 3.06, the Trustee shall 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 3.06 shall
constitute conclusive evidence of the appropriate  Fractional Undivided Interest
in the related 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 3.06 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 3.07.  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 3.08. 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 cancelled by it. No Certificates shall be authenticated in
lieu of or in  exchange  for any  Certificates  cancelled  as  provided  in this
Section 3.08,  except as expressly  permitted by this  Agreement.  All cancelled
Certificates  held by the Registrar  shall be destroyed and a  certification  of
their destruction delivered to the Trustee.

         Section 3.09.  LIMITATION  OF LIABILITY FOR PAYMENTS.  All payments and
distributions  made  to  Certificateholders  of any  series  in  respect  of the
Certificates  of such series  shall be made only from the Trust  Property of the
related  Trust and only to the extent  that the  Trustee  shall have  sufficient
income or proceeds from such 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  of the  related  Trust for any  payment  or


<PAGE>

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 Owner  Trustees  or the Owner  Participants,  except as
otherwise expressly provided herein or in the related 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 of each
series a Certificate Account as one or more  non-interest-bearing  accounts. The
Trustee  shall hold such  Certificate  Account  in trust for the  benefit of the
Certificateholders  of  such  series,  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 an Intercreditor Agreement, if applicable)
with  respect to the  Certificates  of such series,  the  Trustee,  upon receipt
thereof,  shall  immediately  deposit  the  aggregate  amount of such  Scheduled
Payment in such Certificate Account.

         (b)  The  Trustee  shall  establish  and  maintain  on  behalf  of  the
Certificateholders  of each  series 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  of such  series  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  an  Intercreditor
Agreement,  if applicable) with respect to the Certificates of such series,  the
Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of
such Special Payments in such Special Payments Account.

         (c)  The  Trustee   shall  present  (or,  if   applicable,   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 with respect to a series
of Certificates  or as soon  thereafter as the Trustee has confirmed  receipt of
the payment of all or any part of the  Scheduled  Payments due on the  Equipment
Notes held (subject to the Intercreditor Agreement) in the related Trust on such
date, the Trustee shall distribute out of the applicable Certificate Account the
entire amount deposited  therein pursuant to Section 4.01(a).  There shall be so
distributed  to each  Certificateholder  of record of such  series 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


<PAGE>

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
applicable  Certificate  Account,  except  that,  with  respect to  Certificates
registered on the Record Date in the name of a Clearing Agency (or its nominee),
such distribution shall be made by wire transfer in immediately  available funds
to the account designated by such Clearing Agency (or such nominee).

         (b) On each  Special  Distribution  Date with  respect  to any  Special
Payment with respect to a series of  Certificates  or as soon  thereafter as the
Trustee has confirmed receipt of any Special Payments due on the Equipment Notes
held (subject to the  Intercreditor  Agreement) in the related Trust or realized
upon the sale of such Equipment  Notes,  the Trustee shall distribute out of the
applicable Special Payments Account the entire amount of such applicable Special
Payment  deposited  therein  pursuant  to  Section  4.01(b).  There  shall be so
distributed  to each  Certificateholder  of record of such  series 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 related Trust held by such  Certificateholder) of the total amount in the
applicable  Special Payments Account on account of such Special Payment,  except
that, with respect to Certificates  registered on the Record Date in the name of
a Clearing  Agency (or its  nominee),  such  distribution  shall be made by wire
transfer  in  immediately  available  funds to the  account  designated  by such
Clearing Agency (or such nominee).

         (c) The Trustee shall,  at the expense of the Company,  cause notice of
each Special  Payment with respect to a series of  Certificates  to be mailed to
each  Certificateholder  of such  series at his  address  as it  appears  in the
Register.  In the event of redemption or purchase of Equipment Notes held in the
related  Trust,  such notice  shall be mailed not less than 15 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 that the Trustee receives a notice from the
Company that  Postponed  Notes will not be purchased by the Trustee  pursuant to
Section  2.02,  such  notice  of  Special  Payment  shall be  mailed  as soon as
practicable  after  receipt of such  notice from the Company and shall state the
Special  Distribution  Date for such Special Payment,  which shall occur 15 days
after the date of such  notice of  Special  Payment  or (if such 15th day is not
practicable)  as soon as practicable  thereafter.  In the event that any Special
Payment is to be made pursuant to the last paragraph of Section  2.02(b) hereof,
there  shall be mailed on the Cut-off  Date (or, if such  mailing on the Cut-off
Date is not practicable,  as soon as practicable after the Cut-off Date), notice
of such Special Payment stating the Special  Distribution  Date for such Special
Payment, which shall occur 15 days after the date of such notice of such Special
Payment  (or,  if such  15th  day is not  practicable,  as  soon as  practicable
thereafter).  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 15 days after the date
of such  notice and as soon as  practicable  thereafter.  Notices  mailed by the
Trustee shall set forth:



<PAGE>

          (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  (taking  into  account  any
     payment to be made by the  Company  pursuant to Section  2.02(b))  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 for the Certificates of such series,  the total amount to
     be received on such date for each $1,000 face amount Certificate.

If the amount of premium,  if any, payable upon the redemption or purchase of an
Equipment Note 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  any  Trust  is
cancelled,  the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each  Certificateholder  of the related series at
its address as it appears on the Register.

         Section  4.03.  STATEMENTS TO  CERTIFICATEHOLDERS.  (a) On each Regular
Distribution Date and Special  Distribution  Date, the Trustee will include with
each distribution of a Scheduled Payment or Special Payment, as the case may be,
to  Certificateholders  of the  related  series a  statement  setting  forth the
information provided below. Such statement shall set forth (per $1,000 aggregate
principal  amount  of  Certificate  as to (i)  and  (ii)  below)  the  following
information:

          (i) the amount of such distribution  hereunder  allocable to principal
     and the amount allocable to premium, if any;

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

          (iii) the Pool Balance and the Pool Factor of the related Trust.

         With respect to the  Certificates  registered in the name of a Clearing
Agency or its nominee,  on the Record Date prior to each Distribution  Date, the
Trustee  will request from the  Clearing  Agency a securities  position  listing
setting forth the names of all the Clearing Agency Participants reflected on the
Clearing  Agency's books as holding interests in the Certificates on such Record
Date. On each Distribution  Date, the applicable  Trustee will mail to each such
Clearing  Agency  Participant  the  statement  described  above  and  will  make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Certificates.



<PAGE>

         (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) and (a)(ii)  above with  respect to the
related  Trust  for such  calendar  year or,  in the  event  such  Person  was a
Certificateholder  of record  during a portion of such  calendar  year,  for the
applicable  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.  With respect to  Certificates  registered  in the name of a
Clearing  Agency or its nominee,  such  statement  and such other items shall be
prepared on the basis of  information  supplied  to the Trustee by the  Clearing
Agency  Participants  and shall be  delivered  by the  Trustee to such  Clearing
Agency  Participants  to be available for  forwarding  by such  Clearing  Agency
Participants  to the  holders of  interests  in the  Certificates  in the manner
described in Section 4.03(a).

         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


<PAGE>

     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. ss. 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. ss. 1110),
     with respect to the Leases or the Aircraft owned by the Company;

          (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  applicable to the  Certificates of each
     series 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 the Note
     Documents  and of this  Agreement  applicable to the  Certificates  of each
     series 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  applicable
to the  Certificates  of each series  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 Note Document  applicable to
the Certificates of such series 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 Event of Default under
any Indenture,  the Trustee may (i) to the extent it is the Controlling Party at
such time (as  determined  pursuant  to the  related  Intercreditor  Agreement),
direct the  exercise  of remedies  as  provided  in such  related  Intercreditor
Agreement and (ii) if there is no related  Intercreditor  Agreement,  direct the


<PAGE>

exercise of remedies or take other action as provided in the relevant  Indenture
to the extent  that it may do so as the  holder of the  Equipment  Notes  issued
under such Indenture and held in the related Trust.

         (b)  PURCHASE  RIGHTS  OF  CERTIFICATEHOLDERS.  At any time  after  the
occurrence   and  during  the   continuation   of  a  Triggering   Event,   each
Certificateholder   of  Certificates  of  certain  series  (each,  a  "POTENTIAL
PURCHASER"  and,  collectively,  the "POTENTIAL  PURCHASERS")  will have certain
rights to purchase  the  Certificates  of one or more other  series,  all as set
forth  in the  Trust  Supplement  applicable  to the  Certificates  held by such
Potential Purchaser.  The purchase price with respect to the Certificates of any
series  shall be equal to the Pool Balance of the  Certificates  of such series,
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   of  such   series   under  this   Agreement,   any  related
Intercreditor  Agreement  or any other Note  Document or on or in respect of the
Certificates  of such series;  PROVIDED,  HOWEVER,  that 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
of such series shall be effective unless the purchasing Certificateholder (each,
a   "PURCHASING    CERTIFICATEHOLDER"   and,   collectively,   the   "PURCHASING
CERTIFICATEHOLDERS")  shall certify to the Trustee that  contemporaneously  with
such  purchase,  one  or  more  Purchasing  Certificateholders  are  purchasing,
pursuant  to the  terms of this  Agreement  and the  other  Agreements,  if any,
relating  to  the  Certificates  of a  series  that  are  subject  to  the  same
Intercreditor  Agreement (such other Agreements,  the "OTHER  AGREEMENTS"),  the
Certificates  of each such series that the Trust  Supplement  applicable  to the
Certificates held by the Purchasing Certificateholder specifies may be purchased
by such Purchasing Certificateholder.  Each payment of the purchase price of the
Certificates of any series 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. By acceptance of its Certificate, each Certificateholder (each, a "SELLING
CERTIFICATEHOLDER"  and, collectively,  the "SELLING  CERTIFICATEHOLDERS")  of a
series that is subject to purchase by Potential Purchasers,  all as set forth in
the  Trust  Supplement  applicable  to the  Certificates  held  by  the  Selling
Certificateholders, agrees that, at any time after the occurrence and during the
continuance of a Triggering  Event,  it will, upon payment of the purchase price
specified herein by one or more Purchasing  Certificateholders,  forthwith sell,
assign,  transfer  and  convey  to such  Purchasing  Certificateholder  (without
recourse,  representation  or warranty of any kind except for its own acts), all
of the right, title,  interest and obligation of such Selling  Certificateholder
in this Agreement,  any related Intercreditor  Agreement,  the related Liquidity
Facility, the related Note Documents and all Certificates of such series held by
such Selling  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   Purchasing
Certificateholder   shall  assume  all  of  such   Selling   Certificateholder's
obligations  under this  Agreement,  any related  Intercreditor  Agreement,  the
related Liquidity  Facility and the related Note Documents.  The Certificates of
such series will be deemed to be  purchased  on the date payment of the purchase
price is made  notwithstanding the failure of any Selling  Certificateholder  to
deliver any Certificates of such series and, upon such a purchase,  (i) the only
rights of the Selling  Certificateholders will be to deliver the Certificates to


<PAGE>

the  Purchasing  Certificateholder  and  receive  the  purchase  price  for such
Certificates of such series and (ii) if the Purchasing  Certificateholder  shall
so  request,  such  Selling  Certificateholder  will  comply  with  all  of  the
provisions of Section 3.04 hereof to enable new  Certificates  of such series to
be issued to the Purchasing  Certificateholder 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 Purchasing Certificateholder.

         Section 6.02.  INCIDENTS OF SALE OF EQUIPMENT  NOTES.  Upon any sale of
all or any part of the  Equipment  Notes held in the Trust 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 held
     in the Trust, 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 held in the related Trust, 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 any  related  Intercreditor
Agreement and any related Note  Documents  (subject to 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  any  related  Intercreditor  Agreement,   the  Certificateholders   holding


<PAGE>

Certificates of a series evidencing  Fractional Undivided Interests  aggregating
not less than a majority in  interest in the related  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
such Intercreditor  Agreement, or exercising any trust or power conferred on the
Trustee  under this  Agreement or such  Intercreditor  Agreement,  including any
right of the Trustee as Controlling Party under such Intercreditor  Agreement or
as holder of the Equipment Notes held in the related Trust;  PROVIDED,  HOWEVER,
that

          (1) such  Direction  shall not in the  opinion  of the  Trustee  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 of such series 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  any  related
Intercreditor Agreement, the Certificateholders holding Certificates of a series
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  Event of Default under any
related 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 of a series, or

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

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

Upon any such  waiver,  such  default  shall cease to exist with  respect to the
Certificates of such series 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 of such series 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
Event of Default.



<PAGE>

         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  any  related
Intercreditor   Agreement,   the  right  of  any  Certificateholder  to  receive
distributions  of  payments  required  pursuant  to Section  4.02  hereof on the
applicable  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  of any series 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 of such series evidencing
     Fractional Undivided Interests aggregating not less than 25% of the related
     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 any such
     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  of  such  series  evidencing   Fractional  Undivided
     Interests  aggregating  not less than a majority in interest in the related
     Trust.

         It  is   understood   and   intended   that  no  one  or  more  of  the
Certificateholders  of any series shall have any right in any manner  whatsoever
hereunder or under the related  Trust  Supplement or under the  Certificates  of
such series to (i) surrender,  impair,  waive, affect,  disturb or prejudice any
property in the Trust Property of the related Trust,  or the lien of any related
Indenture   on  any   property   subject   thereto,   or  the   rights   of  the
Certificateholders of such series or the holders of the related Equipment Notes,
(ii) obtain or seek to obtain  priority over or  preference  with respect to any
other such  Certificateholder  of such  series 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  of such series 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 of any series 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.



<PAGE>

         Section 6.09. UNDERTAKING FOR COSTS. In any suit for the enforcement of
any right or remedy under this Agreement, or in any suit against the Trustee for
any action taken,  suffered or omitted by it as Trustee, a court may require any
party  litigant  in such  suit to file an  undertaking  to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; PROVIDED,  HOWEVER, that neither
this Section 6.09 nor the Trust  Indenture  Act shall be deemed to authorize any
court to require such an  undertaking  or to make such an assessment in any suit
instituted by the Company.

                                   ARTICLE VII

                                   THE TRUSTEE

         Section 7.01.  CERTAIN DUTIES AND  RESPONSIBILITIES.  (a) Except during
the  continuance  of an Event of  Default in  respect  of a Trust,  the  Trustee
undertakes  to perform such duties in respect of such Trust 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 in respect of a Trust has  occurred and
is  continuing,  the Trustee shall exercise such of the rights and powers vested
in it by this  Agreement  in respect of such  Trust,  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 his 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 willful misconduct, except that

               (1) this Subsection shall not be construed to limit the effect of
          Subsection (a)of this Section 7.01; 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  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 7.01.

         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 known to the Trustee,  the Trustee shall transmit by
mail to the Company, any related Owner Trustees, any related Owner Participants,
the related Loan Trustees and the Certificateholders holding Certificates of the
related  series 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 in the  payment of the  principal,  premium,  if any, or interest on any


<PAGE>

Equipment Note, 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 shall
determine  that  the  withholding  of such  notice  is in the  interests  of the
Certificateholders  of the related series.  For the purpose of this Section 7.02
in respect of any Trust,  the term  "DEFAULT"  means any event that is, or after
notice or lapse of time or both would become,  an Event of Default in respect of
that Trust.

         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 Request;

          (c)  whenever  in  the   administration   of  this  Agreement  or  any
     Intercreditor  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 related  Owner  Trustee or any
     related 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  or any  Intercreditor
     Agreement  at the  Direction of any of the  Certificateholders  pursuant to
     this   Agreement   or   any    Intercreditor    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 any  Intercreditor  Agreement or perform any duties under this
     Agreement or any  Intercreditor  Agreement either directly or by or through
     agents or  attorneys,  and the  Trustee  shall not be  responsible  for any


<PAGE>

     misconduct  or  negligence  on the part of any agent or attorney  appointed
     with due care by it under this Agreement or any Intercreditor 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 of any series  evidencing
     Fractional  Undivided  Interests  aggregating  not less than a majority  in
     interest in the  related  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 or any Intercreditor 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 of each series, 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 Basic Agreement,  any Equipment Notes, any  Intercreditor
Agreement,  the  Certificates  of any series,  any Trust  Supplement or any Note
Documents,  except that the Trustee  hereby  represents  and warrants  that this
Basic Agreement has been, and each Trust Supplement, each Certificate, each Note
Purchase  Agreement  and each  Intercreditor  Agreement of, or relating to, each
series  will  be  executed  and  delivered  by one of its  officers  who is duly
authorized to execute 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,  any 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 under this  Agreement  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); and



<PAGE>

          (2)  except as  otherwise  expressly  provided  herein or in any Trust
     Supplement,  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  Basic  Agreement,  any  Trust  Supplement  or  any  Intercreditor
     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 with respect
     to the Certificates of any series,  pursuant to the particular  sections of
     the Note Purchase Agreement specified in the related Trust Supplement.

         The Trustee shall be entitled to  reimbursement  from, and shall have a
lien prior to the  Certificates of each series upon, all property and funds held
or  collected  by the Trustee in its  capacity as Trustee  with  respect to such
series or the related Trust 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. The Trustee
shall  notify  the  Company  of any  claim  for any tax for  which  it may  seek
reimbursement.  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 amount of such tax and the circumstances  thereof to all  Certificateholders
of such series as their names and addresses appear in the Register.

         Section 7.08. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. Each Trust shall
at all times have a Trustee  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.

         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 of any
Trust,  the Trustee  shall  resign  immediately  as Trustee of such Trust 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


<PAGE>

of any  Trust  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 of any or all Trusts
by giving prior written  notice thereof to the Company,  the Authorized  Agents,
the related Owner  Trustees and the related Loan  Trustees.  If an instrument of
acceptance by a successor  Trustee shall not have been delivered to the Company,
the related  Owner  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  of  the  related  series  holding  Certificates   evidencing
Fractional Undivided Interests  aggregating not less than a majority in interest
in such Trust  delivered  to the Trustee and to the Company,  the related  Owner
Trustees and the related Loan Trustees.

         (d) If at any time in respect of any Trust:

          (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  remove  the  Trustee  or  (ii)  any
Certificateholder   of  the   related   series   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 of such Trust.

         (e)  If a  Responsible  Officer  of the  Trustee  shall  obtain  actual
knowledge of an Avoidable  Tax (as defined  below) in respect of any Trust 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 as Trustee of
such Trust  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 of such Trust in a jurisdiction where there
are no Avoidable  Taxes.  As used herein,  an "AVOIDABLE TAX" in respect of such
Trust  means a state or local  tax:  (i) upon  (w) such  Trust,  (x) such  Trust
Property,  (y) Certificateholders of such Trust or (z) the Trustee for which the
Trustee is entitled to seek reimbursement from the Trust Property of such Trust,
and (ii) which would be avoided if the Trustee were located in another state, or
jurisdiction  within a state,  within the United States of America.  A tax shall


<PAGE>

not be an  Avoidable  Tax in  respect  of any Trust if the  Company or any Owner
Trustee shall agree to pay, and shall pay, such tax.

         (f) If the Trustee  shall  resign,  be removed or become  incapable  of
acting as Trustee of any Trust or if a vacancy  shall occur in the office of the
Trustee  of any  Trust for any  cause,  the  Company  shall  promptly  appoint a
successor  Trustee of such Trust.  If,  within one year after such  resignation,
removal or  incapability,  or other  occurrence  of such  vacancy,  a  successor
Trustee of such Trust shall be appointed by Direction of the  Certificateholders
of the related series holding Certificates of such series evidencing  Fractional
Undivided  Interests  aggregating  not less than a majority  in interest in such
Trust  delivered to the Company,  the related Owner  Trustees,  the related Loan
Trustee and the retiring  Trustee,  then the successor  Trustee of such Trust so
appointed  shall,  with the approval of the Company of such  appointment,  which
approval shall not be  unreasonably  withheld,  forthwith upon its acceptance of
such  appointment,  become the successor Trustee of such Trust and supersede the
successor  Trustee of such Trust  appointed as provided  above.  If no successor
Trustee shall have been so appointed as provided above and accepted  appointment
in  the   manner   hereinafter   provided,   the   resigning   Trustee   or  any
Certificateholder  who has been a BONA  FIDE  Certificateholder  of the  related
series  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 of such Trust.

         (g)  The  successor  Trustee  of a  Trust  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 of the related series 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 and to the
retiring Trustee with respect to any or all Trusts an instrument  accepting such
appointment,  and thereupon the  resignation or removal of the retiring  Trustee
with respect to such Trusts 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 in respect of such Trusts 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.

         If a successor  Trustee is  appointed  with respect to one or more (but
not all) Trusts, the Company, the predecessor Trustee and each successor Trustee
with  respect to any Trust shall  execute and deliver a  supplemental  agreement
hereto  which shall  contain  such  provisions  as shall be deemed  necessary or
desirable  to  confirm  that all the  rights,  powers,  trusts and duties of the


<PAGE>

predecessor  Trustee  with  respect  to the  Trusts as to which the  predecessor
Trustee is not retiring shall continue to be vested in the predecessor  Trustee,
and shall add to or change any of the provisions of this Basic Agreement and the
applicable Trust  Supplements as shall be necessary to provide for or facilitate
the  administration  of the Trusts hereunder by more than one Trustee,  it being
understood  that  nothing  herein  or  in  such  supplemental   agreement  shall
constitute  such  Trustees as  co-Trustees  of the same Trust and that each such
Trustee shall be Trustee of separate 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,  HOWEVER,  that 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) With respect to each series
of  Certificates,  there shall at all times be maintained an office or agency in
the location set forth in Section 12.04 where Certificates of such series 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  with respect to the  Certificates  of any series  (E.G.,  the
Certificates of such series 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,  any Owner  Trustees,  the
Loan Trustees (in the case of any Owner Trustee or Loan Trustee,  at its address
specified in the Note  Documents or such other address as may be notified to the
Trustee) and the  Certificateholders  of such series.  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 of each series.  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


<PAGE>

capital and surplus of at least $75,000,000,  or 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 of each series.  Each Registrar shall
furnish to the Trustee,  at stated intervals of not more than six months, and at
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,  if such
successor corporation is otherwise eligible under this Section 7.12, 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,  any related Owner Trustees
and the  related  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 7.12 (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 7.12. The Company shall give written notice of
any such appointment  made by it to the Trustee,  any related Owner Trustees and
the related  Loan  Trustees;  and in each case the Trustee  shall mail notice of
such appointment to all  Certificateholders of the related series as their names
and addresses appear on the Register for such series.

         (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 7.13.  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.



<PAGE>

         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  TRUSTEE'S  NAME.
Subject to the  provisions of any  Intercreditor  Agreement,  the Trustee agrees
that all Equipment Notes to be purchased by any Trust and Permitted Investments,
if any, shall be issued in the name of the Trustee as trustee for the applicable
Trust or its  nominee  and held by the  Trustee in trust for the  benefit of the
Certificateholders  of such  series,  or,  if not so held,  the  Trustee  or its
nominee  shall be  reflected as the owner of such  Equipment  Notes or Permitted
Investments, as the case may be, in the register of the issuer of such Equipment
Notes or Permitted Investments, as the case may be.

         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,  any  Intercreditor  Agreement and the
     Note Purchase  Agreements  and has taken all necessary  action to authorize
     the  execution,  delivery  and  performance  by it of this  Agreement,  any
     Intercreditor Agreement and the Note Purchase Agreements;

          (c) the  execution,  delivery and  performance  by the Trustee of this
     Agreement, any Intercreditor Agreement and the Note Purchase Agreements (i)
     will not violate any provision of any United States  federal law or the law
     of the state of the United States where it is 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,  and (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,  any  Intercreditor  Agreement and the Note Purchase  Agreements
     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


<PAGE>

     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,  any Intercreditor Agreement and the Note Purchase
     Agreements  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,
     HOWEVER,  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.  As to the
Certificates of any series, the Trustee, as trustee of the related 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 of such series any and all withholding taxes
applicable  thereto  as  required  by law.  The  Trustee  agrees  to act as such
withholding agent 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 of such series,  to withhold such amounts
and  timely  pay the  same to the  appropriate  authority  in the name of and on
behalf of the Certificateholders of such series, 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 of such series 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.

         Section 7.17.  TRUSTEE'S LIENS. The Trustee in its individual  capacity
agrees that it will, in respect of each Trust created by this Agreement,  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 of such Trust which is  attributable  to the Trustee  either (i) in its
individual  capacity and which is unrelated to the transactions  contemplated by
this Agreement or the related Note 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


<PAGE>

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  of each series, 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 for such
series, 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 of each
series contained in the most recent list furnished to the Trustee as provided in
Section 7.12 or Section 8.01, as the case may be, and the names and addresses of
Certificateholders  of each series  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 any series of
Certificates,  the  Trustee  shall  transmit to the  Certificateholders  of such
series, 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) 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 of the Company 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;



<PAGE>

          (c)  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 (b) of this Section 8.04 as may be
     required by rules and regulations prescribed by the SEC; and

          (d)  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  knowledge  of  the
     Company's compliance with all conditions and covenants under this Agreement
     (it  being  understood  that  for  purposes  of this  paragraph  (d),  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  an
Intercreditor  Agreement or a Liquidity  Facility,  in form  satisfactory to the
Trustee, for any of the following purposes:

          (1) to provide for the formation of a Trust,  the issuance of a series
     of Certificates and other matters contemplated by Section 2.01(b); or

          (2) 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 any  Intercreditor
     Agreement or any Liquidity Facility; or

          (3) to add to the  covenants  of the  Company  for the  benefit of the
     Certificateholders  of any  series,  or to  surrender  any  right  or power
     conferred upon the Company in this Agreement,  any Intercreditor  Agreement
     or any Liquidity Facility; or

          (4) to correct or  supplement  any  provision in this  Agreement,  any
     Intercreditor Agreement or any Liquidity Facility which may be defective or
     inconsistent  with any other  provision  herein or  therein  or to cure any
     ambiguity  or to modify  any other  provision  with  respect  to matters or
     questions arising under this Agreement,  any Intercreditor Agreement or any
     Liquidity  Facility,  PROVIDED,  HOWEVER,  that any such  action  shall not
     materially adversely affect the interests of the  Certificateholders of any
     series;  to  correct  any  mistake  in this  Agreement,  any  Intercreditor
     Agreement or any Liquidity  Facility;  or, as provided in any Intercreditor


<PAGE>

     Agreement,  to  give  effect  to or  provide  for a  Replacement  Liquidity
     Facility (as defined in such Intercreditor Agreement); or

          (5) to comply with any  requirement  of the SEC, any  applicable  law,
     rules or  regulations  of any  exchange  or  quotation  system on which the
     Certificates of any series are listed or of any regulatory body; or

          (6) to modify,  eliminate or add to the provisions of this  Agreement,
     any  Intercreditor  Agreement or any  Liquidity  Facility to such extent as
     shall be necessary to continue the  qualification  of this  Agreement,  any
     Intercreditor   Agreement  or  any  Liquidity   Facility   (including   any
     supplemental  agreement) under the Trust Indenture Act or under any similar
     Federal  statute  hereafter  enacted,  and to add to  this  Agreement,  any
     Intercreditor  Agreement or any Liquidity Facility 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 Basic  Agreement  was executed or
     any  corresponding  provision  in any  similar  Federal  statute  hereafter
     enacted; or

          (7) to evidence and provide for the  acceptance of  appointment  under
     this Agreement,  any Intercreditor Agreement or any Liquidity Facility by a
     successor  Trustee  with  respect  to one or more  Trusts  and to add to or
     change any of the provisions of this Agreement, any Intercreditor Agreement
     or  any  Liquidity  Facility  as  shall  be  necessary  to  provide  for or
     facilitate the administration of the Trust, pursuant to the requirements of
     Section 7.10; or

          (8) to provide the information required under Section 7.12 and Section
     12.04 as to the Trustee; or

          (9) to make any other  amendments or modifications  hereto,  PROVIDED,
     HOWEVER,  that such amendments or modifications shall apply to Certificates
     of any series to be thereafter issued;

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  respect  to each  separate  Trust  and the  series of
Certificates  relating  thereto,  with  the  consent  of the  Certificateholders
holding  Certificates of such series (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 such 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,  relating to such  Certificates,  which consent  shall not be  unreasonably
withheld),  but shall not be obligated  to, and the Trustee  (subject to Section
9.03) shall, enter into an agreement or agreements  supplemental  hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of  the  provisions  of  this  Agreement,  any  Intercreditor  Agreement  or any


<PAGE>

Liquidity  Facility to the extent  applicable to such  Certificateholders  or of
modifying in any manner the rights and  obligations  of such  Certificateholders
under this Agreement,  any  Intercreditor  Agreement or any Liquidity  Facility;
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 of  payments  on the  Equipment  Notes held in such
     Trust  or  distributions  that  are  required  to be  made  herein  on  any
     Certificate  of  such  series,  or  change  any  date  of  payment  on  any
     Certificate of such series,  or change the place of payment  where,  or the
     coin or currency in which,  any  Certificate of such series 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 of such Trust except as permitted by this Agreement,  or otherwise
     deprive  such  Certificateholder  of the  benefit of the  ownership  of the
     Equipment Notes in such Trust; or

          (3) alter the priority of distributions specified in the Intercreditor
     Agreement  in  a  manner  materially   adverse  to  the  interests  of  the
     Certificateholders of any series; or

          (4)  reduce  the  specified  percentage  of the  aggregate  Fractional
     Undivided   Interests   of  such  Trust  that  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

          (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  of  such  series
     affected thereby; or

          (6) 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.

         It shall not be necessary for any Direction of such  Certificateholders
under  this  Section  9.02  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  Basic  Agreement  or any Trust
Supplement, the Trustee may in its discretion decline to execute such document.



<PAGE>

         Section 9.04. EXECUTION OF SUPPLEMENTAL  AGREEMENTS.  In executing,  or
accepting the additional trusts created by, any supplemental 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 Basic
Agreement  shall be  modified in  accordance  therewith,  and such  supplemental
agreement shall form a part of this Basic Agreement for all purposes;  and every
Certificateholder  of each series  theretofore or thereafter  authenticated  and
delivered  hereunder  shall be bound  thereby to the extent  applicable  to such
series.

         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 of each series  authenticated  and delivered after the execution of
any  supplemental  agreement  applicable to such series 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 of such series after proper presentation and
demand.

                                    ARTICLE X

                   AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS

         Section 10.01.  AMENDMENTS AND  SUPPLEMENTS TO INDENTURE AND OTHER NOTE
DOCUMENTS. In the event that the Trustee, as holder (or beneficial owner through
the Subordination  Agent) of any Equipment Notes (or as a prospective  purchaser
of any Postponed  Notes) in trust for the benefit of the  Certificateholders  of
any series or as Controlling  Party under an 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, other
Note Document or any other related document,  the Trustee shall forthwith send a
notice of such proposed  amendment,  modification,  waiver or supplement to each
Certificateholder  of such series  registered  on the Register as of the date of
such  notice.  The Trustee  shall  request from the  Certificateholders  of such
series 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 (or, with respect to Postponed  Notes,  a prospective  purchaser 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 (or, with
respect to Postponed Notes, a prospective purchaser of) such Equipment Note or a
Controlling  Party and (c) how to vote (or  direct  the  Subordination  Agent to
vote) any Equipment  Note (or, with respect to a Postponed  Note, its commitment


<PAGE>

to acquire  such  Postponed  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 (or
Postponed 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
of such series 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 one Business Day before the Trustee
directs  such action or casts such vote or gives such  consent.  Notwithstanding
the foregoing,  but subject to Section 6.04 and any Intercreditor Agreement, the
Trustee  may,  with  respect  to the  Certificates  of any  series,  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 any related  Indenture or any other related Note 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 of such series.

                                   ARTICLE XI

                              TERMINATION OF TRUSTS

         Section  11.01.  TERMINATION  OF THE  TRUSTS.  In respect of each Trust
created by the Basic Agreement as  supplemented  by a related Trust  Supplement,
the respective  obligations and  responsibilities of the Company and the Trustee
with respect to such Trust shall terminate upon the  distribution to all Holders
of  Certificates  of the  series of such Trust 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 of such Trust;
PROVIDED, HOWEVER, that in no event shall such Trust continue beyond one hundred
ten (110) years following the date of the execution of the Trust Supplement with
respect to such Trust (or such other final  expiration  date as may be specified
in such Trust Supplement).

         Notice of any termination of a Trust, specifying the applicable Regular
Distribution Date (or applicable Special  Distribution Date, as the case may be)
upon which the Certificateholders of any series may surrender their Certificates
to the Trustee for payment of the final distribution and cancellation,  shall be
mailed promptly by the Trustee to  Certificateholders of such series not earlier
than the minimum  number of days and not later than the  maximum  number of days
specified  therefor  in  the  related  Trust  Supplement  preceding  such  final
distribution   specifying  (A)  the  Regular   Distribution   Date  (or  Special


<PAGE>

Distribution  Date, as the case may be) upon which the proposed final payment of
the Certificates of such series will be made upon  presentation and surrender of
Certificates  of such  series 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 Regular  Distribution Date (or Special
Distribution  Date, as the case may be) is not  applicable,  payments being made
only upon  presentation  and surrender of the Certificates of such series at the
office or agency of the Trustee therein  specified.  The Trustee shall give such
notice to the  Registrar at the time such notice is given to  Certificateholders
of such series.  Upon  presentation  and surrender of the  Certificates  of such
series in accordance with such notice, the Trustee shall cause to be distributed
to  Certificateholders  of such series  amounts  distributable  on such  Regular
Distribution Date (or Special Distribution Date, as the case may be) pursuant to
Section 4.02.

         In the event that all of the  Certificateholders  of such series  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  of such series to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. No additional interest shall accrue on the Certificates of
such series after any Regular  Distribution Date (or Special  Distribution Date,
as the case may be) of such series, as specified in the first written notice. In
the event that any money held by the Trustee for the payment of distributions on
the  Certificates  of such series shall remain  unclaimed for two years (or such
lesser time as the Trustee  shall be  satisfied,  after 60 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 and the
Company.

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         Section 12.01. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or
incapacity of any Certificateholder of any series shall not operate to terminate
this Agreement or the related 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. LIABILITIES OF CERTIFICATEHOLDERS. Neither the existence
of the Trust nor any  provision in this  Agreement 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. REGISTRATION OF EQUIPMENT NOTES IN NAME OF SUBORDINATION
AGENT.  If a Trust is party to an  Intercreditor  Agreement,  the Trustee agrees
that all  Equipment  Notes to be  purchased by such Trust shall be issued in the
name of the  Subordination  Agent  under  such  Intercreditor  Agreement  or its


<PAGE>

nominee  and held by such  Subordination  Agent in trust for the  benefit of the
Certificateholders,  or, if not so held, such 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 12.04.  NOTICES.  (a) Unless  otherwise  specifically  provided
herein or in the  applicable  Trust  Supplement  with respect to any Trust,  all
notices  required under the terms and provisions of this Basic Agreement or such
Trust  Supplement with respect to such Trust 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:

               Continental Airlines, Inc.
               2929 Allen Parkway
               Houston, TX  77019
               Attention:  Chief Financial Officer and
                           General Counsel
               Facsimile:  (713) 523-2831

          if to the Trustee:

               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

         (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  of any series
shall be mailed by first-class mail to the addresses for  Certificateholders  of
such series shown on the Register kept by the  Registrar and to addresses  filed
with the Trustee for  Certificate  Owners of such  series.  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  or Certificate
Owners of such series.

         (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.



<PAGE>

         (e)  If  the   Company   mails  a  notice  or   communication   to  the
Certificateholders  of such  series,  it shall mail a copy to the Trustee and to
each Paying Agent for such series 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 12.05.  GOVERNING LAW. THIS BASIC  AGREEMENT HAS BEEN DELIVERED
IN  THE  STATE  OF NEW  YORK  AND,  TOGETHER  WITH  ALL  TRUST  SUPPLEMENTS  AND
CERTIFICATES, SHALL BE 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.

         Section 12.06.  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 related Trust,
or of the  Certificates  of such series or the rights of the  Certificateholders
thereof.

         Section 12.07. TRUST INDENTURE ACT CONTROLS.  This Agreement is subject
to the  provisions  of  the  Trust  Indenture  Act  and  shall,  to  the  extent
applicable,  be governed by such provisions.  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  12.08.  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  12.09.  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 12.10.  BENEFITS OF AGREEMENT.  Nothing in this Agreement or in
the  Certificates of any series,  express or implied,  shall give to any Person,
other  than  the  parties  hereto  and  their  successors  hereunder,   and  the
Certificateholders  of each series, any benefit or any legal or equitable right,
remedy or claim under this Agreement.



<PAGE>

         Section  12.11.   LEGAL  HOLIDAYS.   In  any  case  where  any  Regular
Distribution  Date or Special  Distribution  Date relating to any Certificate of
any  series  shall not be a  Business  Day with  respect  to such  series,  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  12.12.  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  12.13.   COMMUNICATION   BY   CERTIFICATEHOLDERS   WITH  OTHER
CERTIFICATEHOLDERS.  Certificateholders of any series may communicate with other
Certificateholders  of such series with respect to their rights under this Basic
Agreement,  the related  Trust  Supplement  or the  Certificates  of such series
pursuant to Section 312(b) of the Trust Indenture Act. The Company,  the Trustee
and any and all  other  persons  benefitted  by this  Agreement  shall  have the
protection afforded by Section 312(c) of the Trust Indenture Act.

         Section  12.14.  INTENTION OF PARTIES.  The parties  hereto intend that
each Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of 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.  The powers  granted and  obligations  undertaken  pursuant to this
Agreement shall be so construed so as to further such intent.



<PAGE>

         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>

                                                                       EXHIBIT A

                               FORM OF CERTIFICATE

         Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation  ("DTC"),  to Issuer or its
agent for  registration  of transfer,  exchange or payment,  and any certificate
issued  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 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.1

              CONTINENTAL AIRLINES ____________ PASS THROUGH TRUST

                                  Pass Through

                         Certificate, Series __________

                  Final Regular Distribution Date: _____, ____

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

Certificate
No._________              $__________ 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 [___] (the
"TRUST")  created by  Wilmington  Trust  Company,  as trustee  (the  "TRUSTEE"),
pursuant to a Pass  Through  Trust  Agreement  dated as of [ ], 1997 (the "BASIC
AGREEMENT"),  as  supplemented  by Trust  Supplement No.  _______  thereto dated
__________,  199_  (collectively,  the  "Agreement"),  between  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 "___%
Continental Airlines Pass Through  Certificate,  Series ____" (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,

- ----------

1.    This legend to appear on  Book-Entry Certificates  to  be  deposited  with
      The Depository Trust Company.



<PAGE>

the  Certificateholder  of this Certificate assents to and agrees to be bound by
the  provisions of the Agreement and any related  Intercreditor  Agreement.  The
property of the Trust  includes  certain  Equipment  Notes and all rights of the
Trust to receive any  payments  under any  Intercreditor  Agreement or Liquidity
Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes is or will be
secured by, among other  things,  a security  interest in aircraft  leased to or
owned by the Company.

         The Certificates  represent fractional undivided interests in the Trust
and the Trust Property,  and have no rights,  benefits or interest in respect of
any  other  separate  trust  established  pursuant  to the  terms  of the  Basic
Agreement for any other series of certificates issued pursuant thereto.

         Subject to and in  accordance  with the terms of the  Agreement and any
related Intercreditor Agreement, from funds then available to the Trustee, there
will be distributed on each __________ and ___________ (a "REGULAR  DISTRIBUTION
DATE"),  commencing  on  _________,  199_,  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 on the
Equipment Notes due on such Regular  Distribution Date, 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 any related  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.

         Distributions  on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto,  without the presentation or surrender of
this  Certificate  or the making of any  notation  hereon.  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.

         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
affiliate thereof. The Certificates are limited in right of 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


<PAGE>

sufficient  income or proceeds from the Trust  Property to make such payments in
accordance  with the  terms of the  Agreement.  Each  Certificateholder  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  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  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.

         The Certificates are issuable only as registered  Certificates  without
coupons in minimum  denominations of $1,000  Fractional  Undivided  Interest and
integral  multiples  thereof  except  that one  Certificate  may be  issued 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 of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.

         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


<PAGE>

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.

         THIS  CERTIFICATE  AND THE  AGREEMENT  HAVE EACH BEEN  DELIVERED IN THE
STATE OF NEW YORK AND  SHALL BE  CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE
STATE OF NEW YORK AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES OF THE PARTIES AND
CERTIFICATEHOLDERS  HEREUNDER AND  THEREUNDER  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.



<PAGE>

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

                                      CONTINENTAL AIRLINES, INC.

                                      By:  WILMINGTON TRUST COMPANY,
                                           as Trustee


                                      By:    ________________________________
                                      Title: ________________________________

Dated: ___________________



<PAGE>



              [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

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



                                       WILMINGTON TRUST COMPANY,
                                       as Trustee


                                       By:   ________________________________
                                                     Authorized Officer





                                                                     EXHIBIT 5.1

                      OPINION OF HUGHES HUBBARD & REED LLP



<PAGE>



Hughes Hubbard & Reed LLP                         One Battery Park Plaza
                                                  New York, New York  10004-1482
                                                  Telephone:  212-837-6000
                                                  Facsimile:  212-422-4726


                                  July 15, 1997

Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019

                   Re:    Continental Airlines, Inc.
                          REGISTRATION STATEMENT ON FORM S-3

Ladies and Gentlemen:

         We have acted as your counsel in connection  with the  above-referenced
Registration Statement on Form S-3 (the "Registration Statement") filed with the
Securities  and Exchange  Commission  pursuant to the Securities Act of 1933, as
amended  (the  "Act"),  with  respect to pass  through  certificates  (the "Pass
Through Certificates")  expected to be issued by one or more trusts to be formed
by  Continental  Airlines,  Inc.  (the  "Company").  Such trusts are expected to
acquire  certain  equipment notes relating to leases of aircraft to the Company.
The Pass Though  Certificates  are expected to be issued and sold by the Company
from time to time  pursuant to Rule 415 under the Act for an  aggregate  initial
offering price not to exceed  $250,000,000  or the equivalent  thereof in one or
more foreign currencies or composite currencies.

         The Pass  Through  Certificates  will be issued in series  under a Pass
Through
 Trust Agreement  between the Company and Wilmington  Trust Company,  the
trustee thereunder (the "Pass Through Trust  Agreement"),  the form of which has
been filed as an exhibit to the Registration Statement, and a Supplement thereto
relating to each such series (a "Trust Supplement").

         We have examined the  Certificate  of  Incorporation  and Bylaws of the
Company and the form of the Pass Through Trust Agreement.  In addition,  we have
examined,  and have  relied as to  matter of fact  upon,  originals  or  copies,
certified  or  otherwise  identified  to our  satisfaction,  of  such  corporate
records,  agreements,  documents and other  instruments and such certificates or
comparable  documents of public officials and of officers and representatives of
the  Company,  and have made such other and  further  investigations  as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth.

         Based upon and subject to the  foregoing,  we are of the opinion  that,
with  respect  to  each  series  of  Pass  Through  Certificates,  when  (i) the
applicable provisions of the Act and such "Blue Sky" or state securities laws as
may be  applicable  shall have been complied  with,  (ii) the Pass Through Trust
Agreement shall have been duly authorized and validly  executed and delivered by
the Company to the trustee  thereunder,  (iii) the Trust Supplement  relating to
such series has been duly  authorized and validly  executed and delivered by the
Company to such  trustee,  (iv) the Board of  Directors of the Company has taken
all necessary corporate action to approve the terms of the offering of such Pass
Through  Certificates and related matters and (v) the Pass Through  Certificates
of such series have been duly executed,  authenticated,  issued and delivered in
accordance with the provisions of the Pass Through Trust Agreement,  the related
Trust Supplement and the applicable definitive purchase, underwriting or similar
agreement  approved by the Board of Directors of the Company and upon payment of
the consideration  therefor provided for therein, such Pass Through Certificates
will be legally issued and binding obligations of the Company.



<PAGE>

         We are  members  of the Bar of the  State  of New  York,  and we do not
express any opinion herein concerning any law other than the law of the State of
New  York,  the  federal  law of the  United  States  and the  Delaware  General
Corporation Law.

         We hereby  consent to the filing of this  opinion as an exhibit to said
Registration  Statement  and we  further  consent  to the use of our name in the
Registration  Statement  under the  caption  "Legal  Opinions".  In giving  this
consent,  we do not thereby  admit that we are in the category of persons  whose
consent is required  under Section 7 of the  Securities Act of 1933, as amended,
or  the  rules  and  regulations  of  the  Securities  and  Exchange  Commission
thereunder.

                                              Very truly yours,
     
                                              /s/ HUGHES HUBBARD & REED LLP





                                                                    EXHIBIT 12.1



                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES



<PAGE>


CONTINENTAL AIRLINES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS)


<TABLE>
<CAPTION>

                                        Three       Three        
                                        Months      Months                                         4/28/93  |  1/1/93
                                        Ended       Ended                                          through  |  through
                                        3/31/97     3/31/96      1996        1995        1994      12/31/93 |  4/27/93       1992
                                        -------     -------    -------     -------     --------    -------- |  -------     --------
<S>                                     <C>         <C>        <C>         <C>         <C>         <C>         <C>         <C>
                                                                                                            |  
Earnings:                                                                                                   |  
  Earnings (Loss) Before Income                                                                             |       
   Taxes, Minority Interest and                                                                             |  
   Extraordinary Items                  $  124      $   95     $  428      $  310      $  (651)      ($52)  |   ($977)      ($125)
  Plus:                                                                                                     |
   Interest Expense (a)                     42          47        165         213          241        165   |      52         153
   Capitalized Interest                     (6)         (1)        (5)         (6)         (17)        (8)  |      (2)         (6)
   Amortization of Capitalized                                                                              |
    Interest                                 1           1          3           2            1          0   |       0           0
   Portion of Rent Expense                                                                                  |
    Representative of Interest                                                                              |
    Expense (a)                             94          89        359         360          337        216   |     117         324
                                        ------      ------     ------      ------      -------     ------   |  ------      ------
                                           255         231        950         879          (89)       321   |    (810)        346
                                        ------      ------     ------      ------      -------     ------   |  ------      ------  
Fixed Charges:                                                                                              | 
   Interest Expense (a)                     42          47        165         213          241        165   |      52         153
   Portion of Rent Expense                                                                                  | 
    Representative of                                                                                       | 
    Interest Expense (a)                    94          89        359         360          337        216   |     117         324
                                        ------      ------     ------      ------      -------     ------   |  ------      ------
Total Fixed Charges                        136         136        524         573          578        381   |     169         477
                                        ------      ------     ------      ------      -------     ------   |  ------      ------
Coverage Adequacy (Deficiency)          $  119      $   95     $  426      $  306      $  (667)    $  (60)  |  $ (979)     $ (131)
                                        ======      ======     ======      ======      =======     ======   |  ======      ======
Coverage Ratio                            1.88        1.70       1.81        1.53          n/a        n/a   |     n/a         n/a
                                        ======      ======     ======      ======      =======     ======   |  ======      ======

- ----------
<FN>
Note:   A  vertical  black  line is  shown  in  the   table  above  to  separate
        Continental's  post-reorganized  consolidated financial data of Holdings
        since  they  have not been prepared on a consistent basis of accounting.

(a)     Includes  Fair Market Value  Adjustments
  resulting  from the  Company's
        emergence from bankruptcy.
</FN>
</TABLE>



                                                                    EXHIBIT 23.1

                        CONSENT OF INDEPENDENT AUDITORS



<PAGE>

                         CONSENT OF INDEPENDENT AUDITORS

We  consent to the  reference  to our firm under the  caption  "Experts"  in the
Registration   Statement  (Form  S-3)  and  related  Prospectus  of  Continental
Airlines, Inc. for the registration of $250,000,000 of Pass Through Certificates
and to the  incorporation by reference therein of our reports dated February 10,
1997,  with respect to the  consolidated  financial  statements and schedules of
Continental  Airlines,  Inc.  included in its Annual  Report (Form 10-K) for the
year ended December 31, 1996, filed with the Securities and Exchange Commission.

                                                 /s/ ERNST & YOUNG LLP

Houston, Texas
July 10, 1997






                                                                    EXHIBIT 24.1

                               POWERS OF ATTORNEY



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments
 thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ JEFFERY A. SMISEK
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  JEFFERY A. SMISEK
                                                    --------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ GORDON M. BETHUNE
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  GORDON M. BETHUNE
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ LAWRENCE W. KELLNER
                                     ----------------------------------------- 
                                     (Signature)

                                     Printed Name:  LAWRENCE W. KELLNER
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ MICHAEL P. BONDS
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  MICHAEL P. BONDS
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ THOMAS J. BARRACK, JR.
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  THOMAS J. BARRACK, JR.
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ GREGORY D. BRENNEMAN
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  GREGROY D. BRENNEMAN
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ LLOYD M. BENTSEN, JR.
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  LLOYD M. BENTSEN, JR.
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ DAVID BONDERMAN
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  DAVID BONDERMAN
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ PATRICK FOLEY
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  PATRICK FOLEY
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ DOUGLAS H. MCCORKINDALE
                                     -----------------------------------------
                                     (Signature)

                                     Printed Name:  DOUGLAS H. MCCORKINDALE
                                                   ---------------------------


Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ GEORGE G.C. PARKER
                                     ----------------------------------------- 
                                     (Signature)

                                     Printed Name:  GEORGE G.C. PARKER
                                                   ---------------------------


Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ RICHARD W. POGUE
                                     ----------------------------------------- 
                                     (Signature)

                                     Printed Name:  RICHARD W. POGUE
                                                   ---------------------------


Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                      /S/ WILLIAM S. PRICE III
                                     ----------------------------------------- 
                                     (Signature)

                                     Printed Name:  WILLIAM S. PRICE III
                                                   ---------------------------


Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                      /S/ DONALD L. STURM
                                     ----------------------------------------- 
                                     (Signature)

                                     Printed Name:  DONALD L. STURM
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                     /S/ KAREN HASTIE WILLIAMS
                                     ----------------------------------------- 
                                     (Signature)

                                     Printed Name:  KAREN HASTIE WILLIAMS
                                                   ---------------------------

Dated and effective as of June 10, 1997



<PAGE>

                                POWER OF ATTORNEY

         The undersigned director and/or officer of Continental Airlines,  Inc.,
a Delaware  corporation  (the  "Company"),  does hereby  constitute  and appoint
Lawrence W. Kellner, Jeffery A. Smisek and Scott R. Peterson, or any of them, as
the undersigned's true and lawful attorneys in-fact and agents to do any and all
things in the undersigned's  name and behalf in the undersigned's  capacity as a
director  and/or officer of the Company,  and to execute any and all instruments
for the  undersigned  and in the  undersigned's  name and capacity as a director
and/or  officer  that such person or persons may deem  necessary or advisable to
enable the Company to comply with the  Securities  Act of 1933, as amended,  and
any rules, regulations or requirements of the Securities and Exchange Commission
in connection with that certain  Registration  Statement on Form S-3 relating to
certain  of the  Company's  Pass  Through  Certificates  in  respect  of EMB-145
aircraft (the "Registration Statement"), including specifically, but not limited
to,  power  and  authority  to sign for the  undersigned  in the  capacity  as a
director and/or officer of the Company the Registration  Statement,  and any and
all amendments thereto, including post-effective amendments, and the undersigned
does hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.

                                      /S/ CHARLES A. YAMARONE
                                     ----------------------------------------- 
                                     (Signature)

                                     Printed Name:  CHARLES A. YAMARONE
                                                   ---------------------------

Dated and effective as of June 10, 1997





                                                                    EXHIBIT 25.1

        STATEMENT OF ELIGIBILITY OF WILMINGTON TRUST COMPANY ON FORM T-1



<PAGE>



                                                           Registration No. 

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM T-1

         STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                  OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) [ X ]
                  -----  
                    
                            WILMINGTON TRUST COMPANY
               (Exact name of trustee as specified in its charter)

        Delaware                                         51-0055023
(State of incorporation)                    (I.R.S. employer identification no.)

                               Rodney Square North
                            1100 North Market Street
                           Wilmington, Delaware 19890
                    (Address of principal executive offices)

                               Cynthia L. Corliss
                        Vice President and Trust Counsel
                            Wilmington Trust Company
                               Rodney Square North
                           Wilmington, Delaware 19890
                                 (302) 651-8516
            (Name, address and telephone number of agent for service)

                           CONTINENTAL AIRLINES, INC.
               (Exact name of obligor as specified in its charter)

        Delaware                                         74-2099724
(State of incorporation                     (I.R.S. employer identification no.)
      or formation)

    2929 Allen Parkway, Suite 2010
           Houston, Texas                                              77019
(Address of principal executive offices)                             (Zip Code)

                        EMB-145 Pass Through Certificates
                       (Title of the indenture securities)



<PAGE>


ITEM 1.  GENERAL INFORMATION.

         Furnish the
 following information as to the trustee:

         (a)  Name and  address of each  examining or  supervising  authority to
              which it is subject.

              Federal Deposit Insurance Co.             State Bank Commissioner
              Five Penn Center                          Dover, Delaware
              Suite #2901
              Philadelphia, PA

         (b)  Whether it is authorized to exercise corporate trust powers.

         The trustee is authorized to exercise corporate trust powers.

ITEM 2.  AFFILIATIONS WITH THE OBLIGOR.

               If the obligor is an  affiliate  of the  trustee,  describe  each
         affiliation:

               Based upon an examination of the books and
               records of the trustee and upon information
               furnished by the obligor, the obligor is not an
               affiliate of the trustee.

ITEM 3.  LIST OF EXHIBITS.

               List  below  all  exhibits  filed  as part of this  Statement  of
         Eligibility and Qualification.

         A.    Copy of the Charter of Wilmington  Trust Company,  which includes
               the  certificate  of authority  of  Wilmington  Trust  Company to
               commence  business  and the  authorization  of  Wilmington  Trust
               Company to exercise corporate trust powers.

         B.    Copy of By-Laws of Wilmington Trust Company.

         C.    Consent of Wilmington Trust Company required by Section 321(b) of
               Trust  Indenture  Act. D. Copy of most recent Report of Condition
               of Wilmington Trust Company.

         Pursuant to the  requirements  of the Trust  Indenture Act of 1939, the
trustee,  Wilmington Trust Company,  a corporation  organized and existing under
the laws of Delaware, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned,  thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 2nd day of July, 1997.

[SEAL]                                       WILMINGTON TRUST COMPANY


Attest: /S/ ROSELINE K. MANEY                By:  /S/ BRUCE L. BISSON
       ----------------------                   ---------------------------  
        ASSISTANT SECRETARY                  Name:  Bruce L. Bisson
       ----------------------                Title: Vice President
                                             



<PAGE>


                                    EXHIBIT A

                                 AMENDED CHARTER

                            Wilmington Trust Company

                              Wilmington, Delaware

                           As existing on May 9, 1987



<PAGE>


                                 Amended Charter

                                       or

                              Act of Incorporation

                                       of

                            Wilmington Trust Company

         WILMINGTON  TRUST  COMPANY,  originally  incorporated  by an Act of the
General  Assembly of the State of Delaware,  entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D.  1903, and the Charter
or Act of  Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust  companies  of the  State of  Delaware,  does  hereby  alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:

         FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

         SECOND: - The location of its principal office in the State of Delaware
         is at Rodney Square  North,  in the City of  Wilmington,  County of New
         Castle;  the name of its resident  agent is  WILMINGTON  TRUST  COMPANY
         whose address is Rodney Square North, in said City. In addition to such
         principal  office,  the said corporation  maintains and operates branch
         offices in the City of Newark, New Castle County, Delaware, the Town of
         Newport, New Castle County,  Delaware, at Claymont,  New Castle County,
         Delaware,  at Greenville,  New Castle County  Delaware,  and at Milford
         Cross Roads,  New Castle  County,  Delaware,  and shall be empowered to
         open, maintain and operate branch offices at Ninth and Shipley Streets,
         418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
         the City of  Wilmington,  New Castle County,  Delaware,  and such other


<PAGE>

         branch offices or places of business as may be authorized  from time to
         time by the  agency  or  agencies  of the  government  of the  State of
         Delaware empowered to confer such authority.

         THIRD:  - (a) The nature of the  business  and the objects and purposes
         proposed to be transacted,  promoted or carried on by this  Corporation
         are to do any or all of the things herein mentioned as fully and to the
         same extent as natural persons might or could do and in any part of the
         world, viz.:

               (1)  To sue and be sued,  complain and defend in any Court of law
                    or equity and to make and use a common  seal,  and alter the
                    seal at pleasure,  to hold,  purchase,  convey,  mortgage or
                    otherwise deal in real and personal estate and property, and
                    to appoint  such  officers and agents as the business of the
                    Corporation shall require,  to make by-laws not inconsistent
                    with the  Constitution  or laws of the  United  States or of
                    this State, to discount  bills,  notes or other evidences of
                    debt, to receive deposits of money, or securities for money,
                    to buy gold and silver bullion and foreign coins, to buy and
                    sell bills of exchange,  and generally to use,  exercise and
                    enjoy all the  powers,  rights,  privileges  and  franchises
                    incident to a corporation  which are proper or necessary for
                    the  transaction of the business of the  Corporation  hereby
                    created.

               (2)  To  insure  titles  to real and  personal  property,  or any
                    estate or interests therein,  and to guarantee the holder of
                    such  property,  real or  personal,  against  any  claim  or
                    claims,  adverse to his interest therein, and to prepare and
                    give  certificates of title for any lands or premises in the
                    State of Delaware, or elsewhere.

               (3)  To act as factor,  agent, broker or attorney in the receipt,
                    collection, custody, investment and management of funds, and
                    the purchase,  sale,  management and disposal of property of
                    all  descriptions,  and to prepare  and  execute  all papers
                    which may be necessary or proper in such business.

               (4)  To prepare and draw agreements,  contracts,  deeds,  leases,
                    conveyances,  mortgages,  bonds  and  legal  papers of every
                    description, and to carry on the business of conveyancing in
                    all its branches.



<PAGE>

               (5)  To receive  upon  deposit for  safekeeping  money,  jewelry,
                    plate,  deeds, bonds and any and all other personal property
                    of every  sort and  kind,  from  executors,  administrators,
                    guardians,  public officers,  courts, receivers,  assignees,
                    trustees,  and from  all  fiduciaries,  and  from all  other
                    persons and individuals,  and from all corporations  whether
                    state,  municipal,  corporate or private, and to rent boxes,
                    safes, vaults and other receptacles for such property.

               (6)  To act as agent or otherwise for the purpose of registering,
                    issuing,  certificating,   countersigning,  transferring  or
                    underwriting  the stock,  bonds or other  obligations of any
                    corporation,  association,  state or  municipality,  and may
                    receive and manage any sinking  fund  therefor on such terms
                    as may be agreed upon between the two  parties,  and in like
                    manner  may  act  as   Treasurer  of  any   corporation   or
                    municipality.

               (7)  To act as Trustee under any deed of trust, mortgage, bond or
                    other  instrument  issued by any state,  municipality,  body
                    politic, corporation, association or person, either alone or
                    in conjunction with any other person or persons, corporation
                    or corporations.

               (8)  To  guarantee  the  validity,  performance  or effect of any
                    contract or agreement,  and the fidelity of persons  holding
                    places of  responsibility or trust; to become surety for any
                    person,  or persons,  for the  faithful  performance  of any
                    trust, office, duty, contract or agreement, either by itself
                    or  in  conjunction  with  any  other  person,  or  persons,
                    corporation,  or  corporations,  or in  like  manner  become
                    surety upon any bond,  recognizance,  obligation,  judgment,
                    suit,  order, or decree to be entered in any court of record
                    within the State of Delaware or elsewhere,  or which may now
                    or hereafter be required by any law, judge, officer or court
                    in the State of Delaware or elsewhere.

               (9)  To act by any and every  method of  appointment  as trustee,
                    trustee  in  bankruptcy,  receiver,  assignee,  assignee  in


<PAGE>

                    bankruptcy, executor, administrator, guardian, bailee, or in
                    any  other  trust  capacity  in  the   receiving,   holding,
                    managing, and disposing of any and all estates and property,
                    real,  personal  or  mixed,  and  to be  appointed  as  such
                    trustee, trustee in bankruptcy, receiver, assignee, assignee
                    in bankruptcy, executor,  administrator,  guardian or bailee
                    by any persons, corporations,  court, officer, or authority,
                    in the State of Delaware or  elsewhere;  and  whenever  this
                    Corporation  is so  appointed  by any  person,  corporation,
                    court,  officer  or  authority  such  trustee,   trustee  in
                    bankruptcy,  receiver,  assignee,  assignee  in  bankruptcy,
                    executor,  administrator,  guardian, bailee, or in any other
                    trust  capacity,  it shall not be required to give bond with
                    surety,  but its  capital  stock  shall be taken and held as
                    security for the performance of the duties devolving upon it
                    by such appointment.

               (10) And for its care,  management and trouble,  and the exercise
                    of any of its powers hereby given, or for the performance of
                    any of the duties  which it may  undertake or be called upon
                    to perform,  or for the assumption of any responsibility the
                    said  Corporation  may  be  entitled  to  receive  a  proper
                    compensation.

               (11) To  purchase,   receive,  hold  and  own  bonds,  mortgages,
                    debentures,  shares of capital stock, and other  securities,
                    obligations, contracts and evidences of indebtedness, of any
                    private,  public or municipal corporation within and without
                    the State of Delaware,  or of the  Government  of the United
                    States,  or of any state,  territory,  colony, or possession
                    thereof,  or  of  any  foreign  government  or  country;  to
                    receive,  collect,  receipt  for,  and dispose of  interest,
                    dividends  and  income  upon  and  from  any of  the  bonds,
                    mortgages,  debentures,  notes,  shares  of  capital  stock,
                    securities,    obligations,    contracts,    evidences    of
                    indebtedness and other property held and owned by it, and to
                    exercise   in   respect  of  all  such   bonds,   mortgages,
                    debentures,  notes,  shares of  capital  stock,  securities,
                    obligations,  contracts, evidences of indebtedness and other
                    property,  any and all the rights,  powers and privileges of
                    individual  owners  thereof,  including  the  right  to vote


<PAGE>

                    thereon; to invest and deal in and with any of the moneys of
                    the  Corporation  upon such securities and in such manner as
                    it may think fit and  proper,  and from time to time to vary
                    or realize such  investments;  to issue bonds and secure the
                    same by  pledges or deeds of trust or  mortgages  of or upon
                    the whole or any part of the  property  held or owned by the
                    Corporation,  and to sell and pledge such bonds, as and when
                    the Board of Directors shall determine, and in the promotion
                    of its said  corporate  business  of  investment  and to the
                    extent  authorized by law, to lease,  purchase,  hold, sell,
                    assign,  transfer,  pledge,  mortgage  and  convey  real and
                    personal  property  of any name and nature and any estate or
                    interest therein.

     (b)  In furtherance of, and not in limitation,  of the powers  conferred by
          the laws of the State of  Delaware,  it is hereby  expressly  provided
          that the said Corporation shall also have the following powers:

               (1)  To do any or all of the things herein set forth, to the same
                    extent as natural persons might or could do, and in any part
                    of the world.

               (2)  To acquire the good will,  rights,  property and  franchises
                    and to  undertake  the whole or any part of the  assets  and
                    liabilities of any person, firm, association or corporation,
                    and to pay for the same in cash, stock of this  Corporation,
                    bonds or  otherwise;  to hold or in any manner to dispose of
                    the  whole  or any part of the  property  so  purchased;  to
                    conduct  in any  lawful  manner the whole or any part of any
                    business  so  acquired,  and  to  exercise  all  the  powers
                    necessary  or  convenient  in  and  about  the  conduct  and
                    management of such business.

               (3)  To take, hold, own, deal in, mortgage or otherwise lien, and
                    to  lease,  sell,  exchange,  transfer,  or  in  any  manner
                    whatever  dispose  of  property,  real,  personal  or mixed,
                    wherever situated.

               (4)  To enter  into,  make,  perform and carry out  contracts  of
                    every   kind  with  any   person,   firm,   association   or
                    corporation, and, without limit as to amount, to draw, make,
                    accept,  endorse,  discount,  execute  and issue  promissory


<PAGE>

                    notes,   drafts,   bills  of  exchange,   warrants,   bonds,
                    debentures,    and   other    negotiable   or   transferable
                    instruments.

               (5)  To have one or more  offices,  to carry on all or any of its
                    operations and businesses,  without  restriction to the same
                    extent as natural  persons might or could do, to purchase or
                    otherwise acquire,  to hold, own, to mortgage,  sell, convey
                    or  otherwise  dispose of, real and  personal  property,  of
                    every  class  and  description,   in  any  State,  District,
                    Territory or Colony of the United States, and in any foreign
                    country or place.

               (6)  It is the  intention  that the objects,  purposes and powers
                    specified  and clauses  contained  in this  paragraph  shall
                    (except  where  otherwise  expressed in said  paragraph)  be
                    nowise  limited or  restricted  by reference to or inference
                    from the  terms of any  other  clause  of this or any  other
                    paragraph in this  charter,  but that the objects,  purposes
                    and  powers  specified  in  each  of  the  clauses  of  this
                    paragraph shall be regarded as independent objects, purposes
                    and powers.

         FOURTH:  - (a) The total number of shares of all classes of stock which
         the  Corporation  shall have  authority to issue is  forty-one  million
         (41,000,000) shares, consisting of:

               (1)  One million (1,000,000) shares of Preferred stock, par value
                    $10.00  per share  (hereinafter  referred  to as  "Preferred
                    Stock"); and

               (2)  Forty million (40,000,000) shares of Common Stock, par value
                    $1.00 per share (hereinafter referred to as "Common Stock").

         (b) Shares of Preferred Stock may be issued from time to time in one or
         more  series  as may from  time to time be  determined  by the Board of
         Directors each of said series to be distinctly  designated.  All shares
         of  any  one  series  of  Preferred  Stock  shall  be  alike  in  every
         particular,  except  that  there  may be  different  dates  from  which
         dividends, if any, thereon shall be cumulative, if made cumulative. The
         voting powers and the preferences and relative, participating, optional


<PAGE>

         and other special rights of each such series,  and the  qualifications,
         limitations or restrictions  thereof,  if any, may differ from those of
         any and all other series at any time  outstanding;  and, subject to the
         provisions of  subparagraph 1 of Paragraph (c) of this Article  FOURTH,
         the Board of Directors of the Corporation is hereby  expressly  granted
         authority to fix by  resolution  or  resolutions  adopted  prior to the
         issuance of any shares of a particular  series of Preferred  Stock, the
         voting powers and the designations,  preferences and relative, optional
         and other  special  rights,  and the  qualifications,  limitations  and
         restrictions  of such  series,  including,  but  without  limiting  the
         generality of the foregoing, the following:

               (1)  The distinctive  designation of, and the number of shares of
                    Preferred Stock which shall  constitute  such series,  which
                    number may be increased (except where otherwise  provided by
                    the  Board of  Directors)  or  decreased  (but not below the
                    number of shares thereof then outstanding) from time to time
                    by like action of the Board of Directors;

               (2)  The rate and times at which, and the terms and conditions on
                    which,  dividends, if any, on Preferred Stock of such series
                    shall be paid, the extent of the preference or relation,  if
                    any, of such dividends to the dividends payable on any other
                    class or  classes,  or series of the same or other  class of
                    stock and whether  such  dividends  shall be  cumulative  or
                    non-cumulative;

               (3)  The right, if any, of the holders of Preferred Stock of such
                    series to convert  the same into or  exchange  the same for,
                    shares of any other class or classes or of any series of the
                    same  or  any  other  class  or  classes  of  stock  of  the
                    Corporation  and the terms and conditions of such conversion
                    or exchange;

               (4)  Whether  or not  Preferred  Stock  of such  series  shall be
                    subject to redemption,  and the  redemption  price or prices
                    and the time or times at which, and the terms and conditions
                    on which, Preferred Stock of such series may be redeemed.

               (5)  The rights,  if any, of the  holders of  Preferred  Stock of
                    such series upon the voluntary or  involuntary  liquidation,
                    merger,  consolidation,  distribution  or  sale  of  assets,
                    dissolution or winding-up, of the Corporation.



<PAGE>

               (6)  The terms of the  sinking  fund or  redemption  or  purchase
                    account,  if any, to be provided for the Preferred  Stock of
                    such series; and

               (7)  The voting powers,  if any, of the holders of such series of
                    Preferred Stock which may,  without  limiting the generality
                    of the foregoing include the right, voting as a series or by
                    itself or together  with other series of Preferred  Stock or
                    all series of  Preferred  Stock as a class,  to elect one or
                    more directors of the Corporation if there shall have been a
                    default  in the  payment  of  dividends  on any  one or more
                    series of Preferred Stock or under such circumstances and on
                    such conditions as the Board of Directors may determine.

         (c) (1) After the requirements  with respect to preferential  dividends
         on the  Preferred  Stock (fixed in  accordance  with the  provisions of
         section (b) of this Article  FOURTH),  if any,  shall have been met and
         after the Corporation shall have complied with all the requirements, if
         any,  with  respect to the  setting  aside of sums as sinking  funds or
         redemption  or  purchase   accounts   (fixed  in  accordance  with  the
         provisions of section (b) of this Article FOURTH),  and subject further
         to any conditions  which may be fixed in accordance with the provisions
         of section  (b) of this  Article  FOURTH,  then and not  otherwise  the
         holders of Common Stock shall be entitled to receive such  dividends as
         may be declared from time to time by the Board of Directors.

               (2)  After  distribution in full of the preferential  amount,  if
                    any, (fixed in accordance with the provisions of section (b)
                    of this Article FOURTH), to be distributed to the holders of
                    Preferred  Stock in the event of  voluntary  or  involuntary
                    liquidation,  distribution or sale of assets, dissolution or
                    winding-up,  of the  Corporation,  the holders of the Common
                    Stock  shall be  entitled  to receive  all of the  remaining
                    assets  of the  Corporation,  tangible  and  intangible,  of
                    whatever kind  available for  distribution  to  stockholders
                    ratably  in  proportion  to the  number  of shares of Common
                    Stock held by them respectively.

               (3)  Except  as  may  otherwise  be  required  by  law  or by the
                    provisions  of  such  resolution  or  resolutions  as may be
                    adopted by the Board of Directors pursuant to section (b) of


<PAGE>

                    this Article FOURTH,  each holder of Common Stock shall have
                    one vote in respect  of each  share of Common  Stock held on
                    all matters voted upon by the stockholders.

         (d) No holder  of any of the  shares of any class or series of stock or
         of options, warrants or other rights to purchase shares of any class or
         series of stock or of other  securities of the  Corporation  shall have
         any preemptive right to purchase or subscribe for any unissued stock of
         any class or series or any additional  shares of any class or series to
         be issued by reason of any increase of the authorized  capital stock of
         the  Corporation  of any class or  series,  or bonds,  certificates  of
         indebtedness,  debentures  or  other  securities  convertible  into  or
         exchangeable  for stock of the  Corporation of any class or series,  or
         carrying  any right to purchase  stock of any class or series,  but any
         such unissued stock, additional authorized issue of shares of any class
         or series of stock or securities  convertible  into or exchangeable for
         stock,  or  carrying  any right to  purchase  stock,  may be issued and
         disposed of pursuant to  resolution  of the Board of  Directors to such
         persons, firms,  corporations or associations,  whether such holders or
         others,  and upon such terms as may be deemed advisable by the Board of
         Directors in the exercise of its sole discretion.

         (e) The  relative  powers,  preferences  and  rights of each  series of
         Preferred  Stock in relation to the relative  powers,  preferences  and
         rights of each other series of Preferred  Stock shall, in each case, be
         as fixed from time to time by the Board of Directors in the  resolution
         or resolutions  adopted pursuant to authority granted in section (b) of
         this  Article  FOURTH  and the  consent,  by  class or  series  vote or
         otherwise,  of the holders of such of the series of Preferred  Stock as
         are  from  time to  time  outstanding  shall  not be  required  for the
         issuance by the Board of  Directors  of any other  series of  Preferred
         Stock whether or not the powers,  preferences  and rights of such other
         series  shall be fixed by the Board of  Directors as senior to, or on a
         parity with,  the powers,  preferences  and rights of such  outstanding
         series, or any of them; provided,  however, that the Board of Directors
         may  provide  in the  resolution  or  resolutions  as to any  series of


<PAGE>

         Preferred Stock adopted  pursuant to section (b) of this Article FOURTH
         that  the  consent  of the  holders  of a  majority  (or  such  greater
         proportion as shall be therein fixed) of the outstanding shares of such
         series voting  thereon shall be required for the issuance of any or all
         other series of Preferred Stock.

         (f) Subject to the  provisions of section (e),  shares of any series of
         Preferred  Stock  may be  issued  from  time to time  as the  Board  of
         Directors of the Corporation  shall determine and on such terms and for
         such consideration as shall be fixed by the Board of Directors.

         (g) Shares of Common Stock may be issued from time to time as the Board
         of Directors of the  Corporation  shall determine and on such terms and
         for such consideration as shall be fixed by the Board of Directors.

         (h) The  authorized  amount of shares of Common  Stock and of Preferred
         Stock may,  without a class or series  vote,  be increased or decreased
         from time to time by the affirmative  vote of the holders of a majority
         of the stock of the Corporation entitled to vote thereon.

         FIFTH:  - (a) The  business  and  affairs of the  Corporation  shall be
         conducted and managed by a Board of Directors.  The number of directors
         constituting the entire Board shall be not less than five nor more than
         twenty-five  as fixed  from time to time by vote of a  majority  of the
         whole Board, provided,  however, that the number of directors shall not
         be  reduced so as to shorten  the term of any  director  at the time in
         office, and provided further, that the number of directors constituting
         the  whole  Board  shall  be  twenty-four  until  otherwise  fixed by a
         majority of the whole Board.

         (b) The Board of  Directors  shall be divided  into three  classes,  as
         nearly   equal  in  number  as  the  then  total  number  of  directors
         constituting  the whole Board  permits,  with the term of office of one
         class  expiring each year.  At the annual  meeting of  stockholders  in
         1982,  directors of the first class shall be elected to hold office for
         a term expiring at the next succeeding annual meeting, directors of the
         second class shall be elected to hold office for a term expiring at the
         second succeeding annual meeting and directors of the third class shall
         be elected to hold office for a term  expiring at the third  succeeding


<PAGE>

         annual meeting. Any vacancies in the Board of Directors for any reason,
         and any newly created directorships  resulting from any increase in the
         directors,  may be  filled  by the  Board  of  Directors,  acting  by a
         majority of the directors then in office,  although less than a quorum,
         and any  directors  so chosen  shall hold office  until the next annual
         election of directors. At such election, the stockholders shall elect a
         successor to such  director to hold office  until the next  election of
         the class for which such director  shall have been chosen and until his
         successor shall be elected and qualified.  No decrease in the number of
         directors shall shorten the term of any incumbent director.

         (c)  Notwithstanding  any other  provisions  of this  Charter or Act of
         Incorporation  or the By-Laws of the Corporation  (and  notwithstanding
         the fact that some lesser  percentage  may be  specified  by law,  this
         Charter or Act of Incorporation or the By-Laws of the Corporation), any
         director or the entire  Board of Directors  of the  Corporation  may be
         removed at any time without cause,  but only by the affirmative vote of
         the holders of two-thirds or more of the outstanding  shares of capital
         stock of the Corporation  entitled to vote generally in the election of
         directors  (considered for this purpose as one class) cast at a meeting
         of the stockholders called for that purpose.

         (d)  Nominations for the election of directors may be made by the Board
         of Directors or by any stockholder entitled to vote for the election of
         directors.  Such  nominations  shall  be made  by  notice  in  writing,
         delivered or mailed by first class United States mail, postage prepaid,
         to the Secretary of the Corporation not less than 14 days nor more than
         50  days  prior  to any  meeting  of the  stockholders  called  for the
         election of directors;  provided,  however,  that if less than 21 days'
         notice of the meeting is given to  stockholders,  such  written  notice
         shall be delivered or mailed,  as  prescribed,  to the Secretary of the
         Corporation  not later than the close of the seventh day  following the
         day on which notice of the meeting was mailed to  stockholders.  Notice
         of  nominations  which are proposed by the Board of Directors  shall be
         given by the Chairman on behalf of the Board.

         (e) Each notice under subsection (d) shall set forth (i) the name, age,
         business  address  and,  if known,  residence  address of each  nominee


<PAGE>

         proposed in such notice, (ii) the principal occupation or employment of
         such nominee and (iii) the number of shares of stock of the Corporation
         which are beneficially owned by each such nominee.

         (f) The  Chairman of the meeting may, if the facts  warrant,  determine
         and declare to the meeting that a nomination was not made in accordance
         with the foregoing procedure,  and if he should so determine,  he shall
         so  declare  to the  meeting  and the  defective  nomination  shall  be
         disregarded.

         (g) No action  required to be taken or which may be taken at any annual
         or special  meeting of  stockholders  of the  Corporation  may be taken
         without a meeting, and the power of stockholders to consent in writing,
         without a meeting, to the taking of any action is specifically denied.

         SIXTH: - The Directors  shall choose such officers,  agent and servants
         as may be  provided  in the  By-Laws as they may from time to time find
         necessary or proper.

         SEVENTH:  - The  Corporation  hereby  created is hereby  given the same
         powers,  rights and  privileges as may be conferred  upon  corporations
         organized   under  the  Act  entitled  "An  Act   Providing  a  General
         Corporation  Law",  approved  March  10,  1899,  as  from  time to time
         amended.

         EIGHTH: - This Act shall be deemed and taken to be a private Act.

         NINTH: - This Corporation is to have perpetual existence.

         TENTH: - The Board of Directors,  by resolution passed by a majority of
         the whole Board,  may  designate  any of their number to  constitute an
         Executive  Committee,  which Committee,  to the extent provided in said
         resolution,  or in the  By-Laws  of the  Company,  shall  have  and may
         exercise all of the powers of the Board of Directors in the  management
         of the business and affairs of the Corporation, and shall have power to
         authorize the seal of the Corporation to be affixed to all papers which
         may require it.

         ELEVENTH:  - The  private  property  of the  stockholders  shall not be
         liable for the payment of corporate debts to any extent whatever.



<PAGE>

         TWELFTH:  - The  Corporation  may transact  business in any part of the
         world.

         THIRTEENTH:  - The Board of Directors of the  Corporation  is expressly
         authorized to make, alter or repeal the By-Laws of the Corporation by a
         vote of the majority of the entire Board.  The  stockholders  may make,
         alter or repeal any By-Law  whether  or not  adopted by them,  provided
         however, that any such additional By-Laws, alterations or repeal may be
         adopted only by the  affirmative  vote of the holders of  two-thirds or
         more of the  outstanding  shares of  capital  stock of the  Corporation
         entitled to vote generally in the election of directors (considered for
         this purpose as one class).

         FOURTEENTH:  - Meetings  of the  Directors  may be held  outside of the
         State of Delaware at such places as may be from time to time designated
         by the  Board,  and the  Directors  may keep the  books of the  Company
         outside of the State of  Delaware at such places as may be from time to
         time designated by them.

         FIFTEENTH:  - (a) In addition to any affirmative  vote required by law,
         and except as otherwise  expressly  provided in sections (b) and (c) of
         this Article FIFTEENTH:

               (A)  any  merger  or  consolidation  of  the  Corporation  or any
                    Subsidiary  (as  hereinafter  defined)  with or into (i) any
                    Interested  Stockholder (as hereinafter defined) or (ii) any
                    other  corporation  (whether  or not  itself  an  Interested
                    Stockholder),  which,  after such  merger or  consolidation,
                    would  be  an  Affiliate  (as  hereinafter  defined)  of  an
                    Interested Stockholder, or

               (B)  any sale, lease,  exchange,  mortgage,  pledge,  transfer or
                    other disposition (in one transaction or a series of related
                    transactions)  to or with any Interested  Stockholder or any
                    Affiliate of any Interested Stockholder of any assets of the
                    Corporation  or any  Subsidiary  having  an  aggregate  fair
                    market value of $1,000,000 or more, or

               (C)  the  issuance  or  transfer  by  the   Corporation   or  any
                    Subsidiary  (in  one  transaction  or a  series  of  related
                    transactions)  of any  securities of the  Corporation or any
                    Subsidiary to any Interested Stockholder or any Affiliate of


<PAGE>

                    any Interested  Stockholder in exchange for cash, securities
                    or other  property  (or a  combination  thereof)  having  an
                    aggregate fair market value of $1,000,000 or more, or

               (D)  the adoption of any plan or proposal for the  liquidation or
                    dissolution of the Corporation, or

               (E)  any  reclassification  of securities  (including any reverse
                    stock split), or recapitalization of the Corporation, or any
                    merger or  consolidation  of the Corporation with any of its
                    Subsidiaries or any similar transaction (whether or not with
                    or into or otherwise  involving an  Interested  Stockholder)
                    which has the effect, directly or indirectly,  of increasing
                    the  proportionate  share of the  outstanding  shares of any
                    class of equity or convertible securities of the Corporation
                    or any Subsidiary  which is directly or indirectly  owned by
                    any  Interested   Stockholder,   or  any  Affiliate  of  any
                    Interested  Stockholder,  shall require the affirmative vote
                    of the  holders of at least  two-thirds  of the  outstanding
                    shares of capital stock of the Corporation  entitled to vote
                    generally in the election of directors,  considered  for the
                    purpose  of this  Article  FIFTEENTH  as one class  ("Voting
                    Shares").   Such   affirmative   vote   shall  be   required
                    notwithstanding  the fact that no vote may be  required,  or
                    that some lesser  percentage may be specified,  by law or in
                    any  agreement  with any  national  securities  exchange  or
                    otherwise.

         (2) The term "business  combination" as used in this Article  FIFTEENTH
         shall  mean any  transaction  which is  referred  to any one or more of
         clauses (A) through (E) of paragraph 1 of the section (a).

         (b) The provisions of section (a) of this Article  FIFTEENTH  shall not
         be applicable to any particular business  combination and such business
         combination  shall require only such affirmative vote as is required by
         law and any other  provisions of the Charter or Act of Incorporation of


<PAGE>

         By-Laws if such business combination has been approved by a majority of
         the whole Board.

         (c) For the purposes of this Article FIFTEENTH:

             (1) A "person" shall mean any individual firm, corporation or other
             entity.

             (2) "Interested Stockholder" shall mean, in respect of any business
             combination,   any  person  (other  than  the  Corporation  or  any
             Subsidiary)   who  or  which  as  of  the   record   date  for  the
             determination of stockholders  entitled to notice of and to vote on
             such business combination, or immediately prior to the consummation
             of any such transaction:

                    (A)  is the beneficial  owner,  directly or  indirectly,  of
                         more than 10% of the Voting Shares, or

                    (B)  is an  Affiliate  of the  Corporation  and at any  time
                         within  two  years  prior  thereto  was the  beneficial
                         owner, directly or indirectly,  of not less than 10% of
                         the then outstanding voting Shares, or

                    (C)  is an assignee  of or has  otherwise  succeeded  in any
                         share of capital stock of the Corporation which were at
                         any time  within two years prior  thereto  beneficially
                         owned   by  any   Interested   Stockholder,   and  such
                         assignment  or  succession  shall have  occurred in the
                         course of a transaction or series of  transactions  not
                         involving a public  offering  within the meaning of the
                         Securities Act of 1933.

             (3) A person shall be the "beneficial owner" of any Voting Shares:

                    (A)  which  such  person  or  any  of  its   Affiliates  and
                         Associates  (as hereafter  defined)  beneficially  own,
                         directly or indirectly, or

                    (B)  which  such  person  or  any  of  its   Affiliates   or
                         Associates  has (i) the right to acquire  (whether such
                         right is  exercisable  immediately  or only  after  the


<PAGE>

                         passage   of   time),   pursuant   to  any   agreement,
                         arrangement  or  understanding  or upon the exercise of
                         conversion   rights,   exchange  rights,   warrants  or
                         options,  or  otherwise,  or  (ii)  the  right  to vote
                         pursuant    to   any    agreement,    arrangement    or
                         understanding, or

                    (C)  which are beneficially  owned,  directly or indirectly,
                         by any other  person  with which  such first  mentioned
                         person or any of its  Affiliates or Associates  has any
                         agreement, arrangement or understanding for the purpose
                         of  acquiring,  holding,  voting  or  disposing  of any
                         shares of capital stock of the Corporation.

             (4) The outstanding Voting Shares shall include shares deemed owned
             through  application  of paragraph  (3) above but shall not include
             any other  Voting  Shares  which may be  issuable  pursuant  to any
             agreement,  or upon  exercise  of  conversion  rights,  warrants or
             options or otherwise.

             (5) "Affiliate" and "Associate" shall have the respective  meanings
             given  those  terms  in  Rule  12b-2  of  the  General   Rules  and
             Regulations under the Securities Exchange Act of 1934, as in effect
             on December 31, 1981.

             (6) "Subsidiary"  shall mean any corporation of which a majority of
             any class of equity  security  (as  defined  in Rule  3a11-1 of the
             General Rules and Regulations under the Securities  Exchange Act of
             1934,  as in effect in  December  31,  1981) is owned,  directly or
             indirectly,  by the Corporation;  provided,  however,  that for the
             purposes of the definition of Investment  Stockholder  set forth in
             paragraph (2) of this section (c), the term "Subsidiary" shall mean
             only a  corporation  of which a  majority  of each  class of equity
             security is owned, directly or indirectly, by the Corporation.

             (d)  majority  of the  directors  shall  have the power and duty to
             determine  for the purposes of this Article  FIFTEENTH on the basis
             of  information  known to them,  (1) the  number of  Voting  Shares
             beneficially  owned  by any  person  (2)  whether  a  person  is an
             Affiliate  or  Associate  of  another,  (3) whether a person has an
             agreement,  arrangement  or  understanding  with  another as to the


<PAGE>

             matters referred to in paragraph (3) of section (c), or (4) whether
             the assets subject to any business combination or the consideration
             received  for  the  issuance  or  transfer  of  securities  by  the
             Corporation,  or any  Subsidiary has an aggregate fair market value
             of $1,00,000 or more.

             (e) Nothing  contained in this Article FIFTEENTH shall be construed
             to relieve any Interested Stockholder from any fiduciary obligation
             imposed by law.

             SIXTEENTH:  Notwithstanding  any other provision of this Charter or
             Act of  Incorporation  or the  By-Laws of the  Corporation  (and in
             addition  to any  other  vote  that may be  required  by law,  this
             Charter or Act of  Incorporation  by the By-Laws),  the affirmative
             vote of the  holders  of at  least  two-thirds  of the  outstanding
             shares of the  capital  stock of the  Corporation  entitled to vote
             generally in the election of directors (considered for this purpose
             as one  class)  shall be  required  to amend,  alter or repeal  any
             provision of Articles FIFTH, THIRTEENTH,  FIFTEENTH or SIXTEENTH of
             this Charter or Act of Incorporation.

           SEVENTEENTH: (a) a Director of this Corporation shall not be liable
           to the Corporation or its stockholders for monetary damages for
           breach of fiduciary duty as a Director, except to the extent such
           exemption from liability or limitation thereof is not permitted under
           the Delaware General Corporation Laws as the same exists or may
           hereafter be amended.

           (b) Any repeal or modification of the foregoing paragraph shall not
           adversely affect any right or protection of a Director of the
           Corporation existing hereunder with respect to any act or omission
           occurring prior to the time of such repeal or modification."



<PAGE>


                                                                       EXHIBIT B

                                     BY-LAWS

                            WILMINGTON TRUST COMPANY

                              WILMINGTON, DELAWARE



<PAGE>



                                                                       EXHIBIT B

                         As existing on January 16, 1997

                       BY-LAWS OF WILMINGTON TRUST COMPANY


                                    ARTICLE I
                             STOCKHOLDERS' MEETINGS

         Section 1. The  Annual  Meeting  of  Stockholders  shall be held on the
third  Thursday in April each year at the principal  office at the Company or at
such other date,  time, or place as may be designated by resolution by the Board
of Directors.

         Section 2. Special  meetings of all  stockholders  may be called at any
time by the Board of Directors, the Chairman of the Board or the President.

         Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each  stockholder at least ten (10) days before said meeting,  at his
last known  address,  a written or printed  notice  fixing the time and place of
such meeting.

         Section 4. A majority in the amount of the capital stock of the Company
issued  and  outstanding  on  the  record  date,  as  herein  determined,  shall
constitute a quorum at all meetings of  stockholders  for the transaction of any
business,  but the holders of a small number of shares may adjourn, from time to
time,  without  further  notice,  until a quorum is  secured.  At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either  in  person  or by proxy,  for each  shares  of stock  registered  in the
stockholder's  name on the books of the  Company on the record date for any such
meeting as determined herein.

                                   ARTICLE II
                                    DIRECTORS

         Section  1. The  number and  classification  of the Board of  Directors
shall be as set forth in the Charter of the Bank.

         Section 2. No person who has attained the age of seventy-two (72) years
shall be  nominated  for  election  to the Board of  Directors  of the  Company,
provided,  however,  that this limitation  shall not apply to any person who was
serving as director of the Company on September 16, 1971.



<PAGE>

         Section  3. The class of  Directors  so elected  shall hold  office for
three years or until their successors are elected and qualified.

         Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

         Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its  discretion  at such times to be determined by a
majority  of its  members,  or at the  call  of the  Chairman  of the  Board  of
Directors or the President.

         Section 6. SPECIAL  meetings of the Board of Directors may be called at
any time by the  Chairman of the Board of  Directors  or by the  President,  and
shall be called upon the written request of a majority of the directors.

         Section 7. A majority of the directors  elected and qualified  shall be
necessary to constitute a quorum for the  transaction of business at any meeting
of the Board of Directors.

         Section 8. Written notice shall be sent by mail to each director of any
special  meeting  of the Board of  Directors,  and of any  change in the time or
place of any regular meeting,  stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

         Section 9. In the event of the death, resignation,  removal,  inability
to act, or  disqualification of any director,  the Board of Directors,  although
less than a quorum,  shall have the right to elect the  successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy  occurred,  and until  such  director's  successor  shall have been duly
elected and qualified.

         Section  10.  The Board of  Directors  at its first  meeting  after its
election by the  stockholders  shall  appoint an  Executive  Committee,  a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors  and a President who may be
the same  person.  The Board of  Directors  shall also  elect at such  meeting a
Secretary and a Treasurer,  who may be the same person,  may appoint at any time
such other  committees  and elect or appoint such other  officers as it may deem


<PAGE>

advisable.  The Board of  Directors  may also elect at such  meeting one or more
Associate Directors.

         Section  11. The Board of  Directors  may at any time  remove,  with or
without  cause,  any member of any  Committee  appointed by it or any  associate
director or officer elected by it and may appoint or elect his successor.

         Section 12. The Board of  Directors  may  designate an officer to be in
charge of such of the  departments  or  division  of the  Company as it may deem
advisable.

                                   ARTICLE III
                                   COMMITTEES

         Section 1. Executive Committee

         (A) The  Executive  Committee  shall be  composed of not more than nine
members who shall be selected by the Board of Directors from its own members and
who shall hold office during the pleasure of the Board.

         (B) The Executive  Committee  shall have all the powers of the Board of
Directors  when it is not in session to transact  all business for and in behalf
of the Company that may be brought before it.

         (C) The Executive  Committee shall meet at the principal  office of the
Company or  elsewhere  in its  discretion  at such times to be  determined  by a
majority  of its  members,  or at the  call  of the  Chairman  of the  Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the  transaction of
business.  Special  meetings of the Executive  Committee may be held at any time
when a quorum is present.

         (D) Minutes of each meeting of the  Executive  Committee  shall be kept
and submitted to the Board of Directors at its next meeting.

         (E)  The  Executive   Committee   shall  advise  and   superintend  all
investments  that may be made of the funds of the Company,  and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.



<PAGE>

         (F) In the  event of a state of  disaster  of  sufficient  severity  to
prevent the conduct and management of the affairs and business of the Company by
its  directors and officers as  contemplated  by these By-Laws any two available
members of the  Executive  Committee as  constituted  immediately  prior to such
disaster  shall  constitute a quorum of that  Committee for the full conduct and
management  of the affairs and  business of the Company in  accordance  with the
provisions  of Article III of these  By-Laws;  and if less than three members of
the Trust Committee is constituted  immediately  prior to such disaster shall be
available for the  transaction of its business,  such Executive  Committee shall
also be empowered to exercise all of the powers  reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability,  at such
time,  of a  minimum  of two  members  of such  Executive  Committee,  any three
available  directors  shall  constitute  the  Executive  Committee  for the full
conduct and  management of the affairs and business of the Company in accordance
with the foregoing  provisions of this Section.  This By-Law shall be subject to
implementation  by Resolutions of the Board of Directors  presently  existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions  which are contrary to the
provisions  of  this  Section  or to the  provisions  of any  such  implementary
Resolutions  shall be suspended  during such a disaster period until it shall be
determined by any interim Executive  Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.

         Section 2. Trust Committee

         (A) The Trust  Committee  shall be composed  of not more than  thirteen
members  who shall be  selected  by the Board of  Directors,  a majority of whom
shall be members of the Board of Directors  and who shall hold office during the
pleasure of the Board.

         (B) The Trust Committee shall have general  supervision  over the Trust
Department and the  investment of trust funds,  in all matters,  however,  being
subject to the approval of the Board of Directors.

         (C) The  Trust  Committee  shall  meet at the  principal  office of the
Company or  elsewhere  in its  discretion  at such times to be  determined  by a


<PAGE>

majority  of its  members  or at the call of its  chairman.  A  majority  of its
members  shall be  necessary  to  constitute  a quorum  for the  transaction  of
business.

         (D) Minutes of each  meeting of the Trust  Committee  shall be kept and
promptly submitted to the Board of Directors.

         (E) The Trust  Committee  shall  have the power to  appoint  Committees
and/or  designate  officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated  when the Trust  Committee is not
in session.

         Section 3. Audit Committee

         (A) The Audit  Committee shall be composed of five members who shall be
selected by the Board of Directors  from its own members,  none of whom shall be
an officer of the Company, and shall hold office at the pleasure of the Board.

         (B) The Audit Committee shall have general  supervision  over the Audit
Division  in all  matters  however  subject  to the  approval  of the  Board  of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit  Division,  review  all  reports  of  examination  of the
Company made by any governmental agency or such independent auditor employed for
that  purpose,  and make such  recommendations  to the Board of  Directors  with
respect thereto or with respect to any other matters  pertaining to auditing the
Company as it shall deem desirable.

         (C) The Audit  Committee  shall meet whenever and wherever the majority
of its members shall deem it to be proper for the  transaction  of its business,
and a majority of its Committee shall constitute a quorum.

         Section 4. Compensation Committee

         (A) The Compensation  Committee shall be composed of not more than five
(5) members who shall be selected by the Board of Directors from its own members
who are not  officers  of the  Company  and who shall  hold  office  during  the
pleasure of the Board.

         (B) The Compensation Committee shall in general advise upon all matters
of policy  concerning the Company brought to its attention by the management and


<PAGE>

from time to time review the  management  of the Company,  major  organizational
matters,  including  salaries  and  employee  benefits  and  specifically  shall
administer the Executive Incentive Compensation Plan.

         (C) Meetings of the Compensation Committee may be called at any time by
the  Chairman  of the  Compensation  Committee,  the  Chairman  of the  Board of
Directors, or the President of the Company.

         Section 5. Associate Directors

         (A) Any person who has served as a director may be elected by the Board
of  Directors  as an  associate  director,  to serve  during the pleasure of the
Board.

         (B) An  associate  director  shall be entitled to attend all  directors
meetings and  participate in the discussion of all matters brought to the Board,
with the exception  that he would have no right to vote.  An associate  director
will be  eligible  for  appointment  to  Committees  of the  Company,  with  the
exception  of  the  Executive   Committee,   Audit  Committee  and  Compensation
Committee, which must be comprised solely of active directors.

         Section 6. Absence or Disqualification of Any Member of a Committee

         (A) In the absence or  disqualification  of any member of any Committee
created under Article III of the By-Laws of this Company,  the member or members
thereof present at any meeting and not disqualified from voting,  whether or not
he or they constitute a quorum,  may  unanimously  appoint another member of the
Board of  Directors  to act at the  meeting in the place of any such  absence or
disqualified member.

                                   ARTICLE IV
                                    OFFICERS

         Section 1. The Chairman of the Board of Directors  shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of  Directors  may from time to time confer and
direct.  He shall also  exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.



<PAGE>

         Section 2. THE VICE  CHAIRMAN  OF THE BOARD.  The Vice  Chairman of the
Board of  Directors  shall  preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority  and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.

         Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

         Section 4. The Chairman of the Board of  Directors or the  President as
designated  by the  Board of  Directors,  shall  carry  into  effect  all  legal
directions of the Executive  Committee and of the Board of Directors,  and shall
at all  times  exercise  general  supervision  over the  interest,  affairs  and
operations of the Company and perform all duties incident to his office.

         Section  5.  There  may  be  one  or  more  Vice  Presidents,   however
denominated  by the  Board of  Directors,  who may at any time  perform  all the
duties of the Chairman of the Board of Directors  and/or the  President and such
other  powers  and  duties as may from time to time be  assigned  to them by the
Board of Directors,  the Executive  Committee,  the Chairman of the Board or the
President  and by the officer in charge of the  department  or division to which
they are assigned.

         Section  6. The  Secretary  shall  attend  to the  giving  of notice of
meetings  of the  stockholders  and  the  Board  of  Directors,  as  well as the
Committees  thereof, to the keeping of accurate minutes of all such meetings and
to recording  the same in the minute  books of the  Company.  In addition to the
other notice  requirements of these By-Laws and as may be practicable  under the
circumstances,  all such notices  shall be in writing and mailed well in advance
of the  scheduled  date of any  other  meeting.  He shall  have  custody  of the
corporate  seal  and  shall  affix  the  same to any  documents  requiring  such
corporate seal and to attest the same.

         Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all


<PAGE>

monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness  and of all the  transactions of the
Company.  He shall have general  supervision of the  expenditures of the Company
and shall  report to the  Board of  Directors  at each  regular  meeting  of the
condition  of the  Company,  and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.

         Section  8.  There  may be a  Controller  who  shall  exercise  general
supervision over the internal operations of the Company,  including  accounting,
and  shall  render  to the  Board of  Directors  at  appropriate  times a report
relating to the general condition and internal operations of the Company.

         There may be one or more subordinate  accounting or controller officers
however  denominated,  who may  perform  the duties of the  Controller  and such
duties as may be prescribed by the Controller.

         Section 9. The officer  designated  by the Board of  Directors to be in
charge of the Audit  Division  of the  Company  with such  title as the Board of
Directors shall prescribe,  shall report to and be directly  responsible only to
the Board of Directors.

         There shall be an Auditor and there may be one or more Audit  Officers,
however  denominated,  who may  perform  all the duties of the  Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

         Section 10. There may be one or more  officers,  subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the  Board of  Directors,  who  shall  ex  officio  hold  the  office
Assistant  Secretary  of this  Company and who may perform such duties as may be
prescribed  by the officer in charge of the  department or division to whom they
are assigned.

         Section 11. The powers and duties of all other  officers of the Company
shall be those usually  pertaining to their respective  offices,  subject to the
direction of the Board of Directors,  the Executive  Committee,  Chairman of the
Board of Directors or the President and the officer in charge of the  department
or division to which they are assigned.



<PAGE>

                                    ARTICLE V
                          STOCK AND STOCK CERTIFICATES

         Section 1. Shares of stock shall be  transferrable  on the books of the
Company and a transfer  book shall be kept in which all transfers of stock shall
be recorded.

         Section  2.  Certificate  of  stock  shall  bear the  signature  of the
President or any Vice President,  however  denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant  Secretary,  and
the seal of the corporation  shall be engraved  thereon.  Each certificate shall
recite that the stock represented  thereby is transferrable  only upon the books
of the Company by the holder  thereof or his  attorney,  upon  surrender  of the
certificate  properly  endorsed.  Any  certificate  of stock  surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued  only upon giving such  security as may be  satisfactory  to the
Board of Directors or the Executive Committee.

         Section 3. The Board of Directors of the Company is  authorized  to fix
in advance a record date for the  determination of the stockholders  entitled to
notice of,  and to vote at, any  meeting  of  stockholders  and any  adjournment
thereof, or entitled to receive payment of any dividend,  or to any allotment or
rights,  or to  exercise  any  rights in respect of any  change,  conversion  or
exchange  of capital  stock,  or in  connection  with  obtaining  the consent of
stockholders  for any  purpose,  which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or  conversion  or exchange of capital  stock shall go into
effect, or a date in connection with obtaining such consent.

                                   ARTICLE VI
                                      SEAL

         Section 1. The corporate  seal of the Company shall be in the following
form:

               Between two concentric circles the words "Wilmington
               Trust Company" within the inner circle the words 
               "Wilmington, Delaware."



<PAGE>

                                   ARTICLE VII
                                   FISCAL YEAR

         Section 1. The fiscal year of the Company shall be the calendar year.

                                  ARTICLE VIII
                     EXECUTION OF INSTRUMENTS OF THE COMPANY

         Section  1.  The  Chairman  of the  Board,  the  President  or any Vice
President,  however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant  Secretary shall have full power and authority to
attest  and  affix  the  corporate  seal of the  Company  to any and all  deeds,
conveyances,   assignments,   releases,  contracts,  agreements,  bonds,  notes,
mortgages and all other instruments  incident to the business of this Company or
in acting as executor,  administrator,  guardian, trustee, agent or in any other
fiduciary or  representative  capacity by any and every method of appointment or
by whatever  person,  corporation,  court  officer or  authority in the State of
Delaware, or elsewhere, without any specific authority,  ratification,  approval
or  confirmation by the Board of Directors or the Executive  Committee,  and any
and all such  instruments  shall  have the same  force  and  validity  as though
expressly authorized by the Board of Directors and/or the Executive Committee.

                                   ARTICLE IX
               COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

         Section 1. Directors and associate directors of the Company, other than
salaried  officers of the Company,  shall be paid such  reasonable  honoraria or
fees for attending  meetings of the Board of Directors as the Board of Directors
may from time to time determine.  Directors and associate directors who serve as
members of committees,  other than salaried  employees of the Company,  shall be
paid such reasonable  honoraria or fees for services as members of committees as
the Board of  Directors  shall from time to time  determine  and  directors  and
associate  directors may be employed by the Company for such special services as
the Board of  Directors  may from time to time  determine  and shall be paid for
such special services so performed reasonable  compensation as may be determined
by the Board of Directors.



<PAGE>

                                    ARTICLE X
                                 INDEMNIFICATION

         Section 1. (A) The Corporation  shall  indemnify and hold harmless,  to
the fullest  extent  permitted by applicable  law as it presently  exists or may
hereafter be amended,  any person who was or is made or is threatened to be made
a party or is  otherwise  involved in any action,  suit or  proceeding,  whether
civil,  criminal,  administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, 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, fiduciary or
agent  of  another  corporation  or  of a  partnership,  joint  venture,  trust,
enterprise  or  non-profit  entity,  including  service with respect to employee
benefit plans,  against all liability and loss suffered and expenses  reasonably
incurred by such person.  The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

         (B) The  Corporation  shall pay the expenses  incurred in defending any
proceeding  in advance of its final  disposition,  PROVIDED,  HOWEVER,  that the
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final  disposition of the proceeding  shall be made
only upon  receipt of an  undertaking  by the  Director  or officer to repay all
amounts  advanced if it should be  ultimately  determined  that the  Director or
officer is not entitled to be indemnified under this Article or otherwise.

         (C) If a claim for  indemnification or payment of expenses,  under this
Article X is not paid in full within ninety days after a written claim  therefor
has been received by the  Corporation  the claimant may file suit to recover the
unpaid  amount of such claim and, if  successful  in whole or in part,  shall be
entitled to be paid the expense of  prosecuting  such claim.  In any such action
the  Corporation  shall  have the burden of proving  that the  claimant  was not
entitled  to  the  requested   indemnification  of  payment  of  expenses  under
applicable law.

         (D) The rights  conferred  on any person by this Article X shall not be
exclusive of any other  rights  which such person may have or hereafter  acquire


<PAGE>

under any  statute,  provision  of the  Charter or Act of  Incorporation,  these
By-Laws,   agreement,   vote  of  stockholders  or  disinterested  Directors  or
otherwise.  (E) Any repeal or modification  of the foregoing  provisions of this
Article X shall not adversely  affect any right or  protection  hereunder of any
person in respect  of any act or  omission  occurring  prior to the time of such
repeal or modification.

                                   ARTICLE XI
                            AMENDMENTS TO THE BY-LAWS

         Section 1. These By-Laws may be altered,  amended or repealed, in whole
or in part,  and any new  By-Law or By-Laws  adopted  at any  regular or special
meeting of the Board of  Directors  by a vote of the majority of all the members
of the Board of Directors then in office.



<PAGE>

                                                                       EXHIBIT C

                             Section 321(b) Consent

         Pursuant  to  Section  321(b) of the Trust  Indenture  Act of 1939,  as
amended,  Wilmington  Trust Company hereby consents that reports of examinations
by Federal, State,  Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.


                                            WILMINGTON TRUST COMPANY

Dated: July 2, 1997                         By: /S/ BRUCE L. BISSON
                                               ---------------------------
                                            Name: Bruce L. Bisson
                                            Title: Vice President



<PAGE>

                                                                       EXHIBIT d

                                     NOTICE

                    This form is  intended  to assist  state
                    nonmember  banks and savings  banks with
                    state publication  requirements.  It has
                    not been  approved by any state  banking
                    authorities.  Refer to your  appropriate
                    state banking authorities for your state
                    publication requirements.

R E P O R T   O F   C O N D I T I O N

Consolidating domestic subsidiaries of the

           WILMINGTON TRUST COMPANY                        of     WILMINGTON
- ----------------------------------------------------------    ------------------
               Name of Bank                                          City

in the State of   DELAWARE  , at the close of business on March 31, 1997.
                ------------


<TABLE>
<CAPTION>
ASSETS

<S>                                                                                          <C>    
Cash and balances due from depository institutions:
   Noninterest-bearing balances and currency and coins..................................     181,744
   Interest-bearing balances............................................................           0
Held-to-maturity securities.............................................................     445,954
Available-for-sale securities...........................................................     767,337
Federal funds sold and securities purchased under agreements to resell..................      86,900
Loans and lease financing receivables:
   Loans and leases, net of unearned income...............................     3,685,616
   LESS:  Allowance for loan and lease losses.............................        52,478
   LESS:  Allocated transfer risk reserve.................................             0
   Loans and leases, net of unearned income, allowance, and reserve.......     3,633,138
Assets held in trading accounts.........................................................           0
Premises and fixed assets (including capitalized leases)................................      94,513
Other real estate owned.................................................................       3,702
Investments in unconsolidated subsidiaries and associated companies.....................          20
Customers' liability to this bank on acceptances outstanding............................           0
Intangible assets.......................................................................       4,012
Other assets............................................................................     103,524
Total assets............................................................................   5,320,844


                                                                             CONTINUED ON NEXT PAGE
</TABLE>




<PAGE>


<TABLE>
<CAPTION>
LIABILITIES

<S>                                                                                         <C>    
Deposits:
In domestic offices.....................................................................    3,618,174
Available-for-sale securities...........................................................      767,337
       Noninterest-bearing.....................................................  784,267
       Interest-bearing........................................................2,833,907
Federal Funds pursed and Securities sold under agreements to repurchase.................      293,862
Demand notes issued to the U.S. Treasury................................................       64,550
Trading liabilities (from Schedule Rc-D)................................................            0
Other borrowed money:                                                                              20
       With original maturity of one year or less..............................  774,000
       With original maturity of more than one year............................   43,000
Bank's liability on acceptances executed and outstanding................................            0
Subordinated notes and debentures.......................................................            0
Other liabilities (from Schedule RC-G)..................................................       95,672
Total liabilities.......................................................................    4,889,258

EQUITY CAPITAL

Perpetual preferred stock and related surplus...........................................            0
Common stock............................................................................          500
Surplus (exclude all surplus related to preferred stock)................................       62,118
Undivided profits and capital reserves..................................................      371,107
Net unreleased holding gains (losses) on available-for-sale securities..................       (2,139)
Total equity capital....................................................................      431,586
Total liabilities, limited-life preferred stock, and equity capital.....................    5,320,944
                                                                                 Thousands of dollars
</TABLE>