SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


                Date of Report (Date of earliest event reported):
                                 April 21, 1998


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


          Delaware                      0-09781              74-2099724
(State or other jurisdiction    (Commission File Number)    (IRS Employer
of incorporation)                                           Identification No.)


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


                                 (713) 834-2950
              (Registrant's telephone number, including area code)



Item 7.   Financial Statements and Exhibits.

          (c) Exhibits.  The Exhibit Index is hereby  incorporated by reference.
The documents  listed on the Exhibit Index are filed as Exhibits with  reference
to the  Registration  Statement  on Form S-3  (Registration  No.  333-34545)  of
Continental  Airlines,  Inc.  The  Registration  Statement  and  the  Prospectus
Supplement,  dated April 15, 1998, to the  Prospectus,  dated September 4, 1997,
relate to the offering of Continental Airlines,  Inc. Pass Through Certificates,
Series 1998-2.



                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, Continental
Airlines,  Inc.  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                             CONTINENTAL AIRLINES, INC.


                                             By  /s/ Jeffery A. Smisek
                                                 ---------------------
                                                 Jeffery A. Smisek
                                                 Executive Vice President
                                                 and General Counsel

May 4, 1998




                                  EXHIBIT INDEX

             4.1    Revolving Credit Agreement (1998-2A),  dated April 21, 1998,
                    between Wilmington Trust Company, as Subordination Agent, as
                    Borrower,  and  Westdeutsche  Landesbank  Girozentrale,   as
                    Liquidity Provider

             4.2    Revolving Credit Agreement (1998-2B),  dated April 21, 1998,
                    between Wilmington Trust Company, as Subordination Agent, as
                    Borrower,  and  Westdeutsche  Landesbank  Girozentrale,   as
                    Liquidity Provider

             4.3    Revolving Credit Agreement (1998-2C),  dated April 21, 1998,
                    between Wilmington Trust Company, as Subordination Agent, as
                    Borrower,  and  Westdeutsche  Landesbank  Girozentrale,   as
                    Liquidity Provider

             4.4    Trust Supplement No. 1998-2A,  dated April 21, 1998, between
                    Wilmington  Trust  Company,  as  Trustee,   and  Continental
                    Airlines,  Inc.  to  Pass  Through  Trust  Agreement,  dated
                    September 25, 1997

             4.5    Trust Supplement No. 1998-2B,  dated April 21, 1998, between
                    Wilmington  Trust  Company,  as  Trustee,   and  Continental
                    Airlines,  Inc.  to  Pass  Through  Trust  Agreement,  dated
                    September 25, 1997

             4.6    Trust Supplement No. 1998-2C,  dated April 21, 1998, between
                    Wilmington  Trust  Company,  as  Trustee,   and  Continental
                    Airlines,  Inc.  to  Pass  Through  Trust  Agreement,  dated
                    September 25, 1997

             4.7    Intercreditor   Agreement,   dated  April  21,  1998,  among
                    Wilmington   Trust   Company,   as   Trustee,   Westdeutsche
                    Landesbank   Girozentrale,   as  Liquidity   Provider,   and
                    Wilmington Trust Company, as Subordination Agent and Trustee

             4.8    Form of Participation  Agreement  (Participation  Agreement,
                    dated as of April  21,  1998,  among  Continental  Airlines,
                    Inc., Lessee, Caljet LLC, Owner Participant,  First Security
                    Bank, National  Association,  Owner Trustee,  and Wilmington
                    Trust  Company,  Mortgagee and Loan  Participant -- separate
                    agreement  for  each  of  14  aircraft,  each  of  which  is
                    substantially the same)

             4.9    Form of Lease (Lease Agreement,  dated as of April 21, 1998,
                    between First Security Bank, National  Association,  Lessor,
                    and Continental Airlines, Inc., Lessee -- separate agreement
                    for each of 14 aircraft,  each of which is substantially the
                    same)



             4.10   Form of Indenture (Trust Indenture and Mortgage, dated as of
                    April  21,  1998,  between  First  Security  Bank,  National
                    Association,  Owner Trustee,  and Wilmington  Trust Company,
                    Mortgagee  -- separate  agreement  for each of 14  aircraft,
                    each of which is substantially the same)

             4.11   Form of Trust Agreement (Trust Agreement,  dated as of April
                    21,  1998,  between  Caljet  LLC and  First  Security  Bank,
                    National  Association  -- separate  agreement for each of 14
                    aircraft, each of which is substantially the same)

             4.12   Form of Equipment  Note,  Series A (separate  Equipment Note
                    relating  to  each  of  14   aircraft,   each  of  which  is
                    substantially the same)

             4.13   Form of Equipment  Note,  Series B (separate  Equipment Note
                    relating  to  each  of  14   aircraft,   each  of  which  is
                    substantially the same)

             4.14   Form of Equipment  Note,  Series C (separate  Equipment Note
                    relating  to  each  of  14   aircraft,   each  of  which  is
                    substantially the same)

             4.15   6.410%   Continental   Airlines  Pass  Through   Certificate
                    1998-2A, Certificate No. 1

             4.16   6.465%   Continental   Airlines  Pass  Through   Certificate
                    1998-2B, Certificate No. 1

             4.17   6.331%   Continental   Airlines  Pass  Through   Certificate
                    1998-2C, Certificate No. 1

             23.1   Consent of Aircraft Information Services,  Inc., dated April
                    10, 1998

             23.2   Consent of BK Associates, Inc., dated April 10, 1998

             23.3   Consent of Morten  Beyer and Agnew,  Inc.,  dated  April 10,
                    1998



                                                                       EXECUTION








================================================================================



                           REVOLVING CREDIT AGREEMENT
                                    (1998-2A)


                           DATED AS OF APRIL 21, 1998

                                     BETWEEN

                            WILMINGTON TRUST COMPANY,

                             AS SUBORDINATION AGENT,
                          AS AGENT AND TRUSTEE FOR THE
                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2A

                                   AS BORROWER

                                       AND

                      WESTDEUTSCHE LANDESBANK GIROZENTRALE,
                       ACTING THROUGH ITS NEW YORK BRANCH

                              AS LIQUIDITY PROVIDER



================================================================================




                                   RELATING TO

                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2A
             6.410% CONTINENTAL AIRLINES PASS THROUGH CERTIFICATES,
                                 SERIES 1998-2A



                                TABLE OF CONTENTS


                                                                            PAGE
                                                                            ----


ARTICLE I - DEFINITIONS
  Section 1.01.   Certain Defined Terms..................................     1

ARTICLE II - AMOUNT AND TERMS OF THE COMMITMENT
  Section 2.01.   The Advances...........................................     7
  Section 2.02.   Making the Advances....................................     7
  Section 2.03.   Fees...................................................     9
  Section 2.04.   Reductions or Termination of the Maximum Commitment....     9
  Section 2.05.   Repayments of Interest Advances or the Final Advance...     9
  Section 2.06.   Repayments of Provider Advances........................    10
  Section 2.07.   Payments to the Liquidity Provider Under the
                  Intercreditor Agreement................................    11
  Section 2.08.   Book Entries...........................................    11
  Section 2.09.   Payments from Available Funds Only.....................    11
  Section 2.10.   Extension of the Expiry Date; Non-Extension Advance....    11

ARTICLE III - OBLIGATIONS OF THE BORROWER
  Section 3.01.   Increased Costs........................................    12
  Section 3.02.   Capital Adequacy.......................................    13
  Section 3.03.   Payments Free of Deductions............................    13
  Section 3.04.   Payments...............................................    14
  Section 3.05.   Computations...........................................    14
  Section 3.06.   Payment on Non-Business Days...........................    14
  Section 3.07.   Interest...............................................    15
  Section 3.08.   Replacement of Borrower................................    16
  Section 3.09.   Funding Loss Indemnification...........................    16
  Section 3.10.   Illegality.............................................    17

ARTICLE IV - CONDITIONS PRECEDENT
  Section 4.01.   Conditions Precedent to Effectiveness of Section 2.01..    17
  Section 4.02.   Conditions Precedent to Borrowing......................    19

ARTICLE V - COVENANTS
  Section 5.01.   Affirmative Covenants of the Borrower..................    19
  Section 5.02.   Negative Covenants of the Borrower.....................    19

ARTICLE VI - LIQUIDITY EVENTS OF DEFAULT
  Section 6.01.   Liquidity Events of Default............................    20

ARTICLE VII - MISCELLANEOUS
  Section 7.01.   Amendments, Etc........................................    20
  Section 7.02.   Notices, Etc...........................................    20



                                TABLE OF CONTENTS
                                  (Continued)

                                                                            PAGE
                                                                            ----

  Section 7.03.   No Waiver; Remedies....................................    21
  Section 7.04.   Further Assurances.....................................    21
  Section 7.05.   Indemnification; Survival of Certain Provisions........    21
  Section 7.06.   Liability of the Liquidity Provider....................    22
  Section 7.07.   Costs, Expenses and Taxes..............................    22
  Section 7.08.   Binding Effect; Participations.........................    23
  Section 7.09.   Severability...........................................    24
  Section 7.10.   GOVERNING LAW..........................................    24
  Section 7.11.   Submission to Jurisdiction; Waiver of Jury Trial;
                  Waiver of Immunity.....................................    24
  Section 7.12.   Execution in Counterparts..............................    25
  Section 7.13.   Entirety...............................................    25
  Section 7.14.   Headings...............................................    26
  Section 7.15.   LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.......    26


ANNEX I           Interest Advance Notice of Borrowing

ANNEX II          Non-Extension Advance Notice of Borrowing

ANNEX III         Downgrade Advance Notice of Borrowing

ANNEX IV          Final Advance Notice of Borrowing

ANNEX V           Notice of Termination

ANNEX VI          Notice of Replacement Subordination Agent



                           REVOLVING CREDIT AGREEMENT


This REVOLVING CREDIT AGREEMENT dated as of April 21, 1998,  between  WILMINGTON
TRUST COMPANY, a Delaware corporation, not in its individual capacity but solely
as  Subordination  Agent  under the  Intercreditor  Agreement  (each as  defined
below),  as agent and  trustee  for the Class A Trust (as  defined  below)  (the
"BORROWER"),  and WESTDEUTSCHE LANDESBANK  GIROZENTRALE,  a bank organized under
the laws of the State of North Rhine-Westphalia, Germany, acting through its New
York branch (the "LIQUIDITY PROVIDER").

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS,  pursuant to the Class A Trust  Agreement  (such term and all
other  capitalized terms used in these recitals having the meanings set forth or
referred  to in  Section  1.01),  the  Class  A Trust  is  issuing  the  Class A
Certificates; and

          WHEREAS,  the  Borrower,  in order to support the timely  payment of a
portion of the interest on the Class A  Certificates  in  accordance  with their
terms,  has  requested  the  Liquidity  Provider  to enter into this  Agreement,
providing in part for the Borrower to request in  specified  circumstances  that
Advances be made hereunder.

          NOW, THEREFORE,  in consideration of the premises,  the parties hereto
agree as follows:

                                    ARTICLE I

                                  DEFINITIONS


          Section 1.01. CERTAIN DEFINED TERMS. (a) DEFINITIONS.  As used in this
Agreement  and unless  otherwise  expressly  indicated,  or unless  the  context
clearly  requires  otherwise,  the  following  capitalized  terms shall have the
following respective meanings for all purposes of this Agreement:

          "ADDITIONAL  COST" has the  meaning  assigned  to such term in Section
     3.01.

          "ADVANCE"  means an  Interest  Advance,  a Final  Advance,  a Provider
     Advance,  an Applied Provider Advance or an Unpaid Advance, as the case may
     be.

          "APPLICABLE  LIQUIDITY RATE" has the meaning  assigned to such term in
     Section 3.07(g).

          "APPLICABLE  MARGIN"  means (y) with respect to any Unpaid  Advance or
     Applied  Provider  Advance,  1.75%,  or (z) with  respect to any  Unapplied
     Provider Advance, .40%.



          "APPLIED  DOWNGRADE  ADVANCE" has the meaning assigned to such term in
     Section 2.06(a).

          "APPLIED  NON-EXTENSION ADVANCE" has the meaning assigned to such term
     in Section 2.06(a).

          "APPLIED  PROVIDER  ADVANCE" has the meaning  assigned to such term in
     Section 2.06(a).

          "BASE RATE" means a fluctuating interest rate per annum in effect from
     time to time,  which rate per annum  shall at all times be equal to (a) the
     weighted average of the rates on overnight Federal funds  transactions with
     members of the Federal Reserve System arranged by Federal funds brokers, as
     published for such day (or, if such day is not a Business Day, for the next
     preceding Business Day) by the Federal Reserve Bank of New York, or if such
     rate is not so published for any day that is a Business Day, the average of
     the quotations for such day for such transactions received by the Liquidity
     Provider from three Federal funds brokers of recognized  standing  selected
     by it, plus (b) one-quarter of one percent (1/4 of 1%).

          "BASE RATE  ADVANCE"  means an Advance  that bears  interest at a rate
     based upon the Base Rate.

          "BORROWER"  has the  meaning  assigned  to such term in the recital of
     parties to this Agreement.

          "BORROWING"  means the making of Advances  requested  by delivery of a
     Notice of Borrowing.

          "BUSINESS  DAY" means any day other than a Saturday or 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  Class A  Certificate  is
     outstanding,  the city and state in which the Class A Trustee, the Borrower
     or any Loan Trustee  maintains  its  Corporate  Trust Office or receives or
     disburses funds, and, if the applicable Business Day relates to any Advance
     or other amount bearing interest based on the LIBOR Rate, on which dealings
     are carried on in the London interbank market.

          "DOWNGRADE ADVANCE" means an Advance made pursuant to Section 2.02(c).

          "EFFECTIVE  DATE" has the  meaning  specified  in  Section  4.01.  The
     delivery of the  certificate  of the  Liquidity  Provider  contemplated  by
     Section  4.01(e) shall be conclusive  evidence that the Effective  Date has
     occurred.

          "EXCLUDED  TAXES" means (i) taxes imposed on the overall net income of
     the Liquidity  Provider or of its Lending Office by the jurisdiction  where
     such  Liquidity  Provider's  principal  office  or such  Lending  Office is
     located, and (ii) Excluded Withholding Taxes.



          "EXCLUDED  WITHHOLDING  TAXES" means (i) withholding  Taxes imposed by
     the United States except to the extent that such United States  withholding
     Taxes are imposed as a result of any change in  applicable  law  (excluding
     from change in  applicable  law for this purpose a change in an  applicable
     treaty or other  change in law  affecting  the  applicability  of a treaty)
     after the date  hereof,  or in the case of a successor  Liquidity  Provider
     (including a transferee of an Advance) or Lending Office, after the date on
     which such successor  Liquidity  Provider  obtains its interest or on which
     the Lending Office is changed,  and (ii) any  withholding  Taxes imposed by
     the  United  States  which  are  imposed  or  increased  as a result of the
     Liquidity  Provider  failing to deliver to the Borrower any  certificate or
     document  (which  certificate or document in the good faith judgment of the
     Liquidity  Provider it is legally  entitled to provide) which is reasonably
     requested by the Borrower to establish  that payments  under this Agreement
     are exempt from (or entitled to a reduced rate of) withholding Tax.

          "EXPENSES"  means  liabilities,   obligations,  damages,  settlements,
     penalties,  claims,  actions,  suits,  costs,  expenses,  and disbursements
     (including, without limitation,  reasonable fees and disbursements of legal
     counsel  and costs of  investigation),  provided  that  Expenses  shall not
     include any Taxes.

          "EXPIRY  DATE" means April 19, 1999,  initially,  or any date to which
     the Expiry Date is extended pursuant to Section 2.10.

          "FINAL ADVANCE" means an Advance made pursuant to Section 2.02(d).

          "INTERCREDITOR  AGREEMENT" means the Intercreditor Agreement dated the
     date hereof,  among the  Trustees,  the Liquidity  Provider,  the liquidity
     provider under each Liquidity  Facility (other than this Agreement) and the
     Subordination Agent, as the same may be amended,  supplemented or otherwise
     modified from time to time in accordance with its terms.

          "INTEREST ADVANCE" means an Advance made pursuant to Section 2.02(a).

          "INTEREST  PERIOD" means,  with respect to any LIBOR Advance,  each of
     the following periods:

          (i)  the period  beginning on the third Business Day following  either
               (x) the Liquidity  Provider's  receipt of the Notice of Borrowing
               for such LIBOR Advance (or, in the case of an Unapplied Downgrade
               Advance,  the period  beginning  on the  Expiry  Date) or (y) the
               withdrawal of funds from the Class A Cash Collateral  Account for
               the  purpose of paying  interest on the Class A  Certificates  as
               contemplated  by Section  2.06(a)  hereof  and,  in either  case,
               ending on the next Regular  Distribution  Date (or ending, in the
               case of an Interest Period  applicable to any Unapplied  Provider
               Advance,  on the  numerically  corresponding  day in the first or
               sixth  calendar  month  after  the  first  day of the  applicable
               Interest Period and/or on the next Regular  Distribution Date, as
               Continental  may  select  by  providing  notice  thereof  to  the



               Borrower and the Liquidity  Provider no later than three Business
               Days prior to the commencement of such Interest Period,  provided
               that if  Continental  shall  not  provide  such a notice at least
               three  Business Days prior to the  commencement  of such Interest
               Period,  then  Continental  shall be deemed to have  selected  an
               Interest  Period ending on the next Regular  Distribution  Date);
               and

          (ii) each  subsequent  period  commencing  on  the  last  day  of  the
               immediately  preceding  Interest  Period  and  ending on the next
               Regular  Distribution Date (or ending, in the case of an Interest
               Period  applicable  to any  Unapplied  Provider  Advance,  on the
               numerically  corresponding  day in the  first or  sixth  calendar
               month  after  the  first day of the  applicable  Interest  Period
               and/or on the next Regular  Distribution Date, as Continental may
               select  by  providing  notice  thereof  to the  Borrower  and the
               Liquidity Provider no later than three Business Days prior to the
               commencement   of  such   Interest   Period,   provided  that  if
               Continental  shall  not  provide  such a notice  at  least  three
               Business Days prior to the  commencement of such Interest Period,
               then  Continental  shall be deemed to have  selected  an Interest
               Period ending on the next Regular Distribution Date);

     PROVIDED,  HOWEVER,  that (I) if an Unapplied  Provider  Advance which is a
     LIBOR Advance becomes an Applied Provider Advance, the Interest Period then
     applicable to such Unapplied  Provider  Advance shall be applicable to such
     Applied  Provider Advance and (II) if (x) the Final Advance shall have been
     made, or (y) other outstanding  Advances shall have been converted into the
     Final Advance, then the Interest Periods shall be successive periods of one
     month   beginning  on  the  third  Business  Day  following  the  Liquidity
     Provider's  receipt of the Notice of Borrowing  for such Final  Advance (in
     the case of clause (x) above) or the last day of the  Interest  Period then
     applicable to such outstanding Advances (in the case of clause (y) above).

          "LENDING  OFFICE" means the lending  office of the Liquidity  Provider
     presently  located at New York,  New York, or such other lending  office as
     the  Liquidity  Provider from time to time shall notify the Borrower as its
     lending office  hereunder;  PROVIDED that the Liquidity  Provider shall not
     change its Lending  Office to a Lending Office outside the United States of
     America except in accordance with Section 3.01, 3.02 or 3.03 hereof.

          "LIBOR ADVANCE" means an Advance bearing interest at a rate based upon
     the LIBOR Rate.

          "LIBOR RATE" means,  with respect to any Interest Period,  the average
     (rounded upward, if necessary,  to the next higher 1/16 of 1%) of the rates
     per annum at which  deposits  in dollars  are offered to major banks in the
     London  interbank  market at  approximately  11:00 A.M.  (London  time) two
     Business  Days  before the first day of such  Interest  Period in an amount
     approximately  equal to the  principal  amount of the Advance to which such
     Interest  Period is to apply and for a period  of time  comparable  to such
     Interest Period.



          "LIQUIDITY  EVENT OF DEFAULT"  means the  occurrence of either (a) the
     Acceleration of all of the Equipment Notes or (b) a Continental  Bankruptcy
     Event.

          "LIQUIDITY  INDEMNITEE"  means (i) the  Liquidity  Provider,  (ii) the
     directors,  officers,  employees and agents of the Liquidity Provider,  and
     (iii) the  successors  and  permitted  assigns of the persons  described in
     clauses (i) and (ii), inclusive.

          "LIQUIDITY  PROVIDER"  has the  meaning  assigned  to such term in the
     recital of parties to this Agreement.

          "MAXIMUM  AVAILABLE  COMMITMENT"  shall  mean,  subject to the proviso
     contained  in the  third  sentence  of  Section  2.02(a),  at any  time  of
     determination,  (a) the  Maximum  Commitment  at  such  time  LESS  (b) the
     aggregate  amount  of each  Interest  Advance  outstanding  at  such  time;
     PROVIDED that following a Provider Advance or a Final Advance,  the Maximum
     Available Commitment shall be zero.

          "MAXIMUM COMMITMENT" means initially  $10,172,382,  as the same may be
     reduced from time to time in accordance with Section 2.04(a).

          "NON-EXTENSION  ADVANCE"  means an Advance  made  pursuant  to Section
     2.02(b).

          "NOTICE OF BORROWING" has the meaning specified in Section 2.02(e).

          "NOTICE OF REPLACEMENT  SUBORDINATION AGENT" has the meaning specified
     in Section 3.08.

          "PERFORMING NOTE DEFICIENCY"  means any time that less than 65% of the
     then  aggregate  outstanding  principal  amount of all Equipment  Notes are
     Performing Equipment Notes.

          "PROSPECTUS  SUPPLEMENT"  means the Prospectus  Supplement dated April
     15, 1998 relating to the Certificates, as such Prospectus Supplement may be
     amended or supplemented.

          "PROVIDER  ADVANCE"  means  a  Downgrade  Advance  or a  Non-Extension
     Advance.

          "REGULATORY  CHANGE" has the meaning  assigned to such term in Section
     3.01.

          "REPLENISHMENT  AMOUNT"  has the  meaning  assigned  to  such  term in
     Section 2.06(b).

          "REQUIRED  AMOUNT" means, for any day, the sum of the aggregate amount
     of interest,  calculated at the rate per annum equal to the Stated Interest
     Rate for the Class A  Certificates,  that  would be  payable on the Class A
     Certificates   on  each  of  the  three   successive   semiannual   Regular
     Distribution  Dates  immediately  following  such day or,  if such day is a
     Regular  Distribution  Date, on such day and the  succeeding two semiannual
     Regular  Distribution  Dates,  in each case  calculated on the basis of the



     Pool Balance of the Class A Certificates  on such day and without regard to
     expected future payments of principal on the Class A Certificates.

          "TAX  LETTER"  means the  letter  dated the date  hereof  between  the
     Liquidity Provider and Continental pertaining to this Agreement.

          "TERMINATION  DATE" means the earliest to occur of the following:  (i)
     the  Expiry  Date;  (ii) the date on which  the  Borrower  delivers  to the
     Liquidity  Provider a certificate,  signed by a Responsible  Officer of the
     Borrower, certifying that all of the Class A Certificates have been paid in
     full (or provision  has been made for such payment in  accordance  with the
     Intercreditor  Agreement  and the Trust  Agreements)  or are  otherwise  no
     longer entitled to the benefits of this Agreement;  (iii) the date on which
     the Borrower delivers to the Liquidity Provider a certificate,  signed by a
     Responsible  Officer  of  the  Borrower,   certifying  that  a  Replacement
     Liquidity Facility has been substituted for this Agreement in full pursuant
     to Section 3.6(e) of the Intercreditor  Agreement;  (iv) the fifth Business
     Day following the receipt by the Borrower of a Termination  Notice from the
     Liquidity  Provider  pursuant to Section 6.01  hereof;  and (v) the date on
     which no Advance is or may (including by reason of  reinstatement as herein
     provided) become available for a Borrowing hereunder.

          "TERMINATION NOTICE" means the Notice of Termination  substantially in
     the form of Annex V to this Agreement.

          "TRANSFEREE" has the meaning assigned to such term in Section 7.08(b).

          "UNAPPLIED  DOWNGRADE  ADVANCE" means any Downgrade Advance other than
     an Applied Downgrade Advance.

          "UNAPPLIED  NON-EXTENSION  ADVANCE"  means any  Non-Extension  Advance
     other than an Applied Non-Extension Advance.

          "UNAPPLIED  PROVIDER ADVANCE" means any Provider Advance other than an
     Applied Provider Advance.

          "UNPAID  ADVANCE"  has the  meaning  assigned  to such term in Section
     2.05.

          (b) TERMS DEFINED IN THE INTERCREDITOR  AGREEMENT. For all purposes of
this Agreement,  the following terms shall have the respective meanings assigned
to such terms in the Intercreditor Agreement:

          "ACCELERATION",  "CERTIFICATES",  "CLASS A CASH  COLLATERAL  ACCOUNT",
     "CLASS A  CERTIFICATEHOLDERS",  "CLASS A  CERTIFICATES",  "CLASS A  TRUST",
     "CLASS A TRUST  AGREEMENT",  "CLASS  A  TRUSTEE",  "CLASS B  CERTIFICATES",
     "CLASS  C  Certificates",   "CLOSING  DATE",  "CONTINENTAL",   "CONTINENTAL
     BANKRUPTCY   EVENT",   "CONTROLLING   PARTY",   "CORPORATE  TRUST  Office",
     "DISTRIBUTION  DATE",   "DOWNGRADED  FACILITY",   "EQUIPMENT  NOTES",  "FEE
     LETTER",   "FINAL  LEGAL  DISTRIBUTION  DATE",   "INTEREST  PAYMENT  DATE",



     "INVESTMENT EARNINGS", "LIQUIDITY FACILITY", "LIQUIDITY OBLIGATIONS", "LOAN
     TRUSTEE",  "MOODY'S",   "NON-EXTENDED  FACILITY",  "OPERATIVE  AGREEMENTS",
     "PARTICIPATION  AGREEMENT",  "PERFORMING EQUIPMENT NOTE",  "PERSON",  "POOL
     BALANCE",  "RATING AGENCY",  "RATINGS CONFIRMATION",  "REGULAR DISTRIBUTION
     DATE", "REPLACEMENT LIQUIDITY FACILITY",  "RESPONSIBLE OFFICER", "SCHEDULED
     PAYMENT",  "SPECIAL PAYMENT",  "STANDARD & POOR'S", "STATED INTEREST RATE",
     "SUBORDINATION  AGENT",  "TAXES",  "THRESHOLD RATING",  "TRANSFER",  "TRUST
     AGREEMENTS",  "TRUSTEE",  "UNDERWRITERS",   "UNDERWRITING  AGREEMENT",  and
     "WRITTEN NOTICE".


                                   ARTICLE II

                       AMOUNT AND TERMS OF THE COMMITMENT


          Section 2.01. THE ADVANCES.  The Liquidity Provider hereby irrevocably
agrees,  on the terms and conditions  hereinafter set forth, to make Advances to
the  Borrower  from time to time on any  Business Day during the period from the
Effective  Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the  obligations  of the  Liquidity  Provider  shall be  earlier  terminated  in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the Maximum Commitment.

          Section 2.02. MAKING THE ADVANCES. (a) Interest Advances shall be made
in one or more  Borrowings by delivery to the Liquidity  Provider of one or more
written and completed  Notices of Borrowing in substantially the form of Annex I
attached hereto,  signed by a Responsible Officer of the Borrower,  in an amount
not  exceeding the Maximum  Available  Commitment at such time and shall be used
solely for the payment when due of interest on the Class A  Certificates  at the
Stated  Interest  Rate  therefor  in  accordance  with  Section  3.6(a)  of  the
Intercreditor   Agreement.   Each   Interest   Advance  made   hereunder   shall
automatically  reduce the Maximum Available  Commitment and the amount available
to be borrowed  hereunder by subsequent  Advances by the amount of such Interest
Advance  (subject  to  reinstatement  as provided  in the next  sentence).  Upon
repayment  to the  Liquidity  Provider  in full of the  amount  of any  Interest
Advance made pursuant to this Section  2.02(a),  together with accrued  interest
thereon  (as  provided  herein),  the  Maximum  Available  Commitment  shall  be
reinstated by the amount of such repaid Interest Advance,  but not to exceed the
Maximum Commitment;  PROVIDED,  HOWEVER,  that the Maximum Available  Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.

          (b) A  Non-Extension  Advance  shall be made in a single  Borrowing if
this  Agreement  is not  extended  in  accordance  with  Section  3.6(d)  of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement  shall have been  delivered  to the Borrower as  contemplated  by said
Section 3.6(d) within the time period  specified in such Section) by delivery to
the  Liquidity  Provider  of a written  and  completed  Notice of  Borrowing  in
substantially  the form of Annex II  attached  hereto,  signed by a  Responsible
Officer of the Borrower,  in an amount equal to the Maximum Available Commitment
at such time, and shall be used to fund the Class A Cash  Collateral  Account in
accordance  with said  Section  3.6(d) and Section  3.6(f) of the  Intercreditor
Agreement.



          (c) A Downgrade  Advance  shall be made in a single  Borrowing  upon a
downgrading of the Liquidity Provider's  short-term unsecured debt rating issued
by either Rating Agency below the applicable  Threshold  Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility to replace this Agreement shall have been  previously  delivered to the
Borrower in accordance  with said Section  3.6(c),  by delivery to the Liquidity
Provider of a written and  completed  Notice of Borrowing in  substantially  the
form of Annex III  attached  hereto,  signed  by a  Responsible  Officer  of the
Borrower,  in an amount equal to the Maximum Available  Commitment at such time,
and shall be used to fund the Class A Cash Collateral Account in accordance with
said Section 3.6(c) and Section 3.6(f) of the Intercreditor Agreement.

          (d) A Final  Advance  shall  be made in a  single  Borrowing  upon the
receipt by the  Borrower of a  Termination  Notice from the  Liquidity  Provider
pursuant  to Section  6.01 hereof by  delivery  to the  Liquidity  Provider of a
written and completed Notice of Borrowing in substantially  the form of Annex IV
attached hereto,  signed by a Responsible Officer of the Borrower,  in an amount
equal to the Maximum  Available  Commitment  at such time,  and shall be used to
fund the Class A Cash  Collateral  Account (in accordance with Section 3.6(i) of
the Intercreditor Agreement) and Section 3.6(f) of the Intercreditor Agreement.

          (e) Each  Borrowing  shall be made on notice in  writing (a "NOTICE OF
BORROWING")  in  substantially  the form required by Section  2.02(a),  2.02(b),
2.02(c) or 2.02(d),  as the case may be, given by the Borrower to the  Liquidity
Provider.  If a Notice of  Borrowing  is delivered by the Borrower in respect of
any  Borrowing no later than 12:00 Noon (New York City time) on a Business  Day,
upon  satisfaction  of the  conditions  precedent set forth in Section 4.02 with
respect to a requested Borrowing, the Liquidity Provider shall make available to
the Borrower,  in accordance with its payment  instructions,  the amount of such
Borrowing in U.S.  dollars and immediately  available  funds,  before 12:00 Noon
(New York City time) on the first Business Day next following the day of receipt
of such Notice of  Borrowing  or on such later  Business  Day  specified in such
Notice of  Borrowing.  If a Notice of  Borrowing is delivered by the Borrower in
respect  of any  Borrowing  after  12:00 Noon (New York City time) on a Business
Day, upon  satisfaction  of the  conditions  precedent set forth in Section 4.02
with  respect  to a  requested  Borrowing,  the  Liquidity  Provider  shall make
available to the Borrower,  in  accordance  with its payment  instructions,  the
amount of such  Borrowing in U.S.  dollars and in immediately  available  funds,
before 12:00 Noon (New York City time) on the second Business Day next following
the day of receipt of such Notice of  Borrowing  or on such later  Business  Day
specified by the Borrower in such Notice of Borrowing. Payments of proceeds of a
Borrowing  shall be made by wire transfer of immediately  available funds to the
Borrower in  accordance  with such wire  transfer  instructions  as the Borrower
shall furnish from time to time to the Liquidity Provider for such purpose. Each
Notice of Borrowing shall be irrevocable and binding on the Borrower.

          (f) Upon the making of any Advance  requested  pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully  discharged of its obligation  hereunder with respect to
such Notice of Borrowing,  and the Liquidity  Provider  shall not  thereafter be
obligated  to make any further  Advances  hereunder in respect of such Notice of



Borrowing to the Borrower or to any other  Person.  Following  the making of any
Advance pursuant to Section 2.02(b),  (c) or (d) hereof to fund the Class A Cash
Collateral  Account,  the Liquidity Provider shall have no interest in or rights
to the Class A Cash Collateral  Account,  such Advance or any other amounts from
time to time on deposit in the Class A Cash  Collateral  Account;  PROVIDED that
the foregoing  shall not affect or impair the  obligations of the  Subordination
Agent to make the  distributions  contemplated  by Section  3.6(e) or (f) of the
Intercreditor  Agreement.  By  paying  to  the  Borrower  proceeds  of  Advances
requested by the Borrower in accordance  with the provisions of this  Agreement,
the  Liquidity   Provider  makes  no   representation  as  to,  and  assumes  no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.

          Section  2.03.  FEES.  The  Borrower  agrees  to pay to the  Liquidity
Provider the fees set forth in the Fee Letter.

          Section   2.04.    REDUCTIONS   OR    TERMINATION   OF   THE   MAXIMUM
COMMITMENT.

          (a) AUTOMATIC  REDUCTION.  Promptly  following  each date on which the
Required Amount is reduced as a result of a reduction in the Pool Balance of the
Class A Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Maximum  Commitment to the Liquidity  Provider within two Business Days thereof.
The failure by the  Borrower  to furnish  any such notice  shall not affect such
automatic reduction of the Maximum Commitment.

          (b)  TERMINATION.  Upon the  making of any  Provider  Advance or Final
Advance  hereunder or the occurrence of the Termination  Date, the obligation of
the Liquidity  Provider to make further Advances  hereunder shall  automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.

          Section 2.05.  REPAYMENTS OF INTEREST  ADVANCES OR THE FINAL  ADVANCE.
Subject to Sections  2.06,  2.07 and 2.09 hereof,  the Borrower  hereby  agrees,
without notice of an Advance or demand for repayment from the Liquidity Provider
(which notice and demand are hereby waived by the Borrower), to pay, or to cause
to be paid,  to the  Liquidity  Provider  on each  date on which  the  Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Advance (any such Advance,  until repaid,  is referred to
herein as an "UNPAID  ADVANCE"),  plus (b)  interest  on the amount of each such
Unpaid  Advance as provided in Section  3.07  hereof;  PROVIDED  that if (i) the
Liquidity Provider shall make a Provider Advance at any time after making one or
more Interest  Advances which shall not have been repaid in accordance with this
Section 2.05 or (ii) this Liquidity Facility shall become a Downgraded  Facility
or Non-Extended  Facility at any time when  unreimbursed  Interest Advances have
reduced the Maximum  Available  Commitment to zero, then such Interest  Advances
shall  cease to  constitute  Unpaid  Advances  and  shall be deemed to have been
changed into an Applied Downgrade Advance or an Applied  Non-Extension  Advance,
as the case may be,  for all  purposes  of this  Agreement  (including,  without
limitation,  for the  purpose  of  determining  when such  Interest  Advance  is
required to be repaid to the Liquidity  Provider in accordance with Section 2.06



and for the  purposes  of  Section  2.06(b)).  The  Borrower  and the  Liquidity
Provider  agree that the  repayment in full of each  Interest  Advance and Final
Advance on the date such  Advance is made is  intended  to be a  contemporaneous
exchange for new value given to the Borrower by the Liquidity Provider.

          Section 2.06.  REPAYMENTS OF PROVIDER  ADVANCES.  (a) Amounts advanced
hereunder  in respect of a Provider  Advance  shall be  deposited in the Class A
Cash Collateral Account, invested and withdrawn from the Class A Cash Collateral
Account  as set  forth  in  Sections  3.6(c),  (d) and (f) of the  Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date,  commencing on the first Regular  Distribution Date after the
making of a  Provider  Advance,  interest  on the  principal  amount of any such
Provider Advance as provided in Section 3.07; PROVIDED, HOWEVER, that amounts in
respect of a Provider Advance withdrawn from the Class A Cash Collateral Account
for the purpose of paying  interest on the Class A  Certificates  in  accordance
with  Section  3.6(f) of the  Intercreditor  Agreement  (the  amount of any such
withdrawal being (y) in the case of a Downgrade  Advance,  an "APPLIED DOWNGRADE
ADVANCE"  and  (z)  in  the  case  of  a  Non-Extension   Advance,  an  "APPLIED
NON-EXTENSION  ADVANCE" and,  together  with an Applied  Downgrade  Advance,  an
"APPLIED  PROVIDER  ADVANCE") shall  thereafter  (subject to Section 2.06(b)) be
treated as an Interest  Advance under this Agreement for purposes of determining
the Applicable  Liquidity Rate for interest payable thereon;  PROVIDED  FURTHER,
HOWEVER,  that if,  following  the making of a Provider  Advance,  the Liquidity
Provider delivers a Termination  Notice to the Borrower pursuant to Section 6.01
hereof,  such Provider  Advance  shall  thereafter be treated as a Final Advance
under this Agreement for purposes of determining  the Applicable  Liquidity Rate
for  interest  payable  thereon.  Subject  to  Sections  2.07 and  2.09  hereof,
immediately  upon the withdrawal of any amounts from the Class A Cash Collateral
Account on account of a reduction in the  Required  Amount,  the Borrower  shall
repay  to the  Liquidity  Provider  a  portion  of the  Provider  Advances  in a
principal amount equal to such reduction,  plus interest on the principal amount
prepaid as provided in Section 3.07 hereof.

          (b) At any time  when an  Applied  Provider  Advance  (or any  portion
thereof) is outstanding, upon the deposit in the Class A Cash Collateral Account
of any amount pursuant to clause "THIRD" of Section 2.4(b) of the  Intercreditor
Agreement,  clause  "THIRD" of Section  3.2 of the  Intercreditor  Agreement  or
clause "FOURTH" of Section 3.3 of the  Intercreditor  Agreement (any such amount
being a  "REPLENISHMENT  AMOUNT") for the purpose of  replenishing or increasing
the balance  thereof up to the Required  Amount at such time,  (i) the aggregate
outstanding  principal amount of all Applied Provider  Advances (and of Provider
Advances  treated  as an  Interest  Advance  for  purposes  of  determining  the
Applicable  Liquidity Rate for interest  payable thereon) shall be automatically
reduced  by the  amount  of such  Replenishment  Amount  and (ii) the  aggregate
outstanding  principal  amount  of all  Unapplied  Provider  Advances  shall  be
automatically increased by the amount of such Replenishment Amount.

          (c)  Upon  the  provision  of  a  Replacement  Liquidity  Facility  in
replacement  of  this  Agreement  in  accordance  with  Section  3.6(e)  of  the
Intercreditor  Agreement,  amounts  remaining  on  deposit  in the  Class A Cash
Collateral  Account after giving effect to any Applied  Provider  Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only



to the extent  such  amounts  are  necessary  to repay in full to the  Liquidity
Provider all amounts owing to it hereunder.

          Section   2.07.   PAYMENTS  TO  THE  LIQUIDITY   PROVIDER   UNDER  THE
INTERCREDITOR  AGREEMENT.  In order to provide for payment or  repayment  to the
Liquidity  Provider  of  any  amounts  hereunder,  the  Intercreditor  Agreement
provides  that amounts  available  and referred to in Articles II and III of the
Intercreditor  Agreement,  to  the  extent  payable  to the  Liquidity  Provider
pursuant  to  the  terms  of the  Intercreditor  Agreement  (including,  without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof.  Amounts so paid to the
Liquidity  Provider  shall be applied by the  Liquidity  Provider  to  Liquidity
Obligations then due and payable in accordance with the Intercreditor  Agreement
or, if not provided for in the Intercreditor  Agreement,  then in such manner as
the Liquidity Provider shall deem appropriate.

          Section 2.08. BOOK ENTRIES.  The Liquidity  Provider shall maintain in
accordance  with its usual  practice  an  account  or  accounts  evidencing  the
indebtedness of the Borrower  resulting from Advances made from time to time and
the amounts of principal  and interest  payable  hereunder and paid from time to
time in respect thereof;  PROVIDED,  HOWEVER,  that the failure by the Liquidity
Provider to maintain such account or accounts  shall not affect the  obligations
of the Borrower in respect of Advances.

          Section 2.09.  PAYMENTS FROM AVAILABLE  FUNDS ONLY. All payments to be
made by the Borrower  under this  Agreement  shall be made only from the amounts
that constitute Scheduled Payments, Special Payments or payments under Section 9
of the  Participation  Agreements and only to the extent that the Borrower shall
have  sufficient  income or proceeds  therefrom  to enable the  Borrower to make
payments in accordance with the terms hereof after giving effect to the priority
of payments provisions set forth in the Intercreditor  Agreement.  The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for  distribution  to it as provided  in the  Intercreditor  Agreement  and this
Agreement and that the Borrower,  in its individual capacity,  is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly  provided  in  this  Agreement,  the  Intercreditor  Agreement  or any
Participation  Agreement.  Amounts  on  deposit  in the Class A Cash  Collateral
Account shall be available to the Borrower to make payments under this Agreement
only to the extent and for the purposes expressly contemplated in Section 3.6(f)
of the Intercreditor Agreement.

          Section 2.10. EXTENSION OF THE EXPIRY DATE;  NON-EXTENSION ADVANCE. No
earlier  than  the 60th  day and no  later  than the 40th day  prior to the then
effective  Expiry Date  (unless such Expiry Date is on or after the date that is
15 days after the Final Legal  Distribution  Date for the Class A Certificates),
the Borrower  shall request that the Liquidity  Provider  extend the Expiry Date
for a period of 364 days  after  the then  effective  Expiry  Date  (unless  the
obligations of the Liquidity  Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower,  no earlier
than 40 days and no later than 25 days prior to the then effective  Expiry Date,
whether, in its sole discretion,  it agrees to so extend the Expiry Date. If the
Liquidity  Provider  advises the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such  Expiry Date shall not be so  extended,  or
fails to irrevocably  and  unconditionally  advise the Borrower on or before the



25th day prior to the Expiry  Date then in effect that such Expiry Date shall be
so extended  (and, in each case, if the Liquidity  Provider  shall not have been
replaced in accordance with Section 3.6(e) of the Intercreditor Agreement),  the
Borrower  shall be  entitled  on and after  such 25th day (but prior to the then
effective  Expiry Date) to request a  Non-Extension  Advance in accordance  with
Section 2.02(b) hereof and Section 3.6(d) of the Intercreditor Agreement.


                                   ARTICLE III

                           OBLIGATIONS OF THE BORROWER


          Section 3.01. INCREASED COSTS. The Borrower shall pay to the Liquidity
Provider  from time to time such amounts as may be necessary to  compensate  the
Liquidity  Provider for any increased  costs incurred by the Liquidity  Provider
which are attributable to its making or maintaining any LIBOR Advances hereunder
or its obligation to make any such Advances  hereunder,  or any reduction in any
amount  receivable  by  the  Liquidity  Provider  under  this  Agreement  or the
Intercreditor Agreement in respect of any such Advances or such obligation (such
increases in costs and  reductions  in amounts  receivable  being herein  called
"ADDITIONAL Costs"),  resulting from any change after the date of this Agreement
in U.S. federal,  state,  municipal,  or foreign laws or regulations  (including
Regulation D of the Board of Governors of the Federal  Reserve  System),  or the
adoption  or making  after the date of this  Agreement  of any  interpretations,
directives, or requirements applying to a class of banks including the Liquidity
Provider  under any U.S.  federal,  state,  municipal,  or any  foreign  laws or
regulations  (whether or not having the force of law) by any court, central bank
or monetary authority charged with the interpretation or administration  thereof
(a "REGULATORY CHANGE"), which: (1) changes the basis of taxation of any amounts
payable to the Liquidity  Provider  under this  Agreement in respect of any such
Advances  (other than Excluded  Taxes);  or (2) imposes or modifies any reserve,
special  deposit,  compulsory  loan  or  similar  requirements  relating  to any
extensions of credit or other assets of, or any deposits with other  liabilities
of, the Liquidity Provider (including any such Advances or any deposits referred
to in the  definition  of LIBOR  Rate or  related  definitions).  The  Liquidity
Provider agrees to use reasonable efforts  (consistent with applicable legal and
regulatory  restrictions)  to change the  jurisdiction  of its Lending Office if
making such change would avoid the need for, or reduce the amount of, any amount
payable  under this  Section  that may  thereafter  accrue and would not, in the
reasonable judgment of the Liquidity Provider,  be otherwise  disadvantageous to
the Liquidity Provider.

          The Liquidity Provider will notify the Borrower of any event occurring
after the date of this  Agreement  that will entitle the  Liquidity  Provider to
compensation  pursuant to this Section 3.01 as promptly as practicable  after it
obtains  knowledge  thereof and determines to request such  compensation,  which
notice shall describe in reasonable  detail the  calculation of the amounts owed
under this Section.  Determinations  by the  Liquidity  Provider for purposes of
this Section 3.01 of the effect of any Regulatory  Change on its costs of making
or maintaining  Advances or on amounts  receivable by it in respect of Advances,



and of the additional  amounts required to compensate the Liquidity  Provider in
respect of any  Additional  Costs,  shall be prima facie  evidence of the amount
owed under this Section.

          Section 3.02.  CAPITAL ADEQUACY.  If (1) the adoption,  after the date
hereof, of any applicable governmental law, rule or regulation regarding capital
adequacy,  (2) any  change,  after the date  hereof,  in the  interpretation  or
administration  of any such law, rule or regulation by any central bank or other
governmental authority charged with the interpretation or administration thereof
or (3) compliance by the Liquidity  Provider or any corporation  controlling the
Liquidity  Provider  with  any  applicable   guideline  or  request  of  general
applicability,  issued  after  the date  hereof,  by any  central  bank or other
governmental authority (whether or not having the force of law) that constitutes
a change of the nature  described  in clause (2), has the effect of requiring an
increase in the amount of capital  required to be  maintained  by the  Liquidity
Provider  or any  corporation  controlling  the  Liquidity  Provider,  and  such
increase is based upon the Liquidity Provider's  obligations hereunder and other
similar obligations,  the Borrower shall pay to the Liquidity Provider from time
to time such  additional  amount or amounts as are necessary to  compensate  the
Liquidity  Provider  for such  portion of such  increase as shall be  reasonably
allocable to the Liquidity Provider's obligations to the Borrower hereunder. The
Liquidity Provider agrees to use reasonable efforts  (consistent with applicable
legal and regulatory  restrictions)  to change the  jurisdiction  of its Lending
Office if making such change  would avoid the need for, or reduce the amount of,
any amount payable under this Section that may thereafter  accrue and would not,
in the reasonable  judgment of the Liquidity Provider,  be otherwise  materially
disadvantageous to the Liquidity Provider.

          The Liquidity Provider will notify the Borrower of any event occurring
after the date of this  Agreement  that will entitle the  Liquidity  Provider to
compensation  pursuant to this Section 3.02 as promptly as practicable  after it
obtains  knowledge  thereof and determines to request such  compensation,  which
notice shall describe in reasonable  detail the  calculation of the amounts owed
under this Section.  Determinations  by the  Liquidity  Provider for purposes of
this  Section  3.02 of the  effect of any  increase  in the  amount  of  capital
required to be maintained by the Liquidity  Provider and of the amount allocable
to the Liquidity Provider's obligations to the Borrower hereunder shall be prima
facie evidence of the amounts owed under this Section.

          Section 3.03.  PAYMENTS FREE OF  DEDUCTIONS.  (a) All payments made by
the Borrower under this  Agreement  shall be made free and clear of, and without
reduction  for or on account  of, any  present or future  stamp or other  taxes,
levies, imposts, duties, charges, fees, deductions,  withholdings,  restrictions
or  conditions  of any  nature  whatsoever  now or  hereafter  imposed,  levied,
collected,  withheld or assessed,  excluding  Excluded Taxes (such  non-excluded
taxes  being  referred to herein,  collectively,  as  "NON-EXCLUDED  TAXES" and,
individually,  as a "NON-EXCLUDED  TAX"). If any Non-Excluded Taxes are required
to be withheld  from any amounts  payable to the Liquidity  Provider  under this
Agreement,  the amounts so payable to the Liquidity  Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded  Taxes)  interest  or any other  such  amounts  payable  under this
Agreement  at the  rates or in the  amounts  specified  in this  Agreement.  The
Liquidity  Provider  agrees  to use  reasonable  efforts  (consistent  with  its
internal   policy  and  legal  and  regulatory   restrictions)   to  change  the
jurisdiction  of its Lending  Office if making such change  would avoid the need



for, or reduce the amount of, any such  additional  amounts that may  thereafter
accrue and would not, in the reasonable judgment of the Liquidity  Provider,  be
otherwise  disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower,  the Liquidity Provider agrees to provide to
the  Borrower  two  original  Internal  Revenue  Service  Form 1001 or 4224,  as
appropriate,  or any successor or other form prescribed by the Internal  Revenue
Service,  certifying that the Liquidity Provider is exempt from or entitled to a
reduced  rate of United  States  withholding  tax on  payments  pursuant to this
Agreement.

          (b) All payments (including, without limitation, Advances) made by the
Liquidity  Provider  under this  Agreement  shall be made free and clear of, and
without  reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted  from any  amounts  payable to the  Borrower  under this
Agreement,  the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate  governmental  or taxing  authority the
full  amount of any such  Taxes  (and any  additional  Taxes in  respect  of the
payment  required  under clause (ii) hereof) and make such reports or returns in
connection  therewith  at the  time or times  and in the  manner  prescribed  by
applicable  law, and (ii) pay to the Borrower an additional  amount which (after
deduction  of all such Taxes) will be  sufficient  to yield to the  Borrower the
full amount  which would have been  received  by it had no such  withholding  or
deduction  been made.  Within 30 days after the date of each payment  hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other  documentary  evidence of) the payment of the Taxes applicable
to such payment.

          Section 3.04.  PAYMENTS.  The Borrower  shall make or cause to be made
each payment to the Liquidity  Provider  under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due.  The  Borrower  shall make all such  payments in
lawful  money of the United  States of  America,  to the  Liquidity  Provider in
immediately  available  funds, by wire transfer to The Chase Manhattan Bank, One
Chase  Manhattan  Plaza,  New York,  New York 10081,  ABA No.  021-000-021,  for
account of Westdeutsche  Landesbank  Girozentrale,  New York branch, Account No.
920-1-060663, Reference: Continental Airlines Liquidity Facility 1998-2A.

          Section 3.05. COMPUTATIONS.  All computations of interest based on the
Base Rate  shall be made on the basis of a year of 365 or 366 days,  as the case
may be, and all  computations  of interest based on the LIBOR Rate shall be made
on the basis of a year of 360 days,  in each case for the actual  number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.

          Section 3.06. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made  hereunder  shall be stated to be due on a day other than a  Business  Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made,  shall be deemed to have been
made when  due).  If any  payment in  respect  of  interest  on an Advance is so
deferred to the next succeeding  Business Day, such deferral shall not delay the
commencement  of the next Interest Period for such Advance (if such Advance is a
LIBOR  Advance) or reduce the number of days for which  interest will be payable
on such Advance on the next interest payment date for such Advance.



          Section  3.07.  INTEREST.  (a) Subject to Section  2.09,  the Borrower
shall pay, or shall cause to be paid, without  duplication,  interest on (i) the
unpaid  principal  amount of each  Advance from and  including  the date of such
Advance (or, in the case of an Applied Provider Advance,  from and including the
date on which the amount thereof was withdrawn from the Class A Cash  Collateral
Account to pay interest on the Class A  Certificates)  to but excluding the date
such  principal  amount  shall be paid in full  (or,  in the case of an  Applied
Provider Advance, the date on which the Class A Cash Collateral Account is fully
replenished  in respect of such Advance) and (ii) any other amount due hereunder
(whether  fees,  commissions,  expenses  or  other  amounts  or,  to the  extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due  (whether  at stated  maturity,  by  acceleration  or
otherwise)  from and  including  the due date thereof to but  excluding the date
such amount is paid in full, in each such case,  at a fluctuating  interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate  permitted by applicable  law;
PROVIDED,  HOWEVER,  that, if at any time the otherwise applicable interest rate
as set forth in this Section  3.07 shall  exceed the maximum  rate  permitted by
applicable  law,  then any  subsequent  reduction in such interest rate will not
reduce the rate of  interest  payable  pursuant to this  Section  3.07 below the
maximum  rate  permitted  by  applicable  law until the total amount of interest
accrued  equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.

          (b)  Except as  provided  in clause (e) below,  each  Advance  will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section.  Each
such  Advance  will be a Base Rate  Advance  for the period from the date of its
borrowing to (but  excluding)  the third  Business Day  following  the Liquidity
Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such
Advance shall be a LIBOR  Advance;  provided that the Borrower (at the direction
of  the  Controlling  Party,  so  long  as the  Liquidity  Provider  is not  the
Controlling Party) may (x) convert the Final Advance into a Base Rate Advance on
the last day of an  Interest  Period for such  Advance  by giving the  Liquidity
Provider no less than four Business  Days' prior written notice of such election
or (y)  elect to  maintain  the Final  Advance  as a Base  Rate  Advance  by not
requesting a conversion of the Final Advance to a LIBOR Advance under Clause (5)
of the  applicable  Notice of Borrowing  (or, if such Final Advance is deemed to
have been made,  without  delivery of a Notice of Borrowing  pursuant to Section
2.06, by requesting,  prior to 11:00 A.M. on the first Business Day  immediately
following the Borrower's receipt of the applicable Termination Notice, that such
Final Advance not be converted from a Base Rate Advance to a LIBOR Advance).

          (c) Each LIBOR Advance shall bear interest during each Interest Period
at a rate per annum  equal to the LIBOR Rate for such  Interest  Period plus the
Applicable Margin for such LIBOR Advance,  payable in arrears on the last day of
such Interest Period and, in the event of the payment of principal of such LIBOR
Advance on a day other than such last day,  on the date of such  payment (to the
extent of interest accrued on the amount of principal repaid).

          (d) Each Base Rate  Advance  shall bear  interest  at a rate per annum
equal to the Base Rate plus the  Applicable  Margin for such Base Rate  Advance,



payable in arrears on each  Regular  Distribution  Date and, in the event of the
payment  of  principal  of such Base Rate  Advance on a day other than a Regular
Distribution  Date,  on the date of such  payment  (to the  extent  of  interest
accrued on the amount of principal repaid).

          (e) Each outstanding Unapplied Downgrade Advance (i) during the period
from and including the date of the making of such  Unapplied  Downgrade  Advance
through but  excluding  the Expiry Date (or, if earlier,  the date of  repayment
thereof or of conversion  thereof into a Final Advance),  shall bear interest in
an amount equal to the Investment  Earnings on amounts on deposit in the Class A
Cash  Collateral  Account  for such  period  plus .325% per annum  (through  and
including the first anniversary of the date of this Agreement) or .35% per annum
(after the first  anniversary  of the date of this  Agreement)  on the amount of
such Unapplied  Downgrade Advance from time to time during such period,  payable
in arrears on each Regular  Distribution  Date, and (ii) thereafter,  shall be a
LIBOR Advance and shall bear interest in accordance with clause (c) above.

          (f)  Each  amount  not  paid  when  due   hereunder   (whether   fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law,  installments  of interest on Advances but excluding  Advances)  shall bear
interest at a rate per annum equal to the Base Rate plus 2.00% until paid.

          (g) Each change in the Base Rate shall become  effective  immediately.
The rates of interest specified in this Section 3.07 with respect to any Advance
or other amount shall be referred to as the "APPLICABLE LIQUIDITY RATE".

          Section 3.08.  REPLACEMENT OF BORROWER.  From time to time and subject
to the successor  Borrower's  meeting the eligibility  requirements set forth in
Section  6.9 of the  Intercreditor  Agreement  applicable  to the  Subordination
Agent,  upon the  effective  date and time  specified in a written and completed
Notice of Replacement  Subordination Agent in substantially the form of Annex VI
attached hereto (a "NOTICE OF REPLACEMENT SUBORDINATION AGENT") delivered to the
Liquidity  Provider by the then  Borrower,  the  successor  Borrower  designated
therein shall be substituted for as the Borrower for all purposes hereunder.

          Section 3.09. FUNDING LOSS INDEMNIFICATION.  The Borrower shall pay to
the Liquidity Provider,  upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient  (in the  reasonable  opinion of the Liquidity
Provider) to compensate it for any loss,  cost, or expense incurred by reason of
the  liquidation  or  redeployment  of deposits  or other funds  acquired by the
Liquidity  Provider to fund or maintain any LIBOR Advance (but excluding loss of
anticipated profits) incurred as a result of:

          (1) Any repayment of a LIBOR Advance on a date other than the last day
     of the Interest Period for such Advance; or

          (2) Any failure by the Borrower to borrow a LIBOR  Advance on the date
     for borrowing specified in the relevant notice under Section 2.02.



          Section 3.10. ILLEGALITY.  Notwithstanding any other provision in this
Agreement,  if any change in any  applicable  law,  rule or  regulation,  or any
change in the  interpretation  or  administration  thereof  by any  governmental
authority,  central bank or comparable agency charged with the interpretation or
administration  thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or  directive  (whether or not having the force of law)
of any such authority,  central bank or comparable agency shall make it unlawful
or impossible for the Liquidity  Provider (or its Lending Office) to maintain or
fund its LIBOR  Advances,  then upon  notice to the  Borrower  by the  Liquidity
Provider,  the  outstanding  principal  amount  of the LIBOR  Advances  shall be
converted to Base Rate  Advances (a)  immediately  upon demand of the  Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider,  requires immediate  repayment;  or (b) at the expiration of
the last Interest  Period to expire before the effective date of any such change
or request.


                                   ARTICLE IV

                              CONDITIONS PRECEDENT


          Section 4.01.  CONDITIONS  PRECEDENT TO EFFECTIVENESS OF SECTION 2.01.
Section 2.01 of this  Agreement  shall  become  effective on and as of the first
date (the  "EFFECTIVE  DATE") on which the following  conditions  precedent have
been satisfied or waived:

          (a) The  Liquidity  Provider  shall  have  received  on or before  the
     Closing  Date  each of the  following,  and in the  case  of each  document
     delivered  pursuant to  paragraphs  (i),  (ii) and (iii),  each in form and
     substance satisfactory to the Liquidity Provider:

                (i) This Agreement duly executed on behalf of the Borrower;

               (ii) The Intercreditor  Agreement duly executed on behalf of each
          of the parties thereto;

              (iii) Fully  executed  copies of each of the Operative  Agreements
          executed and  delivered on or before the Closing Date (other than this
          Agreement and the Intercreditor Agreement);

               (iv) A copy of the Prospectus  Supplement and specimen  copies of
          the Class A Certificates;

                (v) An executed copy of each  document,  instrument, certificate
          and opinion  delivered on or before the Closing  Date  pursuant to the
          Class A Trust  Agreement,  the  Intercreditor  Agreement and the other
          Operative Agreements (in the case of each such opinion, other than the
          opinion of  counsel  for the  Underwriters,  either  addressed  to the
          Liquidity  Provider  or  accompanied  by a  letter  from  the  counsel
          rendering  such opinion to the effect that the  Liquidity  Provider is



          entitled  to  rely  on  such  opinion  as of its  date  as if it  were
          addressed to the Liquidity Provider);

               (vi)  Evidence  that  there  shall have been made and shall be in
          full force and effect, all filings,  recordings and/or  registrations,
          and there  shall have been given or taken any notice or other  similar
          action as may be  reasonably  necessary  or, to the extent  reasonably
          requested by the Liquidity Provider, reasonably advisable, in order to
          establish,   perfect,  protect  and  preserve  the  right,  title  and
          interest,  remedies, powers, privileges,  liens and security interests
          of,  or for  the  benefit  of,  the  Trustees,  the  Borrower  and the
          Liquidity  Provider created by the Operative  Agreements  executed and
          delivered on or prior to the Closing Date;

              (vii)  An  agreement  from  Continental,  pursuant  to  which  (i)
          Continental agrees to provide copies of quarterly financial statements
          and audited annual financial statements to the Liquidity Provider, and
          such other  information  as the Liquidity  Provider  shall  reasonably
          request with respect to the transactions contemplated by the Operative
          Agreements,  in each case,  only to the  extent  that  Continental  is
          obligated to provide such information pursuant to Section 8.2.1 of the
          Leases to the parties thereto and (ii) Continental agrees to allow the
          Liquidity  Provider  to  inspect   Continental's   books  and  records
          regarding such  transactions,  and to discuss such  transactions  with
          officers and employees of Continental; and

             (viii)  Such other  documents,  instruments, opinions and approvals
          pertaining  to the  transactions  contemplated  hereby or by the other
          Operative  Agreements as the Liquidity  Provider shall have reasonably
          requested.

          (b) The following  statement  shall be true on and as of the Effective
     Date:  no event has  occurred and is  continuing,  or would result from the
     entering  into  of this  Agreement  or the  making  of any  Advance,  which
     constitutes a Liquidity Event of Default.

          (c) The Liquidity  Provider shall have received payment in full of all
     fees  and  other  sums  required  to be paid to or for the  account  of the
     Liquidity Provider on or prior to the Effective Date.

          (d) All conditions precedent to the issuance of the Certificates under
     the Trust  Agreements  shall have been satisfied or waived,  all conditions
     precedent to the effectiveness of the other Liquidity Facilities shall have
     been satisfied or waived,  and all conditions  precedent to the purchase of
     the Certificates by the Underwriters under the Underwriting Agreement shall
     have been satisfied  (unless any of such  conditions  precedent  shall have
     been waived by the Underwriters).

          (e) The Borrower  shall have  received a  certificate,  dated the date
     hereof,  signed  by a  duly  authorized  representative  of  the  Liquidity
     Provider,  certifying that all conditions precedent to the effectiveness of
     Section 2.01 have been satisfied or waived.




          Section 4.02. CONDITIONS PRECEDENT TO BORROWING. The obligation of the
Liquidity Provider to make an Advance on the occasion of each Borrowing shall be
subject to the conditions  precedent that the Effective Date shall have occurred
and,  prior to the date of such  Borrowing,  the Borrower shall have delivered a
Notice of Borrowing which conforms to the terms and conditions of this Agreement
and has been  completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.


                                    ARTICLE V

                                    COVENANTS


          Section 5.01.  AFFIRMATIVE  COVENANTS OF THE BORROWER.  So long as any
Advance  shall remain unpaid or the  Liquidity  Provider  shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity  Provider  hereunder,  the Borrower will,  unless the Liquidity
Provider shall otherwise consent in writing:

          (a) PERFORMANCE OF THIS AND OTHER AGREEMENTS.  Punctually pay or cause
     to be paid all  amounts  payable by it under this  Agreement  and the other
     Operative  Agreements and observe and perform in all material  respects the
     conditions,  covenants and requirements  applicable to it contained in this
     Agreement and the other Operative Agreements.

          (b) REPORTING  REQUIREMENTS.  Furnish to the  Liquidity  Provider with
     reasonable promptness,  such other information and data with respect to the
     transactions  contemplated by the Operative Agreements as from time to time
     may be  reasonably  requested  by the  Liquidity  Provider;  and permit the
     Liquidity Provider, upon reasonable notice, to inspect the Borrower's books
     and records with respect to such transactions and to meet with officers and
     employees of the Borrower to discuss such transactions.

          (c) CERTAIN OPERATIVE  AGREEMENTS.  Furnish to the Liquidity  Provider
     with reasonable  promptness,  such Operative  Agreements entered into after
     the date  hereof as from time to time may be  reasonably  requested  by the
     Liquidity Provider.

          Section  5.02.  NEGATIVE  COVENANTS  OF THE  BORROWER.  So long as any
Advance  shall remain unpaid or the  Liquidity  Provider  shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder,  the Borrower will not appoint or permit or
suffer to be appointed any successor  Borrower without the prior written consent
of the Liquidity Provider,  which consent shall not be unreasonably  withheld or
delayed.



                                   ARTICLE VI

                           LIQUIDITY EVENTS OF DEFAULT


          Section 6.01.  LIQUIDITY EVENTS OF DEFAULT. If (a) any Liquidity Event
of Default has occurred  and is  continuing  and (b) there is a Performing  Note
Deficiency,  the  Liquidity  Provider  may,  in its  discretion,  deliver to the
Borrower a  Termination  Notice,  the effect of which  shall be to cause (i) the
obligation of the Liquidity Provider to make Advances hereunder to expire on the
fifth Business Day after the date on which such  Termination  Notice is received
by the  Borrower,  (ii) the  Borrower to  promptly  request,  and the  Liquidity
Provider to promptly  make, a Final Advance in accordance  with Section  2.02(d)
hereof  and  Section  3.6(i)  of the  Intercreditor  Agreement,  (iii) all other
outstanding  Advances to be  automatically  converted  into Final  Advances  for
purposes of  determining  the  Applicable  Liquidity  Rate for interest  payable
thereon,  and (iv)  subject  to  Sections  2.07 and 2.09  hereof,  all  Advances
(including,  without  limitation,  any  Provider  Advance and  Applied  Provider
Advance),  any  accrued  interest  thereon  and any  other  amounts  outstanding
hereunder to become immediately due and payable to the Liquidity Provider.


                                   ARTICLE VII

                                  MISCELLANEOUS


          Section 7.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective  unless the same shall be in writing and signed by the
Liquidity  Provider,  and,  in the case of an  amendment  or of a waiver  by the
Borrower,  the Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

          Section 7.02.  NOTICES,  ETC. Except as otherwise  expressly  provided
herein, all notices and other communications  provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):

                Borrower:             WILMINGTON TRUST COMPANY
                                      Rodney Square North
                                      1100 North Market Square
                                      Wilmington, DE 19890-0001
                                      Attention:  Corporate Trust Administration

                                      Telephone:  (302) 651-1000
                                      Telecopy:   (302) 651-8882



                Liquidity Provider:   WESTDEUTSCHE LANDESBANK GIROZENTRALE
                                      Global Structured Finance
                                      1211 Avenue of the Americas
                                      New York, NY 10036
                                      Attention:  Alfred Heynen

                                      Telephone: (212) 852-6115
                                      Telecopy: (212) 869-7634

                with a copy to:       WESTDEUTSCHE LANDESBANK GIROZENTRALE
                                      Loan Administration
                                      1211 Avenue of the Americas
                                      New York, NY 10036
                                      Attention: Cheryl Wilson

                                      Telephone: (212) 852-6152
                                      Telecopy: (212) 302-7946

or, as to each of the foregoing, at such other address as shall be designated by
such  Person  in  a  written  notice  to  the  others.   All  such  notices  and
communications  shall be effective (i) if given by telecopier,  when transmitted
to the telecopier  number specified above, (ii) if given by mail, when deposited
in the mails  addressed as specified  above,  and (iii) if given by other means,
when delivered at the address  specified  above,  except that written notices to
the Liquidity  Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity  Provider.  A copy of all
notices  delivered  hereunder  to either party shall in addition be delivered to
each  of the  parties  to  the  Participation  Agreements  at  their  respective
addresses set forth therein.

          Section  7.03.  NO  WAIVER;  REMEDIES.  No  failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise  of any right  under  this  Agreement  preclude  any  other or  further
exercise  thereof  or the  exercise  of any other  right.  The  remedies  herein
provided are cumulative and not exclusive of any remedies provided by law.

          Section  7.04.  FURTHER  ASSURANCES.  The  Borrower  agrees to do such
further  acts and things and to execute  and deliver to the  Liquidity  Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider  may  reasonably  require or deem  advisable  to carry into  effect the
purposes  of this  Agreement  and the other  Operative  Agreements  or to better
assure and confirm unto the Liquidity  Provider its rights,  powers and remedies
hereunder and under the other Operative Agreements.

          Section 7.05.  INDEMNIFICATION;  SURVIVAL OF CERTAIN  PROVISIONS.  The
Liquidity  Provider  shall be  indemnified  hereunder  to the  extent and in the
manner described in Section 9 of the Participation  Agreements. In addition, the
Borrower  agrees to indemnify,  protect,  defend and hold harmless the Liquidity
Provider from,  against and in respect of, and shall pay on demand, all Expenses
of any  kind or  nature  whatsoever  (other  than  any  Expenses  of the  nature
described in Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless



of  whether  indemnified  against  pursuant  to said  Sections  or in  such  Fee
Letter)),  that may be imposed,  incurred by or asserted  against any  Liquidity
Indemnitee,  in any way relating  to,  resulting  from,  or arising out of or in
connection  with any action,  suit or proceeding by any third party against such
Liquidity  Indemnitee  and  relating  to this  Agreement,  the Fee  Letter,  the
Intercreditor Agreement or any Participation Agreement;  PROVIDED, HOWEVER, that
the  Borrower  shall not be  required  to  indemnify,  protect,  defend and hold
harmless any Liquidity  Indemnitee  in respect of any Expense of such  Liquidity
Indemnitee  to the  extent  such  Expense  is  (i)  attributable  to  the  gross
negligence  or willful  misconduct  of such  Liquidity  Indemnitee  or any other
Liquidity  Indemnitee,  (ii) ordinary and usual operating  overhead expense,  or
(iii)  attributable  to the failure by such  Liquidity  Indemnitee  or any other
Liquidity Indemnitee to perform or observe any agreement,  covenant or condition
on its part to be performed  or observed in this  Agreement,  the  Intercreditor
Agreement,  the Fee Letter,  the Tax Letter or any other Operative  Agreement to
which it is a party. The indemnities contained in Section 9 of the Participation
Agreements, and the provisions of Sections 3.01, 3.02, 3.03, 3.09, 7.05 and 7.07
hereof, shall survive the termination of this Agreement.

          Section  7.06.  LIABILITY OF THE LIQUIDITY  PROVIDER.  (a) Neither the
Liquidity Provider nor any of its officers,  employees,  directors or affiliates
shall  be  liable  or  responsible  for:  (i) the use  which  may be made of the
Advances  or any  acts  or  omissions  of the  Borrower  or any  beneficiary  or
transferee  in  connection   therewith;   (ii)  the  validity,   sufficiency  or
genuineness of documents,  or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid,  insufficient,  fraudulent or
forged;  or (iii) the  making of  Advances  by the  Liquidity  Provider  against
delivery of a Notice of Borrowing and other  documents  which do not comply with
the terms  hereof;  PROVIDED,  HOWEVER,  that the  Borrower  shall  have a claim
against the Liquidity  Provider,  and the Liquidity  Provider shall be liable to
the Borrower,  to the extent of any damages  suffered by the Borrower which were
the result of (A) the Liquidity  Provider's  willful misconduct or negligence in
determining  whether documents presented hereunder comply with the terms hereof,
or (B)  any  breach  by the  Liquidity  Provider  of any of the  terms  of  this
Agreement,  including,  but not limited to, the Liquidity  Provider's failure to
make lawful  payment  hereunder  after the  delivery to it by the  Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.

          (b) Neither the Liquidity Provider nor any of its officers, employees,
directors or affiliates  shall be liable or  responsible  in any respect for (i)
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with this Agreement
or any Notice of Borrowing delivered hereunder,  or (ii) any action, inaction or
omission which may be taken by it in good faith,  absent  willful  misconduct or
negligence  (in which  event the extent of the  Liquidity  Provider's  potential
liability  to the  Borrower  shall be  limited  as set forth in the  immediately
preceding  paragraph),  in  connection  with  this  Agreement  or any  Notice of
Borrowing.

          Section 7.07.  COSTS,  EXPENSES AND TAXES. The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity  Provider shall make demand,  all  reasonable  out-of-pocket
costs and expenses  (including,  without  limitation,  the  reasonable  fees and
expenses  of  outside  counsel  for the  Liquidity  Provider)  of the  Liquidity



Provider in connection with the preparation,  negotiation,  execution, delivery,
filing and recording of this Agreement,  any other  Operative  Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable costs and expenses (including  reasonable counsel fees
and expenses) of the Liquidity  Provider in connection  with (i) the enforcement
of this Agreement or any other  Operative  Agreement,  (ii) the  modification or
amendment of, or supplement to, this Agreement or any other Operative  Agreement
or such  other  documents  which may be  delivered  in  connection  herewith  or
therewith  (whether or not the same shall become  effective) or (iii) any action
or  proceeding  relating to any order,  injunction,  or other  process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under  this  Agreement,  the  Intercreditor  Agreement  or any  other  Operative
Agreement or otherwise  affecting the  application  of funds in the Class A Cash
Collateral Accounts. In addition,  the Borrower shall pay any and all recording,
stamp and other  similar  taxes and fees payable or  determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative  Agreement and such other documents,  and agrees to save the
Liquidity  Provider  harmless  from and  against  any and all  liabilities  with
respect to or  resulting  from any delay in paying or omission to pay such taxes
or fees.

          Section 7.08. BINDING EFFECT; PARTICIPATIONS. (a) This Agreement shall
be binding  upon and inure to the  benefit  of the  Borrower  and the  Liquidity
Provider and their  respective  successors and assigns,  except that neither the
Liquidity  Provider  (except as  otherwise  provided in this  Section  7.08) nor
(except as  contemplated  by Section 3.08) the Borrower  shall have the right to
assign its rights or  obligations  hereunder or any interest  herein without the
prior written consent of the other party, subject to the requirements of Section
7.08(b). The Liquidity Provider may grant participations herein or in any of its
rights hereunder  (including,  without  limitation,  funded  participations  and
participations in rights to receive interest  payments  hereunder) and under the
other Operative  Agreements to such Persons as the Liquidity Provider may in its
sole discretion select,  subject to the requirements of Section 7.08(b). No such
participation  by the Liquidity  Provider,  however,  will relieve the Liquidity
Provider of its obligations  hereunder.  In connection with any participation or
any  proposed  participation,   the  Liquidity  Provider  may  disclose  to  the
participant or the proposed  participant  any  information  that the Borrower is
required to deliver or to disclose to the  Liquidity  Provider  pursuant to this
Agreement.  The Borrower  acknowledges and agrees that the Liquidity  Provider's
source  of  funds  may  derive  in  part  from  its  participants   (other  than
Continental).  Accordingly, references in this Agreement and the other Operative
Agreements  to  determinations,   reserve  and  capital  adequacy  requirements,
increased costs,  reduced receipts,  additional  amounts due pursuant to Section
3.03 and the like as they pertain to the Liquidity Provider shall be deemed also
to include  those of each of its  participants  (subject,  in each case,  to the
maximum amount that would have been incurred by or attributable to the Liquidity
Provider directly if the Liquidity  Provider,  rather than the participant,  had
held the interest participated).

          (b) If, pursuant to subsection (a) above, the Liquidity Provider sells
any  participation  in this  Agreement  to any bank or  other  entity  (each,  a
"TRANSFEREE"),  then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
          



the  Liquidity  Provider and the  Borrower)  either (A) that it is  incorporated
under  the laws of the  United  States  or a state  thereof  or (B)  that  under
applicable  law and  treaties,  no taxes will be required  to be  withheld  with
respect  to any  payments  to be made  to such  Transferee  in  respect  of this
Agreement,  (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated,  two copies of a properly completed
United States  Internal  Revenue Service Form 4224 or Form 1001, as appropriate,
or other  applicable  form,  certificate or document  prescribed by the Internal
Revenue Service  certifying,  in each case, such  Transferee's  entitlement to a
complete exemption from United States federal  withholding tax in respect to any
and all payments to be made  hereunder,  and (iii) agree (for the benefit of the
Liquidity  Provider and the Borrower) to provide the Liquidity  Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes  obsolete or (B) after the  occurrence  of
any event requiring a change in the most recent form previously  delivered by it
and prior to the  immediately  following due date of any payment by the Borrower
hereunder,  certifying  in the  case  of a Form  1001  or Form  4224  that  such
Transferee  is  entitled to a complete  exemption  from  United  States  federal
withholding  tax on  payments  under this  Agreement.  Unless the  Borrower  has
received forms or other documents reasonably satisfactory to it (and required by
applicable  law)  indicating  that payments  hereunder are not subject to United
States federal  withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.

          (c)  Notwithstanding  the other  provisions of this Section 7.08,  the
Liquidity  Provider  may assign and  pledge all or any  portion of the  Advances
owing  to it to any  Federal  Reserve  Bank or the  United  States  Treasury  as
collateral  security  pursuant to  Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower  to the  Liquidity  Provider  in  accordance  with  the  terms  of this
Agreement shall satisfy the Borrower's  obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.

          Section 7.09.  SEVERABILITY.  Any provision of this Agreement which is
prohibited,  unenforceable  or not authorized in any  jurisdiction  shall, as to
such   jurisdiction,   be  ineffective  to  the  extent  of  such   prohibition,
unenforceability  or   non-authorization   without  invalidating  the  remaining
provisions hereof or affecting the validity,  enforceability or legality of such
provision in any other jurisdiction.

          Section 7.10.  GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          Section 7.11. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; WAIVER
OF  IMMUNITY.   (a)  Each  of  the  parties   hereto  hereby   irrevocably   and
unconditionally:

                (i) submits for itself and its  property in any legal  action or
          proceeding   relating  to  this  Agreement  or  any  other   Operative



          Agreement,  or for  recognition  and  enforcement  of any  judgment in
          respect hereof or thereof, to the nonexclusive general jurisdiction of
          the courts of the State of New York,  the courts of the United  States
          of America for the Southern  District of New York,  and the  appellate
          courts from any thereof;

               (ii) consents  that any such action or proceeding  may be brought
          in such courts,  and waives any objection that it may now or hereafter
          have to the venue of any such action or  proceeding  in any such court
          or that such action or proceeding was brought in an inconvenient court
          and agrees not to plead or claim the same;

              (iii) agrees  that  service  of  process  in  any  such  action or
          proceeding  may be effected by mailing a copy thereof by registered or
          certified mail (or any substantially  similar form and mail),  postage
          prepaid, to each party hereto at its address set forth in Section 7.02
          hereof, or at such other address of which the Liquidity Provider shall
          have been notified pursuant thereto; and(iv)agrees that nothing herein
          shall  affect  the right to effect  service  of  process  in any other
          manner  permitted  by law or shall limit the right to sue in any other
          jurisdiction.

          (b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED
UPON OR ARISING OUT OF THIS  AGREEMENT OR ANY DEALINGS  BETWEEN THEM RELATING TO
THE  SUBJECT  MATTER  OF THIS  AGREEMENT  AND  THE  RELATIONSHIP  THAT IS  BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory  claims.  The Borrower and
the  Liquidity  Provider  each warrant and  represent  that it has reviewed this
waiver with its legal counsel,  and that it knowingly and voluntarily waives its
jury trial rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT.

          (c) The Liquidity Provider hereby waives any immunity it may have from
the  jurisdiction  of the courts of the United States or of any State and waives
any immunity any of its  properties  located in the United  States may have from
attachment  or  execution  upon a judgment  entered by any such court  under the
United States Foreign Sovereign  Immunities Act of 1976 or any similar successor
legislation.

          Section  7.12.  EXECUTION  IN  COUNTERPARTS.  This  Agreement  may  be
executed  in any  number of  counterparts  and by  different  parties  hereto on
separate  counterparts,  each  of  which  counterparts,  when  so  executed  and
delivered,  shall be deemed  to be an  original  and all of which  counterparts,
taken together, shall constitute but one and the same Agreement.

          Section 7.13. ENTIRETY.  This Agreement,  the Intercreditor  Agreement
and the other  Operative  Agreements to which the Liquidity  Provider is a party



constitute  the entire  agreement  of the  parties  hereto  with  respect to the
subject matter hereof and supersedes all prior  understandings and agreements of
such parties.

          Section  7.14.  HEADINGS.  Section  headings  in  this  Agreement  are
included  herein for  convenience  of reference  only and shall not constitute a
part of this Agreement for any other purpose.

          Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT
AS EXPRESSLY  SET FORTH IN THIS  AGREEMENT,  THE  OBLIGATIONS  OF THE  LIQUIDITY
PROVIDER  TO MAKE  ADVANCES  HEREUNDER,  AND THE  BORROWER'S  RIGHTS TO  DELIVER
NOTICES OF  BORROWING  REQUESTING  THE MAKING OF  ADVANCES  HEREUNDER,  SHALL BE
UNCONDITIONAL  AND  IRREVOCABLE,  AND SHALL BE PAID OR  PERFORMED,  IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.



          IN WITNESS WHEREOF,  the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first set forth above.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination   Agent,  as  agent  and
                                          trustee  for  the  Class A  Trust,  as
                                          Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:


                                        WESTDEUTSCHE  LANDESBANK   GIROZENTRALE,
                                        acting  through  its New York  Branch as
                                        Liquidity Provider


                                        By:_____________________________________
                                           Name:
                                           Title:


                                        By:_____________________________________
                                           Name:
                                           Title:


                                                                      Annex I to
                                                      Revolving Credit Agreement


                      INTEREST ADVANCE NOTICE OF BORROWING

          The  undersigned,  a duly  authorized  signatory  of  the  undersigned
borrower  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE   LANDESBANK
GIROZENTRALE,  acting  through its New York Branch (the  "LIQUIDITY  PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2A) dated as of April 21,
1998,   between  the  Borrower  and  the  Liquidity   Provider  (the  "LIQUIDITY
AGREEMENT";  the terms defined  therein and not otherwise  defined  herein being
used herein as therein defined or referenced), that:

          (1) The Borrower is the  Subordination  Agent under the  Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of an Interest  Advance by the  Liquidity  Provider to be used,  subject to
     clause  (3)(v)  below,   for  the  payment  of  interest  on  the  Class  A
     Certificates  which was payable on  ____________,  ____ (the  "DISTRIBUTION
     DATE") in  accordance  with the terms and  provisions  of the Class A Trust
     Agreement  and the Class A  Certificates,  which Advance is requested to be
     made on ____________, ____.

          (3)  The  amount  of the  Interest  Advance  requested  hereby  (i) is
     $_______________.__,  to be applied in respect of the  payment of  interest
     which was due and payable on the Class A Certificates  on the  Distribution
     Date,  (ii) does not  include  any amount  with  respect to the  payment of
     principal  of,  or  premium  on,  the  Class A  Certificates,  the  Class B
     Certificates  or the  Class C  Certificates,  or  interest  on the  Class B
     Certificates or the Class C Certificates,  (iii) was computed in accordance
     with  the  provisions  of the  Class  A  Certificates,  the  Class  A Trust
     Agreement and the  Intercreditor  Agreement (a copy of which computation is
     attached hereto as Schedule I), (iv) does not exceed the Maximum  Available
     Commitment  on the date  hereof and (v) has not been and is not the subject
     of a prior or contemporaneous Notice of Borrowing.

          (4)  Upon  receipt  by or on  behalf  of the  Borrower  of the  amount
     requested  hereby,  (a) the Borrower will apply the same in accordance with
     the terms of Section 3.6(b) of the Intercreditor  Agreement, (b) no portion
     of such amount shall be applied by the  Borrower for any other  purpose and
     (c) no portion of such amount  until so applied  shall be  commingled  with
     other funds held by the Borrower.

          The  Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  the making of the  Interest  Advance as  requested by this Notice of
Borrowing shall  automatically  reduce,  subject to  reinstatement in accordance
with the terms of the Liquidity  Agreement,  the Maximum Available Commitment by
an amount  equal to the  amount of the  Interest  Advance  requested  to be made
hereby as set forth in clause (i) of paragraph (3) of this  Certificate and such



reduction shall automatically result in corresponding  reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.

          IN WITNESS  WHEREOF,  the Borrower has  executed  and  delivered  this
Notice of Borrowing as of the ____ day of _____________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:




               SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING

          [Insert Copy of  Computations  in  accordance  with  Interest  Advance
Notice of Borrowing]



                                                                     Annex II to
                                                      Revolving Credit Agreement

                    NON-EXTENSION ADVANCE NOTICE OF BORROWING

          The  undersigned,  a duly  authorized  signatory  of  the  undersigned
subordination   agent  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE
LANDESBANK  GIROZENTRALE,  acting  through its New York  Branch (the  "LIQUIDITY
PROVIDER"),  with reference to the Revolving Credit Agreement (1998-2A) dated as
of April  21,  1998,  between  the  Borrower  and the  Liquidity  Provider  (the
"LIQUIDITY  AGREEMENT";  the terms  defined  therein and not  otherwise  defined
herein being used herein as therein defined or referenced), that:

          (1) The Borrower is the  Subordination  Agent under the  Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the Non-Extension  Advance by the Liquidity  Provider to be used for the
     funding of the Class A Cash  Collateral  Account in accordance with Section
     3.6(d) of the  Intercreditor  Agreement,  which  Advance is requested to be
     made on __________, ____.

          (3) The amount of the  Non-Extension  Advance  requested hereby (i) is
     $_______________.__,  which equals the Maximum Available  Commitment on the
     date  hereof and is to be applied in respect of the  funding of the Class A
     Cash   Collateral   Account  in  accordance  with  Section  3.6(d)  of  the
     Intercreditor  Agreement,  (ii) does not include any amount with respect to
     the payment of the principal  of, or premium on, the Class A  Certificates,
     or principal of, or interest or premium on, the Class B Certificates or the
     Class C Certificates,  (iii) was computed in accordance with the provisions
     of  the  Class  A  Certificates,  the  Class  A  Trust  Agreement  and  the
     Intercreditor  Agreement (a copy of which computation is attached hereto as
     Schedule  I),  and (iv) has not been and is not the  subject  of a prior or
     contemporaneous Notice of Borrowing under the Liquidity Agreement.

          (4)  Upon  receipt  by or on  behalf  of the  Borrower  of the  amount
     requested hereby,  (a) the Borrower will deposit such amount in the Class A
     Cash Collateral  Account and apply the same in accordance with the terms of
     Section  3.6(d) of the  Intercreditor  Agreement,  (b) no  portion  of such
     amount shall be applied by the  Borrower  for any other  purpose and (c) no
     portion of such  amount  until so applied  shall be  commingled  with other
     funds held by the Borrower.

          The  Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the  Non-Extension  Advance as  requested  by this
Notice of Borrowing shall automatically and irrevocably terminate the obligation
of  the  Liquidity  Provider  to  make  further  Advances  under  the  Liquidity
Agreement;  and (B)  following  the  making  by the  Liquidity  Provider  of the
Non-Extension Advance requested by this Notice of Borrowing,  the Borrower shall
not be entitled to request any further Advances under the Liquidity Agreement.



          IN WITNESS  WHEREOF,  the Borrower has  executed  and  delivered  this
Notice of Borrowing as of the ____ day of _____________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:



             SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING

          [Insert Copy of computations in accordance with Non-Extension  Advance
Notice of Borrowing]



                                                                    Annex III to
                                                      Revolving Credit Agreement

                      DOWNGRADE ADVANCE NOTICE OF BORROWING

          The  undersigned,  a duly  authorized  signatory  of  the  undersigned
subordination   agent  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE
LANDESBANK  GIROZENTRALE,  acting  through its New York  Branch (the  "LIQUIDITY
PROVIDER"),  with reference to the Revolving Credit Agreement (1998-2A) dated as
of April  21,  1998,  between  the  Borrower  and the  Liquidity  Provider  (the
"LIQUIDITY  AGREEMENT";  the terms  defined  therein and not  otherwise  defined
herein being used herein as therein defined or referenced), that:

          (1) The Borrower is the  Subordination  Agent under the  Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the  Downgrade  Advance  by the  Liquidity  Provider  to be used for the
     funding of the Class A Cash  Collateral  Account in accordance with Section
     3.6(c) of the  Intercreditor  Agreement by reason of the downgrading of the
     short-term unsecured debt rating of the Liquidity Provider issued by either
     Rating Agency below the Threshold Rating,  which Advance is requested to be
     made on __________, ____.

          (3) The  amount  of the  Downgrade  Advance  requested  hereby  (i) is
     $_______________.__,  which equals the Maximum Available  Commitment on the
     date  hereof and is to be applied in respect of the  funding of the Class A
     Cash   Collateral   Account  in  accordance  with  Section  3.6(c)  of  the
     Intercreditor  Agreement,  (ii) does not include any amount with respect to
     the payment of the principal  of, or premium on, the Class A  Certificates,
     or principal of, or interest or premium on, the Class B Certificates or the
     Class C Certificates,  (iii) was computed in accordance with the provisions
     of  the  Class  A  Certificates,  the  Class  A  Trust  Agreement  and  the
     Intercreditor  Agreement (a copy of which computation is attached hereto as
     Schedule  I),  and (iv) has not been and is not the  subject  of a prior or
     contemporaneous Notice of Borrowing under the Liquidity Agreement.

          (4)  Upon  receipt  by or on  behalf  of the  Borrower  of the  amount
     requested hereby,  (a) the Borrower will deposit such amount in the Class A
     Cash Collateral  Account and apply the same in accordance with the terms of
     Section  3.6(c) of the  Intercreditor  Agreement,  (b) no  portion  of such
     amount shall be applied by the  Borrower  for any other  purpose and (c) no
     portion of such  amount  until so applied  shall be  commingled  with other
     funds held by the Borrower.

          The  Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the Downgrade  Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity  Agreement;  and



(B)  following the making by the  Liquidity  Provider of the  Downgrade  Advance
requested by this Notice of  Borrowing,  the  Borrower  shall not be entitled to
request any further Advances under the Liquidity Agreement.

          IN WITNESS  WHEREOF,  the Borrower has  executed  and  delivered  this
Notice of Borrowing as of the ____ day of ___________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:



               SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING

          [Insert Copy of  computations  in accordance  with  Downgrade  Advance
Notice of Borrowing]



                                                                     Annex IV to
                                                      Revolving Credit Agreement

                        FINAL ADVANCE NOTICE OF BORROWING

          The  undersigned,  a duly  authorized  signatory  of  the  undersigned
borrower  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE   LANDESBANK
GIROZENTRALE,  acting  through its New York Branch (the  "LIQUIDITY  PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2A) dated as of April 21,
1998,   between  the  Borrower  and  the  Liquidity   Provider  (the  "LIQUIDITY
AGREEMENT";  the terms defined  therein and not otherwise  defined  herein being
used herein as therein defined or referenced), that:

          (1) The Borrower is the  Subordination  Agent under the  Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the Final Advance by the  Liquidity  Provider to be used for the funding
     of the Class A Cash Collateral Account in accordance with Section 3.6(i) of
     the  Intercreditor  Agreement by reason of the receipt by the Borrower of a
     Termination  Notice  from  the  Liquidity  Provider  with  respect  to  the
     Liquidity Agreement, which Advance is requested to be made on ____________,
     ____.

          (3)  The  amount  of  the  Final  Advance   requested  hereby  (i)  is
     $_________________.__, which equals the Maximum Available Commitment on the
     date  hereof and is to be applied in respect of the  funding of the Class A
     Cash   Collateral   Account  in  accordance  with  Section  3.6(i)  of  the
     Intercreditor  Agreement,  (ii) does not include any amount with respect to
     the payment of principal  of, or premium on, the Class A  Certificates,  or
     principal  of, or interest or premium on, the Class B  Certificates  or the
     Class C Certificates,  (iii) was computed in accordance with the provisions
     of  the  Class  A  Certificates,  the  Class  A  Trust  Agreement  and  the
     Intercreditor  Agreement (a copy of which computation is attached hereto as
     Schedule  I),  and (iv) has not been and is not the  subject  of a prior or
     contemporaneous Notice of Borrowing.

          (4)  Upon  receipt  by or on  behalf  of the  Borrower  of the  amount
     requested hereby,  (a) the Borrower will deposit such amount in the Class A
     Cash Collateral  Account and apply the same in accordance with the terms of
     Section  3.6(i) of the  Intercreditor  Agreement,  (b) no  portion  of such
     amount shall be applied by the  Borrower  for any other  purpose and (c) no
     portion of such  amount  until so applied  shall be  commingled  with other
     funds held by the Borrower.



          (5) The Borrower hereby requests that the Advance  requested hereby be
     a Base Rate Advance  [and that such Base Rate  Advance be converted  into a
     LIBOR  Advance on the third  Business  Day  following  your receipt of this
     notice.]

          The  Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the Final  Advance as  requested by this Notice of
Borrowing shall  automatically  and irrevocably  terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity  Agreement;  and
(B)  following  the  making  by the  Liquidity  Provider  of the  Final  Advance
requested by this Notice of  Borrowing,  the  Borrower  shall not be entitled to
request any further Advances under the Liquidity Agreement.

          IN WITNESS  WHEREOF,  the Borrower has  executed  and  delivered  this
Notice of Borrowing as of the ____ day of ____________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:






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

   Bracketed language may be included at Borrower's option.



                 SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING

          [Insert Copy of  Computations  in accordance with Final Advance Notice
of Borrowing]



                                                                      Annex V to
                                                      Revolving Credit Agreement



                              NOTICE OF TERMINATION




                                               [Date]

Wilmington Trust Company,
  as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001

Attention:  Corporate Trust Administration

Revolving Credit Agreement dated as of April 21, 1998,  between Wilmington Trust
     Company,  as Subordination  Agent, as agent and trustee for the Continental
     Airlines  Pass  Through  Trust,  1998-2A,  as  Borrower,  and  Westdeutsche
     Landesbank Girozentrale, acting through its New York Branch (the "LIQUIDITY
     AGREEMENT")

Ladies and Gentlemen:

          You are hereby notified that pursuant to Section 6.01 of the Liquidity
Agreement,  by reason of the occurrence of a Liquidity  Event of Default and the
existence of a Performing  Note  Deficiency  (each as defined  therein),  we are
giving this notice to you in order to cause (i) our obligations to make Advances
(as defined  therein) under such  Liquidity  Agreement to terminate on the fifth
Business  Day after the date on which you  receive  this  notice and (ii) you to
request a Final Advance under the Liquidity Agreement pursuant to Section 3.6(i)
of the  Intercreditor  Agreement  (as defined in the  Liquidity  Agreement) as a
consequence of your receipt of this notice.



          THIS  NOTICE IS THE  "NOTICE OF  TERMINATION"  PROVIDED  FOR UNDER THE
LIQUIDITY  AGREEMENT.  OUR  OBLIGATIONS  TO MAKE  ADVANCES  UNDER THE  LIQUIDITY
AGREEMENT  WILL  TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU
RECEIVE THIS NOTICE.

                                        Very truly yours,

                                        WESTDEUTSCHE  LANDESBANK   GIROZENTRALE,
                                          acting through its New York Branch, as
                                          Liquidity Provider


                                        By:_____________________________________
                                           Name:
                                           Title:


cc:  Wilmington Trust Company,
      as Class A Trustee



                                                                     Annex VI to
                                                      Revolving Credit Agreement

                    NOTICE OF REPLACEMENT SUBORDINATION AGENT

[Date]
Attention:

     Revolving Credit Agreement dated as of April 21, 1998,  between  Wilmington
     Trust  Company,  as  Subordination  Agent,  as agent  and  trustee  for the
     Continental  Airlines  Pass  Through  Trust,  1998-2A,  as  Borrower,   and
     Westdeutsche  Landesbank  Girozentrale,  acting through its New York Branch
     (the "LIQUIDITY AGREEMENT")

Ladies and Gentlemen:

          For value received,  the undersigned  beneficiary  hereby  irrevocably
transfers to:

                         ______________________________
                              [Name of Transferee]


                         ______________________________
                             [Address of Transferee]

all rights and  obligations  of the  undersigned as Borrower under the Liquidity
Agreement  referred to above.  The transferee  has succeeded the  undersigned as
Subordination  Agent under the Intercreditor  Agreement referred to in the first
paragraph of the  Liquidity  Agreement,  pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.

          By this transfer,  all rights of the undersigned as Borrower under the
Liquidity  Agreement are transferred to the transferee and the transferee  shall
hereafter  have the sole  rights and  obligations  as Borrower  thereunder.  The
undersigned  shall pay any costs and expenses of such transfer,  including,  but
not limited to, transfer taxes or governmental charges.

          We ask that this transfer be effective as of _______________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:



                                                                       EXECUTION









================================================================================




                           REVOLVING CREDIT AGREEMENT
                                    (1998-2B)


                           DATED AS OF APRIL 21, 1998

                                     BETWEEN

                            WILMINGTON TRUST COMPANY,

                             AS SUBORDINATION AGENT,
                          AS AGENT AND TRUSTEE FOR THE
                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2B

                                   AS BORROWER

                                       AND

                      WESTDEUTSCHE LANDESBANK GIROZENTRALE,
                       ACTING THROUGH ITS NEW YORK BRANCH

                              AS LIQUIDITY PROVIDER



================================================================================




                                   RELATING TO

                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2B
             6.465% CONTINENTAL AIRLINES PASS THROUGH CERTIFICATES,
                                 SERIES 1998-2B





                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

ARTICLE I - DEFINITIONS
  Section 1.01.  Certain Defined Terms..................................      1

ARTICLE II - AMOUNT AND TERMS OF THE COMMITMENT
  Section 2.01.  The Advances...........................................      7
  Section 2.02.  Making the Advances....................................      7
  Section 2.03.  Fees...................................................      9
  Section 2.04.  Reductions or Termination of the Maximum Commitment....      9
  Section 2.05.  Repayments of Interest Advances or the Final Advance...      9
  Section 2.06.  Repayments of Provider Advances........................     10
  Section 2.07.  Payments to the Liquidity Provider Under the
                 Intercreditor Agreement................................     11
  Section 2.08.  Book Entries...........................................     11
  Section 2.09.  Payments from Available Funds Only.....................     11
  Section 2.10.  Extension of the Expiry Date; Non-Extension Advance....     12

ARTICLE III - OBLIGATIONS OF THE BORROWER
  Section 3.01.  Increased Costs........................................     12
  Section 3.02.  Capital Adequacy.......................................     13
  Section 3.03.  Payments Free of Deductions............................     13
  Section 3.04.  Payments...............................................     14
  Section 3.05.  Computations...........................................     15
  Section 3.06.  Payment on Non-Business Days...........................     15
  Section 3.07.  Interest...............................................     15
  Section 3.08.  Replacement of Borrower................................     16
  Section 3.09.  Funding Loss Indemnification...........................     17
  Section 3.10.  Illegality.............................................     17

ARTICLE IV - CONDITIONS PRECEDENT
  Section 4.01.  Conditions Precedent to Effectiveness of Section 2.01..     17
  Section 4.02.  Conditions Precedent to Borrowing......................     19

ARTICLE V - COVENANTS
  Section 5.01.  Affirmative Covenants of the Borrower..................     19
  Section 5.02.  Negative Covenants of the Borrower.....................     20

ARTICLE VI - LIQUIDITY EVENTS OF DEFAULT
  Section 6.01.  Liquidity Events of Default............................     20

ARTICLE VII - MISCELLANEOUS
  Section 7.01.  Amendments, Etc........................................     20
  Section 7.02.  Notices, Etc...........................................     21



                                TABLE OF CONTENTS
                                  (Continued)

                                                                            PAGE
                                                                            ----

  Section 7.03.  No Waiver; Remedies....................................     22
  Section 7.04.  Further Assurances.....................................     22
  Section 7.05.  Indemnification; Survival of Certain Provisions........     22
  Section 7.06.  Liability of the Liquidity Provider....................     22
  Section 7.07.  Costs, Expenses and Taxes..............................     23
  Section 7.08.  Binding Effect; Participations.........................     23
  Section 7.09.  Severability...........................................     25
  Section 7.10.  GOVERNING LAW..........................................     25
  Section 7.11.  Submission to Jurisdiction; Waiver of Jury Trial;
                 Waiver of Immunity.....................................     25
  Section 7.12.  Execution in Counterparts..............................     26
  Section 7.13.  Entirety...............................................     26
  Section 7.14.  Headings...............................................     26
  Section 7.15.  LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.......     26


ANNEX I          Interest Advance Notice of Borrowing

ANNEX II         Non-Extension Advance Notice of Borrowing

ANNEX III        Downgrade Advance Notice of Borrowing

ANNEX IV         Final Advance Notice of Borrowing

ANNEX V          Notice of Termination

ANNEX VI         Notice of Replacement Subordination Agent



                           REVOLVING CREDIT AGREEMENT

This REVOLVING CREDIT AGREEMENT dated as of April 21, 1998,  between  WILMINGTON
TRUST COMPANY, a Delaware corporation, not in its individual capacity but solely
as  Subordination  Agent  under the  Intercreditor  Agreement  (each as  defined
below),  as agent and  trustee  for the Class B Trust (as  defined  below)  (the
"BORROWER"),  and WESTDEUTSCHE LANDESBANK  GIROZENTRALE,  a bank organized under
the laws of the State of North Rhine-Westphalia, Germany, acting through its New
York branch (the "LIQUIDITY PROVIDER").

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS,  pursuant to the Class B Trust  Agreement  (such term and all
other  capitalized terms used in these recitals having the meanings set forth or
referred  to in  Section  1.01),  the  Class  B Trust  is  issuing  the  Class B
Certificates; and

          WHEREAS,  the  Borrower,  in order to support the timely  payment of a
portion of the interest on the Class B  Certificates  in  accordance  with their
terms,  has  requested  the  Liquidity  Provider  to enter into this  Agreement,
providing in part for the Borrower to request in  specified  circumstances  that
Advances be made hereunder.

          NOW, THEREFORE,  in consideration of the premises,  the parties hereto
agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

          Section 1.01. CERTAIN DEFINED TERMS. (a) DEFINITIONS.  As used in this
Agreement  and unless  otherwise  expressly  indicated,  or unless  the  context
clearly  requires  otherwise,  the  following  capitalized  terms shall have the
following respective meanings for all purposes of this Agreement:

          "ADDITIONAL  COST" has the  meaning  assigned  to such term in Section
     3.01.

          "ADVANCE"  means an  Interest  Advance,  a Final  Advance,  a Provider
     Advance,  an Applied Provider Advance or an Unpaid Advance, as the case may
     be.

          "APPLICABLE  LIQUIDITY RATE" has the meaning  assigned to such term in
     Section 3.07(g).

          "APPLICABLE  MARGIN"  means (y) with respect to any Unpaid  Advance or
     Applied  Provider  Advance,  1.75%,  or (z) with  respect to any  Unapplied
     Provider Advance, .40%.



          "APPLIED  DOWNGRADE  ADVANCE" has the meaning assigned to such term in
     Section 2.06(a).

          "APPLIED  NON-EXTENSION ADVANCE" has the meaning assigned to such term
     in Section 2.06(a).

          "APPLIED  PROVIDER  ADVANCE" has the meaning  assigned to such term in
     Section 2.06(a).

          "BASE RATE" means a fluctuating interest rate per annum in effect from
     time to time,  which rate per annum  shall at all times be equal to (a) the
     weighted average of the rates on overnight Federal funds  transactions with
     members of the Federal Reserve System arranged by Federal funds brokers, as
     published for such day (or, if such day is not a Business Day, for the next
     preceding Business Day) by the Federal Reserve Bank of New York, or if such
     rate is not so published for any day that is a Business Day, the average of
     the quotations for such day for such transactions received by the Liquidity
     Provider from three Federal funds brokers of recognized  standing  selected
     by it, plus (b) one-quarter of one percent (1/4 of 1%).

          "BASE RATE  ADVANCE"  means an Advance  that bears  interest at a rate
     based upon the Base Rate.

          "BORROWER"  has the  meaning  assigned  to such term in the recital of
     parties to this Agreement.

          "BORROWING"  means the making of Advances  requested  by delivery of a
     Notice of Borrowing.

          "BUSINESS  DAY" means any day other than a Saturday or 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  Class B  Certificate  is
     outstanding,  the city and state in which the Class B Trustee, the Borrower
     or any Loan Trustee  maintains  its  Corporate  Trust Office or receives or
     disburses funds, and, if the applicable Business Day relates to any Advance
     or other amount bearing interest based on the LIBOR Rate, on which dealings
     are carried on in the London interbank market.

          "DOWNGRADE ADVANCE" means an Advance made pursuant to Section 2.02(c).

          "EFFECTIVE  DATE" has the  meaning  specified  in  Section  4.01.  The
     delivery of the  certificate  of the  Liquidity  Provider  contemplated  by
     Section  4.01(e) shall be conclusive  evidence that the Effective  Date has
     occurred.

          "EXCLUDED  TAXES" means (i) taxes imposed on the overall net income of
     the Liquidity  Provider or of its Lending Office by the jurisdiction  where
     such  Liquidity  Provider's  principal  office  or such  Lending  Office is
     located, and (ii) Excluded Withholding Taxes.



          "EXCLUDED  WITHHOLDING  TAXES" means (i) withholding  Taxes imposed by
     the United States except to the extent that such United States  withholding
     Taxes are imposed as a result of any change in  applicable  law  (excluding
     from change in  applicable  law for this purpose a change in an  applicable
     treaty or other  change in law  affecting  the  applicability  of a treaty)
     after the date  hereof,  or in the case of a successor  Liquidity  Provider
     (including a transferee of an Advance) or Lending Office, after the date on
     which such successor  Liquidity  Provider  obtains its interest or on which
     the Lending Office is changed,  and (ii) any  withholding  Taxes imposed by
     the  United  States  which  are  imposed  or  increased  as a result of the
     Liquidity  Provider  failing to deliver to the Borrower any  certificate or
     document  (which  certificate or document in the good faith judgment of the
     Liquidity  Provider it is legally  entitled to provide) which is reasonably
     requested by the Borrower to establish  that payments  under this Agreement
     are exempt from (or entitled to a reduced rate of) withholding Tax.

          "EXPENSES"  means  liabilities,   obligations,  damages,  settlements,
     penalties,  claims,  actions,  suits,  costs,  expenses,  and disbursements
     (including, without limitation,  reasonable fees and disbursements of legal
     counsel  and costs of  investigation),  provided  that  Expenses  shall not
     include any Taxes.

          "EXPIRY  DATE" means April 19, 1999,  initially,  or any date to which
     the Expiry Date is extended pursuant to Section 2.10.

          "FINAL ADVANCE" means an Advance made pursuant to Section 2.02(d).

          "INTERCREDITOR  AGREEMENT" means the Intercreditor Agreement dated the
     date hereof,  among the  Trustees,  the Liquidity  Provider,  the liquidity
     provider under each Liquidity  Facility (other than this Agreement) and the
     Subordination Agent, as the same may be amended,  supplemented or otherwise
     modified from time to time in accordance with its terms.

          "INTEREST ADVANCE" means an Advance made pursuant to Section 2.02(a).

          "INTEREST  PERIOD" means,  with respect to any LIBOR Advance,  each of
     the following periods:

          (i)  the period  beginning on the third Business Day following  either
               (x) the Liquidity  Provider's  receipt of the Notice of Borrowing
               for such LIBOR Advance (or, in the case of an Unapplied Downgrade
               Advance,  the period  beginning  on the  Expiry  Date) or (y) the
               withdrawal of funds from the Class B Cash Collateral  Account for
               the  purpose of paying  interest on the Class B  Certificates  as
               contemplated  by Section  2.06(a)  hereof  and,  in either  case,
               ending on the next Regular  Distribution  Date (or ending, in the
               case of an Interest Period  applicable to any Unapplied  Provider
               Advance,  on the  numerically  corresponding  day in the first or
               sixth  calendar  month  after  the  first  day of the  applicable
               Interest Period and/or on the next Regular  Distribution Date, as
               Continental  may  select  by  providing  notice  thereof  to  the



               Borrower and the Liquidity  Provider no later than three Business
               Days prior to the commencement of such Interest Period,  provided
               that if  Continental  shall  not  provide  such a notice at least
               three  Business Days prior to the  commencement  of such Interest
               Period,  then  Continental  shall be deemed to have  selected  an
               Interest  Period ending on the next Regular  Distribution  Date);
               and

          (ii) each  subsequent  period  commencing  on  the  last  day  of  the
               immediately  preceding  Interest  Period  and  ending on the next
               Regular  Distribution Date (or ending, in the case of an Interest
               Period  applicable  to any  Unapplied  Provider  Advance,  on the
               numerically  corresponding  day in the  first or  sixth  calendar
               month  after  the  first day of the  applicable  Interest  Period
               and/or on the next Regular  Distribution Date, as Continental may
               select  by  providing  notice  thereof  to the  Borrower  and the
               Liquidity Provider no later than three Business Days prior to the
               commencement   of  such   Interest   Period,   provided  that  if
               Continental  shall  not  provide  such a notice  at  least  three
               Business Days prior to the  commencement of such Interest Period,
               then  Continental  shall be deemed to have  selected  an Interest
               Period ending on the next Regular Distribution Date);

     PROVIDED,  HOWEVER,  that (I) if an Unapplied  Provider  Advance which is a
     LIBOR Advance becomes an Applied Provider Advance, the Interest Period then
     applicable to such Unapplied  Provider  Advance shall be applicable to such
     Applied  Provider Advance and (II) if (x) the Final Advance shall have been
     made, or (y) other outstanding  Advances shall have been converted into the
     Final Advance, then the Interest Periods shall be successive periods of one
     month   beginning  on  the  third  Business  Day  following  the  Liquidity
     Provider's  receipt of the Notice of Borrowing  for such Final  Advance (in
     the case of clause (x) above) or the last day of the  Interest  Period then
     applicable to such outstanding Advances (in the case of clause (y) above).

          "LENDING  OFFICE" means the lending  office of the Liquidity  Provider
     presently  located at New York,  New York, or such other lending  office as
     the  Liquidity  Provider from time to time shall notify the Borrower as its
     lending office  hereunder;  PROVIDED that the Liquidity  Provider shall not
     change its Lending  Office to a Lending Office outside the United States of
     America except in accordance with Section 3.01, 3.02 or 3.03 hereof.

          "LIBOR ADVANCE" means an Advance bearing interest at a rate based upon
     the LIBOR Rate.

          "LIBOR RATE" means,  with respect to any Interest Period,  the average
     (rounded upward, if necessary,  to the next higher 1/16 of 1%) of the rates
     per annum at which  deposits  in dollars  are offered to major banks in the
     London  interbank  market at  approximately  11:00 A.M.  (London  time) two
     Business  Days  before the first day of such  Interest  Period in an amount
     approximately  equal to the  principal  amount of the Advance to which such
     Interest  Period is to apply and for a period  of time  comparable  to such
     Interest Period.



          "LIQUIDITY  EVENT OF DEFAULT"  means the  occurrence of either (a) the
     Acceleration of all of the Equipment Notes or (b) a Continental  Bankruptcy
     Event.

          "LIQUIDITY  INDEMNITEE"  means (i) the  Liquidity  Provider,  (ii) the
     directors,  officers,  employees and agents of the Liquidity Provider,  and
     (iii) the  successors  and  permitted  assigns of the persons  described in
     clauses (i) and (ii), inclusive.

          "LIQUIDITY  PROVIDER"  has the  meaning  assigned  to such term in the
     recital of parties to this Agreement.

          "MAXIMUM  AVAILABLE  COMMITMENT"  shall  mean,  subject to the proviso
     contained  in the  third  sentence  of  Section  2.02(a),  at any  time  of
     determination,  (a) the  Maximum  Commitment  at  such  time  LESS  (b) the
     aggregate  amount  of each  Interest  Advance  outstanding  at  such  time;
     PROVIDED that following a Provider Advance or a Final Advance,  the Maximum
     Available Commitment shall be zero.

          "MAXIMUM  COMMITMENT" means initially  $3,779,892,  as the same may be
     reduced from time to time in accordance with Section 2.04(a).

          "NON-EXTENSION  ADVANCE"  means an Advance  made  pursuant  to Section
     2.02(b).

          "NOTICE OF BORROWING" has the meaning specified in Section 2.02(e).

          "NOTICE OF REPLACEMENT  SUBORDINATION AGENT" has the meaning specified
     in Section 3.08.

          "PERFORMING NOTE DEFICIENCY"  means any time that less than 65% of the
     then  aggregate  outstanding  principal  amount of all Equipment  Notes are
     Performing Equipment Notes.

          "PROSPECTUS  SUPPLEMENT"  means the Prospectus  Supplement dated April
     15, 1998 relating to the Certificates, as such Prospectus Supplement may be
     amended or supplemented.

          "PROVIDER  ADVANCE"  means  a  Downgrade  Advance  or a  Non-Extension
     Advance.

          "REGULATORY  CHANGE" has the meaning  assigned to such term in Section
     3.01.

          "REPLENISHMENT  AMOUNT"  has the  meaning  assigned  to  such  term in
     Section 2.06(b).

          "REQUIRED  AMOUNT" means, for any day, the sum of the aggregate amount
     of interest,  calculated at the rate per annum equal to the Stated Interest
     Rate for the Class B  Certificates,  that  would be  payable on the Class B
     Certificates   on  each  of  the  three   successive   semiannual   Regular
     Distribution  Dates  immediately  following  such day or,  if such day is a
     Regular  Distribution  Date, on such day and the  succeeding two semiannual
     Regular  Distribution  Dates,  in each case  calculated on the basis of the



     Pool Balance of the Class B Certificates  on such day and without regard to
     expected future payments of principal on the Class B Certificates.

          "TAX  LETTER"  means the  letter  dated the date  hereof  between  the
     Liquidity Provider and Continental pertaining to this Agreement.

          "TERMINATION  DATE" means the earliest to occur of the following:  (i)
     the  Expiry  Date;  (ii) the date on which  the  Borrower  delivers  to the
     Liquidity  Provider a certificate,  signed by a Responsible  Officer of the
     Borrower, certifying that all of the Class B Certificates have been paid in
     full (or provision  has been made for such payment in  accordance  with the
     Intercreditor  Agreement  and the Trust  Agreements)  or are  otherwise  no
     longer entitled to the benefits of this Agreement;  (iii) the date on which
     the Borrower delivers to the Liquidity Provider a certificate,  signed by a
     Responsible  Officer  of  the  Borrower,   certifying  that  a  Replacement
     Liquidity Facility has been substituted for this Agreement in full pursuant
     to Section 3.6(e) of the Intercreditor  Agreement;  (iv) the fifth Business
     Day following the receipt by the Borrower of a Termination  Notice from the
     Liquidity  Provider  pursuant to Section 6.01  hereof;  and (v) the date on
     which no Advance is or may (including by reason of  reinstatement as herein
     provided) become available for a Borrowing hereunder.

          "TERMINATION NOTICE" means the Notice of Termination  substantially in
     the form of Annex V to this Agreement.

          "TRANSFEREE" has the meaning assigned to such term in Section 7.08(b).

          "UNAPPLIED  DOWNGRADE  ADVANCE" means any Downgrade Advance other than
     an Applied Downgrade Advance.

          "UNAPPLIED  NON-EXTENSION  ADVANCE"  means any  Non-Extension  Advance
     other than an Applied Non-Extension Advance.

          "UNAPPLIED  PROVIDER ADVANCE" means any Provider Advance other than an
     Applied Provider Advance.

          "UNPAID  ADVANCE"  has the  meaning  assigned  to such term in Section
     2.05.

          (b) TERMS DEFINED IN THE INTERCREDITOR  AGREEMENT. For all purposes of
this Agreement,  the following terms shall have the respective meanings assigned
to such terms in the Intercreditor Agreement:

          "ACCELERATION",  "CERTIFICATES", "CLASS A CERTIFICATES", "CLASS B CASH
     COLLATERAL ACCOUNT", "CLASS B CERTIFICATEHOLDERS",  "CLASS B CERTIFICATES",
     "CLASS B TRUST",  "CLASS B TRUST  AGREEMENT",  "CLASS B TRUSTEE",  "CLASS C
     CERTIFICATES",  "CLOSING  DATE",  "CONTINENTAL",   "CONTINENTAL  BANKRUPTCY
     EVENT", "CONTROLLING PARTY", "CORPORATE TRUST Office", "DISTRIBUTION DATE",
     "DOWNGRADED  FACILITY",  "EQUIPMENT  NOTES",  "FEE  LETTER",  "FINAL  LEGAL
     DISTRIBUTION  DATE",   "INTEREST  PAYMENT  DATE",   "INVESTMENT  EARNINGS",



     "LIQUIDITY FACILITY",  "LIQUIDITY OBLIGATIONS",  "LOAN TRUSTEE", "MOODY'S",
     "NON-EXTENDED FACILITY", "OPERATIVE AGREEMENTS", "PARTICIPATION AGREEMENT",
     "PERFORMING  EQUIPMENT NOTE",  "PERSON",  "POOL BALANCE",  "RATING AGENCY",
     "RATINGS CONFIRMATION", "REGULAR DISTRIBUTION DATE", "REPLACEMENT LIQUIDITY
     FACILITY",  "RESPONSIBLE OFFICER",  "SCHEDULED PAYMENT", "SPECIAL PAYMENT",
     "STANDARD  &  POOR'S",  "STATED  INTEREST  RATE",   "SUBORDINATION  AGENT",
     "TAXES",  "THRESHOLD RATING",  "TRANSFER",  "TRUST AGREEMENTS",  "TRUSTEE",
     "UNDERWRITERS", "UNDERWRITING AGREEMENT", and "WRITTEN NOTICE".


                                   ARTICLE II

                       AMOUNT AND TERMS OF THE COMMITMENT

          Section 2.01. THE ADVANCES.  The Liquidity Provider hereby irrevocably
agrees,  on the terms and conditions  hereinafter set forth, to make Advances to
the  Borrower  from time to time on any  Business Day during the period from the
Effective  Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the  obligations  of the  Liquidity  Provider  shall be  earlier  terminated  in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the Maximum Commitment.

          Section 2.02. MAKING THE ADVANCES. (a) Interest Advances shall be made
in one or more  Borrowings by delivery to the Liquidity  Provider of one or more
written and completed  Notices of Borrowing in substantially the form of Annex I
attached hereto,  signed by a Responsible Officer of the Borrower,  in an amount
not  exceeding the Maximum  Available  Commitment at such time and shall be used
solely for the payment when due of interest on the Class B  Certificates  at the
Stated  Interest  Rate  therefor  in  accordance  with  Section  3.6(a)  of  the
Intercreditor   Agreement.   Each   Interest   Advance  made   hereunder   shall
automatically  reduce the Maximum Available  Commitment and the amount available
to be borrowed  hereunder by subsequent  Advances by the amount of such Interest
Advance  (subject  to  reinstatement  as provided  in the next  sentence).  Upon
repayment  to the  Liquidity  Provider  in full of the  amount  of any  Interest
Advance made pursuant to this Section  2.02(a),  together with accrued  interest
thereon  (as  provided  herein),  the  Maximum  Available  Commitment  shall  be
reinstated by the amount of such repaid Interest Advance,  but not to exceed the
Maximum Commitment;  PROVIDED,  HOWEVER,  that the Maximum Available  Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.

          (b) A  Non-Extension  Advance  shall be made in a single  Borrowing if
this  Agreement  is not  extended  in  accordance  with  Section  3.6(d)  of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement  shall have been  delivered  to the Borrower as  contemplated  by said
Section 3.6(d) within the time period  specified in such Section) by delivery to
the  Liquidity  Provider  of a written  and  completed  Notice of  Borrowing  in
substantially  the form of Annex II  attached  hereto,  signed by a  Responsible
Officer of the Borrower,  in an amount equal to the Maximum Available Commitment
at such time, and shall be used to fund the Class B Cash  Collateral  Account in
accordance  with said  Section  3.6(d) and Section  3.6(f) of the  Intercreditor
Agreement.



          (c) A Downgrade  Advance  shall be made in a single  Borrowing  upon a
downgrading of the Liquidity Provider's  short-term unsecured debt rating issued
by either Rating Agency below the applicable  Threshold  Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility to replace this Agreement shall have been  previously  delivered to the
Borrower in accordance  with said Section  3.6(c),  by delivery to the Liquidity
Provider of a written and  completed  Notice of Borrowing in  substantially  the
form of Annex III  attached  hereto,  signed  by a  Responsible  Officer  of the
Borrower,  in an amount equal to the Maximum Available  Commitment at such time,
and shall be used to fund the Class B Cash Collateral Account in accordance with
said Section 3.6(c) and Section 3.6(f) of the Intercreditor Agreement.

          (d) A Final  Advance  shall  be made in a  single  Borrowing  upon the
receipt by the  Borrower of a  Termination  Notice from the  Liquidity  Provider
pursuant  to Section  6.01 hereof by  delivery  to the  Liquidity  Provider of a
written and completed Notice of Borrowing in substantially  the form of Annex IV
attached hereto,  signed by a Responsible Officer of the Borrower,  in an amount
equal to the Maximum  Available  Commitment  at such time,  and shall be used to
fund the Class B Cash  Collateral  Account (in accordance with Section 3.6(i) of
the Intercreditor Agreement) and Section 3.6(f) of the Intercreditor Agreement.

          (e) Each  Borrowing  shall be made on notice in  writing (a "NOTICE OF
BORROWING")  in  substantially  the form required by Section  2.02(a),  2.02(b),
2.02(c) or 2.02(d),  as the case may be, given by the Borrower to the  Liquidity
Provider.  If a Notice of  Borrowing  is delivered by the Borrower in respect of
any  Borrowing no later than 12:00 Noon (New York City time) on a Business  Day,
upon  satisfaction  of the  conditions  precedent set forth in Section 4.02 with
respect to a requested Borrowing, the Liquidity Provider shall make available to
the Borrower,  in accordance with its payment  instructions,  the amount of such
Borrowing in U.S.  dollars and immediately  available  funds,  before 12:00 Noon
(New York City time) on the first Business Day next following the day of receipt
of such Notice of  Borrowing  or on such later  Business  Day  specified in such
Notice of  Borrowing.  If a Notice of  Borrowing is delivered by the Borrower in
respect  of any  Borrowing  after  12:00 Noon (New York City time) on a Business
Day, upon  satisfaction  of the  conditions  precedent set forth in Section 4.02
with  respect  to a  requested  Borrowing,  the  Liquidity  Provider  shall make
available to the Borrower,  in  accordance  with its payment  instructions,  the
amount of such  Borrowing in U.S.  dollars and in immediately  available  funds,
before 12:00 Noon (New York City time) on the second Business Day next following
the day of receipt of such Notice of  Borrowing  or on such later  Business  Day
specified by the Borrower in such Notice of Borrowing. Payments of proceeds of a
Borrowing  shall be made by wire transfer of immediately  available funds to the
Borrower in  accordance  with such wire  transfer  instructions  as the Borrower
shall furnish from time to time to the Liquidity Provider for such purpose. Each
Notice of Borrowing shall be irrevocable and binding on the Borrower.

          (f) Upon the making of any Advance  requested  pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully  discharged of its obligation  hereunder with respect to
such Notice of Borrowing,  and the Liquidity  Provider  shall not  thereafter be
obligated  to make any further  Advances  hereunder in respect of such Notice of



Borrowing to the Borrower or to any other  Person.  Following  the making of any
Advance pursuant to Section 2.02(b),  (c) or (d) hereof to fund the Class B Cash
Collateral  Account,  the Liquidity Provider shall have no interest in or rights
to the Class B Cash Collateral  Account,  such Advance or any other amounts from
time to time on deposit in the Class B Cash  Collateral  Account;  PROVIDED that
the foregoing  shall not affect or impair the  obligations of the  Subordination
Agent to make the  distributions  contemplated  by Section  3.6(e) or (f) of the
Intercreditor  Agreement.  By  paying  to  the  Borrower  proceeds  of  Advances
requested by the Borrower in accordance  with the provisions of this  Agreement,
the  Liquidity   Provider  makes  no   representation  as  to,  and  assumes  no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.

          Section  2.03.  FEES.  The  Borrower  agrees  to pay to the  Liquidity
Provider the fees set forth in the Fee Letter.

          Section   2.04.    REDUCTIONS   OR    TERMINATION   OF   THE   MAXIMUM
COMMITMENT.

          (a) AUTOMATIC  REDUCTION.  Promptly  following  each date on which the
Required Amount is reduced as a result of a reduction in the Pool Balance of the
Class B Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Maximum  Commitment to the Liquidity  Provider within two Business Days thereof.
The failure by the  Borrower  to furnish  any such notice  shall not affect such
automatic reduction of the Maximum Commitment.

          (b)  TERMINATION.  Upon the  making of any  Provider  Advance or Final
Advance  hereunder or the occurrence of the Termination  Date, the obligation of
the Liquidity  Provider to make further Advances  hereunder shall  automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.

          Section 2.05.  REPAYMENTS OF INTEREST  ADVANCES OR THE FINAL  ADVANCE.
Subject to Sections  2.06,  2.07 and 2.09 hereof,  the Borrower  hereby  agrees,
without notice of an Advance or demand for repayment from the Liquidity Provider
(which notice and demand are hereby waived by the Borrower), to pay, or to cause
to be paid,  to the  Liquidity  Provider  on each  date on which  the  Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Advance (any such Advance,  until repaid,  is referred to
herein as an "UNPAID  ADVANCE"),  plus (b)  interest  on the amount of each such
Unpaid  Advance as provided in Section  3.07  hereof;  PROVIDED  that if (i) the
Liquidity Provider shall make a Provider Advance at any time after making one or
more Interest  Advances which shall not have been repaid in accordance with this
Section 2.05 or (ii) this Liquidity Facility shall become a Downgraded  Facility
or Non-Extended  Facility at any time when  unreimbursed  Interest Advances have
reduced the Maximum  Available  Commitment to zero, then such Interest  Advances
shall  cease to  constitute  Unpaid  Advances  and  shall be deemed to have been
changed into an Applied Downgrade Advance or an Applied  Non-Extension  Advance,
as the case may be,  for all  purposes  of this  Agreement  (including,  without
limitation,  for the  purpose  of  determining  when such  Interest  Advance  is
required to be repaid to the Liquidity  Provider in accordance with Section 2.06



and for the  purposes  of  Section  2.06(b)).  The  Borrower  and the  Liquidity
Provider  agree that the  repayment in full of each  Interest  Advance and Final
Advance on the date such  Advance is made is  intended  to be a  contemporaneous
exchange for new value given to the Borrower by the Liquidity Provider.

          Section 2.06.  REPAYMENTS OF PROVIDER  ADVANCES.  (a) Amounts advanced
hereunder  in respect of a Provider  Advance  shall be  deposited in the Class B
Cash Collateral Account, invested and withdrawn from the Class B Cash Collateral
Account  as set  forth  in  Sections  3.6(c),  (d) and (f) of the  Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date,  commencing on the first Regular  Distribution Date after the
making of a  Provider  Advance,  interest  on the  principal  amount of any such
Provider Advance as provided in Section 3.07; PROVIDED, HOWEVER, that amounts in
respect of a Provider Advance withdrawn from the Class B Cash Collateral Account
for the purpose of paying  interest on the Class B  Certificates  in  accordance
with  Section  3.6(f) of the  Intercreditor  Agreement  (the  amount of any such
withdrawal being (y) in the case of a Downgrade  Advance,  an "APPLIED DOWNGRADE
ADVANCE"  and  (z)  in  the  case  of  a  Non-Extension   Advance,  an  "APPLIED
NON-EXTENSION  ADVANCE" and,  together  with an Applied  Downgrade  Advance,  an
"APPLIED  PROVIDER  ADVANCE") shall  thereafter  (subject to Section 2.06(b)) be
treated as an Interest  Advance under this Agreement for purposes of determining
the Applicable  Liquidity Rate for interest payable thereon;  PROVIDED  FURTHER,
HOWEVER,  that if,  following  the making of a Provider  Advance,  the Liquidity
Provider delivers a Termination  Notice to the Borrower pursuant to Section 6.01
hereof,  such Provider  Advance  shall  thereafter be treated as a Final Advance
under this Agreement for purposes of determining  the Applicable  Liquidity Rate
for  interest  payable  thereon.  Subject  to  Sections  2.07 and  2.09  hereof,
immediately  upon the withdrawal of any amounts from the Class B Cash Collateral
Account on account of a reduction in the  Required  Amount,  the Borrower  shall
repay  to the  Liquidity  Provider  a  portion  of the  Provider  Advances  in a
principal amount equal to such reduction,  plus interest on the principal amount
prepaid as provided in Section 3.07 hereof.

          (b) At any time  when an  Applied  Provider  Advance  (or any  portion
thereof) is outstanding, upon the deposit in the Class B Cash Collateral Account
of any amount pursuant to clause "THIRD" of Section 2.4(b) of the  Intercreditor
Agreement,  clause  "THIRD" of Section  3.2 of the  Intercreditor  Agreement  or
clause "FOURTH" of Section 3.3 of the  Intercreditor  Agreement (any such amount
being a  "REPLENISHMENT  AMOUNT") for the purpose of  replenishing or increasing
the balance  thereof up to the Required  Amount at such time,  (i) the aggregate
outstanding  principal amount of all Applied Provider  Advances (and of Provider
Advances  treated  as an  Interest  Advance  for  purposes  of  determining  the
Applicable  Liquidity Rate for interest  payable thereon) shall be automatically
reduced  by the  amount  of such  Replenishment  Amount  and (ii) the  aggregate
outstanding  principal  amount  of all  Unapplied  Provider  Advances  shall  be
automatically increased by the amount of such Replenishment Amount.

          (c)  Upon  the  provision  of  a  Replacement  Liquidity  Facility  in
replacement  of  this  Agreement  in  accordance  with  Section  3.6(e)  of  the
Intercreditor  Agreement,  amounts  remaining  on  deposit  in the  Class B Cash
Collateral  Account after giving effect to any Applied  Provider  Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only



to the extent  such  amounts  are  necessary  to repay in full to the  Liquidity
Provider all amounts owing to it hereunder.

          Section   2.07.   PAYMENTS  TO  THE  LIQUIDITY   PROVIDER   UNDER  THE
INTERCREDITOR  AGREEMENT.  In order to provide for payment or  repayment  to the
Liquidity  Provider  of  any  amounts  hereunder,  the  Intercreditor  Agreement
provides  that amounts  available  and referred to in Articles II and III of the
Intercreditor  Agreement,  to  the  extent  payable  to the  Liquidity  Provider
pursuant  to  the  terms  of the  Intercreditor  Agreement  (including,  without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof.  Amounts so paid to the
Liquidity  Provider  shall be applied by the  Liquidity  Provider  to  Liquidity
Obligations then due and payable in accordance with the Intercreditor  Agreement
or, if not provided for in the Intercreditor  Agreement,  then in such manner as
the Liquidity Provider shall deem appropriate.

          Section 2.08. BOOK ENTRIES.  The Liquidity  Provider shall maintain in
accordance  with its usual  practice  an  account  or  accounts  evidencing  the
indebtedness of the Borrower  resulting from Advances made from time to time and
the amounts of principal  and interest  payable  hereunder and paid from time to
time in respect thereof;  PROVIDED,  HOWEVER,  that the failure by the Liquidity
Provider to maintain such account or accounts  shall not affect the  obligations
of the Borrower in respect of Advances.

          Section 2.09.  PAYMENTS FROM AVAILABLE  FUNDS ONLY. All payments to be
made by the Borrower  under this  Agreement  shall be made only from the amounts
that constitute Scheduled Payments, Special Payments or payments under Section 9
of the  Participation  Agreements and only to the extent that the Borrower shall
have  sufficient  income or proceeds  therefrom  to enable the  Borrower to make
payments in accordance with the terms hereof after giving effect to the priority
of payments provisions set forth in the Intercreditor  Agreement.  The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for  distribution  to it as provided  in the  Intercreditor  Agreement  and this
Agreement and that the Borrower,  in its individual capacity,  is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly  provided  in  this  Agreement,  the  Intercreditor  Agreement  or any
Participation  Agreement.  Amounts  on  deposit  in the Class B Cash  Collateral
Account shall be available to the Borrower to make payments under this Agreement
only to the extent and for the purposes expressly contemplated in Section 3.6(f)
of the Intercreditor Agreement.

          Section 2.10. EXTENSION OF THE EXPIRY DATE;  NON-EXTENSION ADVANCE. No
earlier  than  the 60th  day and no  later  than the 40th day  prior to the then
effective  Expiry Date  (unless such Expiry Date is on or after the date that is
15 days after the Final Legal  Distribution  Date for the Class B Certificates),
the Borrower  shall request that the Liquidity  Provider  extend the Expiry Date
for a period of 364 days  after  the then  effective  Expiry  Date  (unless  the
obligations of the Liquidity  Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower,  no earlier
than 40 days and no later than 25 days prior to the then effective  Expiry Date,
whether, in its sole discretion,  it agrees to so extend the Expiry Date. If the
Liquidity  Provider  advises the Borrower on or before the 25th day prior to the



Expiry Date then in effect that such  Expiry Date shall not be so  extended,  or
fails to irrevocably  and  unconditionally  advise the Borrower on or before the
25th day prior to the Expiry  Date then in effect that such Expiry Date shall be
so extended  (and, in each case, if the Liquidity  Provider  shall not have been
replaced in accordance with Section 3.6(e) of the Intercreditor Agreement),  the
Borrower  shall be  entitled  on and after  such 25th day (but prior to the then
effective  Expiry Date) to request a  Non-Extension  Advance in accordance  with
Section 2.02(b) hereof and Section 3.6(d) of the Intercreditor Agreement.


                                   ARTICLE III

                          OBLIGATIONS OF THE BORROWER

          Section 3.01. INCREASED COSTS. The Borrower shall pay to the Liquidity
Provider  from time to time such amounts as may be necessary to  compensate  the
Liquidity  Provider for any increased  costs incurred by the Liquidity  Provider
which are attributable to its making or maintaining any LIBOR Advances hereunder
or its obligation to make any such Advances  hereunder,  or any reduction in any
amount  receivable  by  the  Liquidity  Provider  under  this  Agreement  or the
Intercreditor Agreement in respect of any such Advances or such obligation (such
increases in costs and  reductions  in amounts  receivable  being herein  called
"ADDITIONAL Costs"),  resulting from any change after the date of this Agreement
in U.S. federal,  state,  municipal,  or foreign laws or regulations  (including
Regulation D of the Board of Governors of the Federal  Reserve  System),  or the
adoption  or making  after the date of this  Agreement  of any  interpretations,
directives, or requirements applying to a class of banks including the Liquidity
Provider  under any U.S.  federal,  state,  municipal,  or any  foreign  laws or
regulations  (whether or not having the force of law) by any court, central bank
or monetary authority charged with the interpretation or administration  thereof
(a "REGULATORY CHANGE"), which: (1) changes the basis of taxation of any amounts
payable to the Liquidity  Provider  under this  Agreement in respect of any such
Advances  (other than Excluded  Taxes);  or (2) imposes or modifies any reserve,
special  deposit,  compulsory  loan  or  similar  requirements  relating  to any
extensions of credit or other assets of, or any deposits with other  liabilities
of, the Liquidity Provider (including any such Advances or any deposits referred
to in the  definition  of LIBOR  Rate or  related  definitions).  The  Liquidity
Provider agrees to use reasonable efforts  (consistent with applicable legal and
regulatory  restrictions)  to change the  jurisdiction  of its Lending Office if
making such change would avoid the need for, or reduce the amount of, any amount
payable  under this  Section  that may  thereafter  accrue and would not, in the
reasonable judgment of the Liquidity Provider,  be otherwise  disadvantageous to
the Liquidity Provider.

          The Liquidity Provider will notify the Borrower of any event occurring
after the date of this  Agreement  that will entitle the  Liquidity  Provider to
compensation  pursuant to this Section 3.01 as promptly as practicable  after it
obtains  knowledge  thereof and determines to request such  compensation,  which
notice shall describe in reasonable  detail the  calculation of the amounts owed
under this Section.  Determinations  by the  Liquidity  Provider for purposes of
this Section 3.01 of the effect of any Regulatory  Change on its costs of making
or maintaining  Advances or on amounts  receivable by it in respect of Advances,



and of the additional  amounts required to compensate the Liquidity  Provider in
respect of any  Additional  Costs,  shall be prima facie  evidence of the amount
owed under this Section.

          Section 3.02.  CAPITAL ADEQUACY.  If (1) the adoption,  after the date
hereof, of any applicable governmental law, rule or regulation regarding capital
adequacy,  (2) any  change,  after the date  hereof,  in the  interpretation  or
administration  of any such law, rule or regulation by any central bank or other
governmental authority charged with the interpretation or administration thereof
or (3) compliance by the Liquidity  Provider or any corporation  controlling the
Liquidity  Provider  with  any  applicable   guideline  or  request  of  general
applicability,  issued  after  the date  hereof,  by any  central  bank or other
governmental authority (whether or not having the force of law) that constitutes
a change of the nature  described  in clause (2), has the effect of requiring an
increase in the amount of capital  required to be  maintained  by the  Liquidity
Provider  or any  corporation  controlling  the  Liquidity  Provider,  and  such
increase is based upon the Liquidity Provider's  obligations hereunder and other
similar obligations,  the Borrower shall pay to the Liquidity Provider from time
to time such  additional  amount or amounts as are necessary to  compensate  the
Liquidity  Provider  for such  portion of such  increase as shall be  reasonably
allocable to the Liquidity Provider's obligations to the Borrower hereunder. The
Liquidity Provider agrees to use reasonable efforts  (consistent with applicable
legal and regulatory  restrictions)  to change the  jurisdiction  of its Lending
Office if making such change  would avoid the need for, or reduce the amount of,
any amount payable under this Section that may thereafter  accrue and would not,
in the reasonable  judgment of the Liquidity Provider,  be otherwise  materially
disadvantageous to the Liquidity Provider.

          The Liquidity Provider will notify the Borrower of any event occurring
after the date of this  Agreement  that will entitle the  Liquidity  Provider to
compensation  pursuant to this Section 3.02 as promptly as practicable  after it
obtains  knowledge  thereof and determines to request such  compensation,  which
notice shall describe in reasonable  detail the  calculation of the amounts owed
under this Section.  Determinations  by the  Liquidity  Provider for purposes of
this  Section  3.02 of the  effect of any  increase  in the  amount  of  capital
required to be maintained by the Liquidity  Provider and of the amount allocable
to the Liquidity Provider's obligations to the Borrower hereunder shall be prima
facie evidence of the amounts owed under this Section.

          Section 3.03.  PAYMENTS FREE OF  DEDUCTIONS.  (a) All payments made by
the Borrower under this  Agreement  shall be made free and clear of, and without
reduction  for or on account  of, any  present or future  stamp or other  taxes,
levies, imposts, duties, charges, fees, deductions,  withholdings,  restrictions
or  conditions  of any  nature  whatsoever  now or  hereafter  imposed,  levied,
collected,  withheld or assessed,  excluding  Excluded Taxes (such  non-excluded
taxes  being  referred to herein,  collectively,  as  "NON-EXCLUDED  TAXES" and,
individually,  as a "NON-EXCLUDED  TAX"). If any Non-Excluded Taxes are required
to be withheld  from any amounts  payable to the Liquidity  Provider  under this
Agreement,  the amounts so payable to the Liquidity  Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded  Taxes)  interest  or any other  such  amounts  payable  under this
Agreement  at the  rates or in the  amounts  specified  in this  Agreement.  The
Liquidity  Provider  agrees  to use  reasonable  efforts  (consistent  with  its
internal   policy  and  legal  and  regulatory   restrictions)   to  change  the
jurisdiction  of its Lending  Office if making such change  would avoid the need



for, or reduce the amount of, any such  additional  amounts that may  thereafter
accrue and would not, in the reasonable judgment of the Liquidity  Provider,  be
otherwise  disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower,  the Liquidity Provider agrees to provide to
the  Borrower  two  original  Internal  Revenue  Service  Form 1001 or 4224,  as
appropriate,  or any successor or other form prescribed by the Internal  Revenue
Service,  certifying that the Liquidity Provider is exempt from or entitled to a
reduced  rate of United  States  withholding  tax on  payments  pursuant to this
Agreement.

          (b) All payments (including, without limitation, Advances) made by the
Liquidity  Provider  under this  Agreement  shall be made free and clear of, and
without  reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted  from any  amounts  payable to the  Borrower  under this
Agreement,  the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate  governmental  or taxing  authority the
full  amount of any such  Taxes  (and any  additional  Taxes in  respect  of the
payment  required  under clause (ii) hereof) and make such reports or returns in
connection  therewith  at the  time or times  and in the  manner  prescribed  by
applicable  law, and (ii) pay to the Borrower an additional  amount which (after
deduction  of all such Taxes) will be  sufficient  to yield to the  Borrower the
full amount  which would have been  received  by it had no such  withholding  or
deduction  been made.  Within 30 days after the date of each payment  hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other  documentary  evidence of) the payment of the Taxes applicable
to such payment.

          Section 3.04.  PAYMENTS.  The Borrower  shall make or cause to be made
each payment to the Liquidity  Provider  under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due.  The  Borrower  shall make all such  payments in
lawful  money of the United  States of  America,  to the  Liquidity  Provider in
immediately  available  funds, by wire transfer to The Chase Manhattan Bank, One
Chase  Manhattan  Plaza,  New York,  New York 10081,  ABA No.  021-000-021,  for
account of Westdeutsche  Landesbank  Girozentrale,  New York branch, Account No.
920-1-060663, Reference: Continental Airlines Liquidity Facility 1998-2B.

          Section 3.05. COMPUTATIONS.  All computations of interest based on the
Base Rate  shall be made on the basis of a year of 365 or 366 days,  as the case
may be, and all  computations  of interest based on the LIBOR Rate shall be made
on the basis of a year of 360 days,  in each case for the actual  number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.

          Section 3.06. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made  hereunder  shall be stated to be due on a day other than a  Business  Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made,  shall be deemed to have been
made when  due).  If any  payment in  respect  of  interest  on an Advance is so
deferred to the next succeeding  Business Day, such deferral shall not delay the
commencement  of the next Interest Period for such Advance (if such Advance is a
LIBOR  Advance) or reduce the number of days for which  interest will be payable
on such Advance on the next interest payment date for such Advance.



          Section  3.07.  INTEREST.  (a) Subject to Section  2.09,  the Borrower
shall pay, or shall cause to be paid, without  duplication,  interest on (i) the
unpaid  principal  amount of each  Advance from and  including  the date of such
Advance (or, in the case of an Applied Provider Advance,  from and including the
date on which the amount thereof was withdrawn from the Class B Cash  Collateral
Account to pay interest on the Class B  Certificates)  to but excluding the date
such  principal  amount  shall be paid in full  (or,  in the case of an  Applied
Provider Advance, the date on which the Class B Cash Collateral Account is fully
replenished  in respect of such Advance) and (ii) any other amount due hereunder
(whether  fees,  commissions,  expenses  or  other  amounts  or,  to the  extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due  (whether  at stated  maturity,  by  acceleration  or
otherwise)  from and  including  the due date thereof to but  excluding the date
such amount is paid in full, in each such case,  at a fluctuating  interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate  permitted by applicable  law;
PROVIDED,  HOWEVER,  that, if at any time the otherwise applicable interest rate
as set forth in this Section  3.07 shall  exceed the maximum  rate  permitted by
applicable  law,  then any  subsequent  reduction in such interest rate will not
reduce the rate of  interest  payable  pursuant to this  Section  3.07 below the
maximum  rate  permitted  by  applicable  law until the total amount of interest
accrued  equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.

          (b)  Except as  provided  in clause (e) below,  each  Advance  will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section.  Each
such  Advance  will be a Base Rate  Advance  for the period from the date of its
borrowing to (but  excluding)  the third  Business Day  following  the Liquidity
Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such
Advance shall be a LIBOR  Advance;  provided that the Borrower (at the direction
of  the  Controlling  Party,  so  long  as the  Liquidity  Provider  is not  the
Controlling Party) may (x) convert the Final Advance into a Base Rate Advance on
the last day of an  Interest  Period for such  Advance  by giving the  Liquidity
Provider no less than four Business  Days' prior written notice of such election
or (y)  elect to  maintain  the Final  Advance  as a Base  Rate  Advance  by not
requesting a conversion of the Final Advance to a LIBOR Advance under Clause (5)
of the  applicable  Notice of Borrowing  (or, if such Final Advance is deemed to
have been made,  without  delivery of a Notice of Borrowing  pursuant to Section
2.06, by requesting,  prior to 11:00 A.M. on the first Business Day  immediately
following the Borrower's receipt of the applicable Termination Notice, that such
Final Advance not be converted from a Base Rate Advance to a LIBOR Advance).

          (c) Each LIBOR Advance shall bear interest during each Interest Period
at a rate per annum  equal to the LIBOR Rate for such  Interest  Period plus the
Applicable Margin for such LIBOR Advance,  payable in arrears on the last day of
such Interest Period and, in the event of the payment of principal of such LIBOR
Advance on a day other than such last day,  on the date of such  payment (to the
extent of interest accrued on the amount of principal repaid).

          (d) Each Base Rate  Advance  shall bear  interest  at a rate per annum
equal to the Base Rate plus the  Applicable  Margin for such Base Rate  Advance,



payable in arrears on each  Regular  Distribution  Date and, in the event of the
payment  of  principal  of such Base Rate  Advance on a day other than a Regular
Distribution  Date,  on the date of such  payment  (to the  extent  of  interest
accrued on the amount of principal repaid).

          (e) Each outstanding Unapplied Downgrade Advance (i) during the period
from and including the date of the making of such  Unapplied  Downgrade  Advance
through but  excluding  the Expiry Date (or, if earlier,  the date of  repayment
thereof or of conversion  thereof into a Final Advance),  shall bear interest in
an amount equal to the Investment  Earnings on amounts on deposit in the Class B
Cash  Collateral  Account  for such  period  plus .325% per annum  (through  and
including the first anniversary of the date of this Agreement) or .35% per annum
(after the first  anniversary  of the date of this  Agreement)  on the amount of
such Unapplied  Downgrade Advance from time to time during such period,  payable
in arrears on each Regular  Distribution  Date, and (ii) thereafter,  shall be a
LIBOR Advance and shall bear interest in accordance with clause (c) above.

          (f)  Each  amount  not  paid  when  due   hereunder   (whether   fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law,  installments  of interest on Advances but excluding  Advances)  shall bear
interest at a rate per annum equal to the Base Rate plus 2.00% until paid.

          (g) Each change in the Base Rate shall become  effective  immediately.
The rates of interest specified in this Section 3.07 with respect to any Advance
or other amount shall be referred to as the "APPLICABLE LIQUIDITY RATE".

          Section 3.08.  REPLACEMENT OF BORROWER.  From time to time and subject
to the successor  Borrower's  meeting the eligibility  requirements set forth in
Section  6.9 of the  Intercreditor  Agreement  applicable  to the  Subordination
Agent,  upon the  effective  date and time  specified in a written and completed
Notice of Replacement  Subordination Agent in substantially the form of Annex VI
attached hereto (a "NOTICE OF REPLACEMENT SUBORDINATION AGENT") delivered to the
Liquidity  Provider by the then  Borrower,  the  successor  Borrower  designated
therein shall be substituted for as the Borrower for all purposes hereunder.

          Section 3.09. FUNDING LOSS INDEMNIFICATION.  The Borrower shall pay to
the Liquidity Provider,  upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient  (in the  reasonable  opinion of the Liquidity
Provider) to compensate it for any loss,  cost, or expense incurred by reason of
the  liquidation  or  redeployment  of deposits  or other funds  acquired by the
Liquidity  Provider to fund or maintain any LIBOR Advance (but excluding loss of
anticipated profits) incurred as a result of:

          (1) Any repayment of a LIBOR Advance on a date other than the last day
     of the Interest Period for such Advance; or

          (2) Any failure by the Borrower to borrow a LIBOR  Advance on the date
     for borrowing specified in the relevant notice under Section 2.02.



          Section 3.10. ILLEGALITY.  Notwithstanding any other provision in this
Agreement,  if any change in any  applicable  law,  rule or  regulation,  or any
change in the  interpretation  or  administration  thereof  by any  governmental
authority,  central bank or comparable agency charged with the interpretation or
administration  thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or  directive  (whether or not having the force of law)
of any such authority,  central bank or comparable agency shall make it unlawful
or impossible for the Liquidity  Provider (or its Lending Office) to maintain or
fund its LIBOR  Advances,  then upon  notice to the  Borrower  by the  Liquidity
Provider,  the  outstanding  principal  amount  of the LIBOR  Advances  shall be
converted to Base Rate  Advances (a)  immediately  upon demand of the  Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider,  requires immediate  repayment;  or (b) at the expiration of
the last Interest  Period to expire before the effective date of any such change
or request.


                                   ARTICLE IV

                              CONDITIONS PRECEDENT

          Section 4.01.  CONDITIONS  PRECEDENT TO EFFECTIVENESS OF SECTION 2.01.
Section 2.01 of this  Agreement  shall  become  effective on and as of the first
date (the  "EFFECTIVE  DATE") on which the following  conditions  precedent have
been satisfied or waived:

          (a) The  Liquidity  Provider  shall  have  received  on or before  the
     Closing  Date  each of the  following,  and in the  case  of each  document
     delivered  pursuant to  paragraphs  (i),  (ii) and (iii),  each in form and
     substance satisfactory to the Liquidity Provider:

                (i) This Agreement duly executed on behalf of the Borrower;

               (ii) The Intercreditor  Agreement duly executed on behalf of each
          of the parties thereto;

              (iii) Fully  executed  copies of each of the Operative  Agreements
          executed and  delivered on or before the Closing Date (other than this
          Agreement and the Intercreditor Agreement);

               (iv) A copy of the Prospectus  Supplement and specimen  copies of
          the Class B Certificates;

                (v) An executed copy of each  document, instrument,  certificate
          and opinion  delivered on or before the Closing  Date  pursuant to the
          Class B Trust  Agreement,  the  Intercreditor  Agreement and the other
          Operative Agreements (in the case of each such opinion, other than the
          opinion of  counsel  for the  Underwriters,  either  addressed  to the
          Liquidity  Provider  or  accompanied  by a  letter  from  the  counsel
          rendering  such opinion to the effect that the  Liquidity  Provider is


          entitled  to  rely  on  such  opinion  as of its  date  as if it  were
          addressed to the Liquidity Provider);

               (vi) Evidence  that  there  shall  have been made and shall be in
          full force and effect, all filings,  recordings and/or  registrations,
          and there  shall have been given or taken any notice or other  similar
          action as may be  reasonably  necessary  or, to the extent  reasonably
          requested by the Liquidity Provider, reasonably advisable, in order to
          establish,   perfect,  protect  and  preserve  the  right,  title  and
          interest,  remedies, powers, privileges,  liens and security interests
          of,  or for  the  benefit  of,  the  Trustees,  the  Borrower  and the
          Liquidity  Provider created by the Operative  Agreements  executed and
          delivered on or prior to the Closing Date;

              (vii) An   agreement  from  Continental,  pursuant  to  which  (i)
          Continental agrees to provide copies of quarterly financial statements
          and audited annual financial statements to the Liquidity Provider, and
          such other  information  as the Liquidity  Provider  shall  reasonably
          request with respect to the transactions contemplated by the Operative
          Agreements,  in each case,  only to the  extent  that  Continental  is
          obligated to provide such information pursuant to Section 8.2.1 of the
          Leases to the parties thereto and (ii) Continental agrees to allow the
          Liquidity  Provider  to  inspect   Continental's   books  and  records
          regarding such  transactions,  and to discuss such  transactions  with
          officers and employees of Continental; and

             (viii) Such  other  documents,  instruments, opinions and approvals
          pertaining  to the  transactions  contemplated  hereby or by the other
          Operative  Agreements as the Liquidity  Provider shall have reasonably
          requested.

          (b) The following  statement  shall be true on and as of the Effective
     Date:  no event has  occurred and is  continuing,  or would result from the
     entering  into  of this  Agreement  or the  making  of any  Advance,  which
     constitutes a Liquidity Event of Default.

          (c) The Liquidity  Provider shall have received payment in full of all
     fees  and  other  sums  required  to be paid to or for the  account  of the
     Liquidity Provider on or prior to the Effective Date.

          (d) All conditions precedent to the issuance of the Certificates under
     the Trust  Agreements  shall have been satisfied or waived,  all conditions
     precedent to the effectiveness of the other Liquidity Facilities shall have
     been satisfied or waived,  and all conditions  precedent to the purchase of
     the Certificates by the Underwriters under the Underwriting Agreement shall
     have been satisfied  (unless any of such  conditions  precedent  shall have
     been waived by the Underwriters).

          (e) The Borrower  shall have  received a  certificate,  dated the date
     hereof,  signed  by a  duly  authorized  representative  of  the  Liquidity
     Provider,  certifying that all conditions precedent to the effectiveness of
     Section 2.01 have been satisfied or waived.



          Section 4.02. CONDITIONS PRECEDENT TO BORROWING. The obligation of the
Liquidity Provider to make an Advance on the occasion of each Borrowing shall be
subject to the conditions  precedent that the Effective Date shall have occurred
and,  prior to the date of such  Borrowing,  the Borrower shall have delivered a
Notice of Borrowing which conforms to the terms and conditions of this Agreement
and has been  completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.


                                    ARTICLE V

                                    COVENANTS

          Section 5.01.  AFFIRMATIVE  COVENANTS OF THE BORROWER.  So long as any
Advance  shall remain unpaid or the  Liquidity  Provider  shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity  Provider  hereunder,  the Borrower will,  unless the Liquidity
Provider shall otherwise consent in writing:

          (a) PERFORMANCE OF THIS AND OTHER AGREEMENTS.  Punctually pay or cause
     to be paid all  amounts  payable by it under this  Agreement  and the other
     Operative  Agreements and observe and perform in all material  respects the
     conditions,  covenants and requirements  applicable to it contained in this
     Agreement and the other Operative Agreements.

          (b) REPORTING  REQUIREMENTS.  Furnish to the  Liquidity  Provider with
     reasonable promptness,  such other information and data with respect to the
     transactions  contemplated by the Operative Agreements as from time to time
     may be  reasonably  requested  by the  Liquidity  Provider;  and permit the
     Liquidity Provider, upon reasonable notice, to inspect the Borrower's books
     and records with respect to such transactions and to meet with officers and
     employees of the Borrower to discuss such transactions.

          (c) CERTAIN OPERATIVE  AGREEMENTS.  Furnish to the Liquidity  Provider
     with reasonable  promptness,  such Operative  Agreements entered into after
     the date  hereof as from time to time may be  reasonably  requested  by the
     Liquidity Provider.

          Section  5.02.  NEGATIVE  COVENANTS  OF THE  BORROWER.  So long as any
Advance  shall remain unpaid or the  Liquidity  Provider  shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder,  the Borrower will not appoint or permit or
suffer to be appointed any successor  Borrower without the prior written consent
of the Liquidity Provider,  which consent shall not be unreasonably  withheld or
delayed.




                                   ARTICLE VI

                          LIQUIDITY EVENTS OF DEFAULT

          Section 6.01.  LIQUIDITY EVENTS OF DEFAULT. If (a) any Liquidity Event
of Default has occurred  and is  continuing  and (b) there is a Performing  Note
Deficiency,  the  Liquidity  Provider  may,  in its  discretion,  deliver to the
Borrower a  Termination  Notice,  the effect of which  shall be to cause (i) the
obligation of the Liquidity Provider to make Advances hereunder to expire on the
fifth Business Day after the date on which such  Termination  Notice is received
by the  Borrower,  (ii) the  Borrower to  promptly  request,  and the  Liquidity
Provider to promptly  make, a Final Advance in accordance  with Section  2.02(d)
hereof  and  Section  3.6(i)  of the  Intercreditor  Agreement,  (iii) all other
outstanding  Advances to be  automatically  converted  into Final  Advances  for
purposes of  determining  the  Applicable  Liquidity  Rate for interest  payable
thereon,  and (iv)  subject  to  Sections  2.07 and 2.09  hereof,  all  Advances
(including,  without  limitation,  any  Provider  Advance and  Applied  Provider
Advance),  any  accrued  interest  thereon  and any  other  amounts  outstanding
hereunder to become immediately due and payable to the Liquidity Provider.


                                   ARTICLE VII

                                 MISCELLANEOUS

          Section 7.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective  unless the same shall be in writing and signed by the
Liquidity  Provider,  and,  in the case of an  amendment  or of a waiver  by the
Borrower,  the Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

          Section 7.02.  NOTICES,  ETC. Except as otherwise  expressly  provided
herein, all notices and other communications  provided for hereunder shall be in
writing  (including  telecopier and mailed or delivered or sent by  telecopier):

             Borrower:             WILMINGTON TRUST COMPANY
                                   Rodney Square North
                                   1100 North Market Square
                                   Wilmington, DE 19890-0001
                                   Attention: Corporate Trust Administration

                                   Telephone:  (302) 651-1000
                                   Telecopy:   (302) 651-8882



             Liquidity Provider:   WESTDEUTSCHE LANDESBANK GIROZENTRALE
                                   Global Structured Finance
                                   1211 Avenue of the Americas
                                   New York, NY 10036
                                   Attention:  Alfred Heynen

                                   Telephone: (212) 852-6115
                                   Telecopy: (212) 869-7634

              with a copy to:      WESTDEUTSCHE LANDESBANK GIROZENTRALE
                                   Loan Administration
                                   1211 Avenue of the Americas
                                   New York, NY 10036
                                   Attention: Cheryl Wilson

                                   Telephone: (212) 852-6152
                                   Telecopy: (212) 302-7946

or, as to each of the foregoing, at such other address as shall be designated by
such  Person  in  a  written  notice  to  the  others.   All  such  notices  and
communications  shall be effective (i) if given by telecopier,  when transmitted
to the telecopier  number specified above, (ii) if given by mail, when deposited
in the mails  addressed as specified  above,  and (iii) if given by other means,
when delivered at the address  specified  above,  except that written notices to
the Liquidity  Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity  Provider.  A copy of all
notices  delivered  hereunder  to either party shall in addition be delivered to
each  of the  parties  to  the  Participation  Agreements  at  their  respective
addresses set forth therein.

          Section  7.03.  NO  WAIVER;  REMEDIES.  No  failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise  of any right  under  this  Agreement  preclude  any  other or  further
exercise  thereof  or the  exercise  of any other  right.  The  remedies  herein
provided are cumulative and not exclusive of any remedies provided by law.

          Section  7.04.  FURTHER  ASSURANCES.  The  Borrower  agrees to do such
further  acts and things and to execute  and deliver to the  Liquidity  Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider  may  reasonably  require or deem  advisable  to carry into  effect the
purposes  of this  Agreement  and the other  Operative  Agreements  or to better
assure and confirm unto the Liquidity  Provider its rights,  powers and remedies
hereunder and under the other Operative Agreements.

          Section 7.05.  INDEMNIFICATION;  SURVIVAL OF CERTAIN  PROVISIONS.  The
Liquidity  Provider  shall be  indemnified  hereunder  to the  extent and in the
manner described in Section 9 of the Participation  Agreements. In addition, the
Borrower  agrees to indemnify,  protect,  defend and hold harmless the Liquidity
Provider from,  against and in respect of, and shall pay on demand, all Expenses
of any  kind or  nature  whatsoever  (other  than  any  Expenses  of the  nature
described in Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless
of  whether  indemnified  against  pursuant  to said  Sections  or in  such  Fee
Letter)),  that may be imposed,  incurred by or asserted  against any  Liquidity



Indemnitee,  in any way relating  to,  resulting  from,  or arising out of or in
connection  with any action,  suit or proceeding by any third party against such
Liquidity  Indemnitee  and  relating  to this  Agreement,  the Fee  Letter,  the
Intercreditor Agreement or any Participation Agreement;  PROVIDED, HOWEVER, that
the  Borrower  shall not be  required  to  indemnify,  protect,  defend and hold
harmless any Liquidity  Indemnitee  in respect of any Expense of such  Liquidity
Indemnitee  to the  extent  such  Expense  is  (i)  attributable  to  the  gross
negligence  or willful  misconduct  of such  Liquidity  Indemnitee  or any other
Liquidity  Indemnitee,  (ii) ordinary and usual operating  overhead expense,  or
(iii)  attributable  to the failure by such  Liquidity  Indemnitee  or any other
Liquidity Indemnitee to perform or observe any agreement,  covenant or condition
on its part to be performed  or observed in this  Agreement,  the  Intercreditor
Agreement,  the Fee Letter,  the Tax Letter or any other Operative  Agreement to
which it is a party. The indemnities contained in Section 9 of the Participation
Agreements, and the provisions of Sections 3.01, 3.02, 3.03, 3.09, 7.05 and 7.07
hereof, shall survive the termination of this Agreement.

          Section  7.06.  LIABILITY OF THE LIQUIDITY  PROVIDER.  (a) Neither the
Liquidity Provider nor any of its officers,  employees,  directors or affiliates
shall  be  liable  or  responsible  for:  (i) the use  which  may be made of the
Advances  or any  acts  or  omissions  of the  Borrower  or any  beneficiary  or
transferee  in  connection   therewith;   (ii)  the  validity,   sufficiency  or
genuineness of documents,  or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid,  insufficient,  fraudulent or
forged;  or (iii) the  making of  Advances  by the  Liquidity  Provider  against
delivery of a Notice of Borrowing and other  documents  which do not comply with
the terms  hereof;  PROVIDED,  HOWEVER,  that the  Borrower  shall  have a claim
against the Liquidity  Provider,  and the Liquidity  Provider shall be liable to
the Borrower,  to the extent of any damages  suffered by the Borrower which were
the result of (A) the Liquidity  Provider's  willful misconduct or negligence in
determining  whether documents presented hereunder comply with the terms hereof,
or (B)  any  breach  by the  Liquidity  Provider  of any of the  terms  of  this
Agreement,  including,  but not limited to, the Liquidity  Provider's failure to
make lawful  payment  hereunder  after the  delivery to it by the  Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.

          (b) Neither the Liquidity Provider nor any of its officers, employees,
directors or affiliates  shall be liable or  responsible  in any respect for (i)
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with this Agreement
or any Notice of Borrowing delivered hereunder,  or (ii) any action, inaction or
omission which may be taken by it in good faith,  absent  willful  misconduct or
negligence  (in which  event the extent of the  Liquidity  Provider's  potential
liability  to the  Borrower  shall be  limited  as set forth in the  immediately
preceding  paragraph),  in  connection  with  this  Agreement  or any  Notice of
Borrowing.

          Section 7.07.  COSTS,  EXPENSES AND TAXES. The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity  Provider shall make demand,  all  reasonable  out-of-pocket
costs and expenses  (including,  without  limitation,  the  reasonable  fees and
expenses  of  outside  counsel  for the  Liquidity  Provider)  of the  Liquidity
Provider in connection with the preparation,  negotiation,  execution, delivery,



filing and recording of this Agreement,  any other  Operative  Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable costs and expenses (including  reasonable counsel fees
and expenses) of the Liquidity  Provider in connection  with (i) the enforcement
of this Agreement or any other  Operative  Agreement,  (ii) the  modification or
amendment of, or supplement to, this Agreement or any other Operative  Agreement
or such  other  documents  which may be  delivered  in  connection  herewith  or
therewith  (whether or not the same shall become  effective) or (iii) any action
or  proceeding  relating to any order,  injunction,  or other  process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under  this  Agreement,  the  Intercreditor  Agreement  or any  other  Operative
Agreement or otherwise  affecting the  application  of funds in the Class B Cash
Collateral Accounts. In addition,  the Borrower shall pay any and all recording,
stamp and other  similar  taxes and fees payable or  determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative  Agreement and such other documents,  and agrees to save the
Liquidity  Provider  harmless  from and  against  any and all  liabilities  with
respect to or  resulting  from any delay in paying or omission to pay such taxes
or fees.

          Section 7.08. BINDING EFFECT; PARTICIPATIONS. (a) This Agreement shall
be binding  upon and inure to the  benefit  of the  Borrower  and the  Liquidity
Provider and their  respective  successors and assigns,  except that neither the
Liquidity  Provider  (except as  otherwise  provided in this  Section  7.08) nor
(except as  contemplated  by Section 3.08) the Borrower  shall have the right to
assign its rights or  obligations  hereunder or any interest  herein without the
prior written consent of the other party, subject to the requirements of Section
7.08(b). The Liquidity Provider may grant participations herein or in any of its
rights hereunder  (including,  without  limitation,  funded  participations  and
participations in rights to receive interest  payments  hereunder) and under the
other Operative  Agreements to such Persons as the Liquidity Provider may in its
sole discretion select,  subject to the requirements of Section 7.08(b). No such
participation  by the Liquidity  Provider,  however,  will relieve the Liquidity
Provider of its obligations  hereunder.  In connection with any participation or
any  proposed  participation,   the  Liquidity  Provider  may  disclose  to  the
participant or the proposed  participant  any  information  that the Borrower is
required to deliver or to disclose to the  Liquidity  Provider  pursuant to this
Agreement.  The Borrower  acknowledges and agrees that the Liquidity  Provider's
source  of  funds  may  derive  in  part  from  its  participants   (other  than
Continental).  Accordingly, references in this Agreement and the other Operative
Agreements  to  determinations,   reserve  and  capital  adequacy  requirements,
increased costs,  reduced receipts,  additional  amounts due pursuant to Section
3.03 and the like as they pertain to the Liquidity Provider shall be deemed also
to include  those of each of its  participants  (subject,  in each case,  to the
maximum amount that would have been incurred by or attributable to the Liquidity
Provider directly if the Liquidity  Provider,  rather than the participant,  had
held the interest participated).

          (b) If, pursuant to subsection (a) above, the Liquidity Provider sells
any  participation  in this  Agreement  to any bank or  other  entity  (each,  a
"TRANSFEREE"),  then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the  Liquidity  Provider and the  Borrower)  either (A) that it is  incorporated
under  the laws of the  United  States  or a state  thereof  or (B)  that  under



applicable  law and  treaties,  no taxes will be required  to be  withheld  with
respect  to any  payments  to be made  to such  Transferee  in  respect  of this
Agreement,  (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated,  two copies of a properly completed
United States  Internal  Revenue Service Form 4224 or Form 1001, as appropriate,
or other  applicable  form,  certificate or document  prescribed by the Internal
Revenue Service  certifying,  in each case, such  Transferee's  entitlement to a
complete exemption from United States federal  withholding tax in respect to any
and all payments to be made  hereunder,  and (iii) agree (for the benefit of the
Liquidity  Provider and the Borrower) to provide the Liquidity  Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes  obsolete or (B) after the  occurrence  of
any event requiring a change in the most recent form previously  delivered by it
and prior to the  immediately  following due date of any payment by the Borrower
hereunder,  certifying  in the  case  of a Form  1001  or Form  4224  that  such
Transferee  is  entitled to a complete  exemption  from  United  States  federal
withholding  tax on  payments  under this  Agreement.  Unless the  Borrower  has
received forms or other documents reasonably satisfactory to it (and required by
applicable  law)  indicating  that payments  hereunder are not subject to United
States federal  withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.

          (c)  Notwithstanding  the other  provisions of this Section 7.08,  the
Liquidity  Provider  may assign and  pledge all or any  portion of the  Advances
owing  to it to any  Federal  Reserve  Bank or the  United  States  Treasury  as
collateral  security  pursuant to  Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower  to the  Liquidity  Provider  in  accordance  with  the  terms  of this
Agreement shall satisfy the Borrower's  obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.

          Section 7.09.  SEVERABILITY.  Any provision of this Agreement which is
prohibited,  unenforceable  or not authorized in any  jurisdiction  shall, as to
such   jurisdiction,   be  ineffective  to  the  extent  of  such   prohibition,
unenforceability  or   non-authorization   without  invalidating  the  remaining
provisions hereof or affecting the validity,  enforceability or legality of such
provision in any other jurisdiction.

          Section 7.10.  GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          Section 7.11. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; WAIVER
OF  IMMUNITY.   (a)  Each  of  the  parties   hereto  hereby   irrevocably   and
unconditionally:

                (i) submits  for itself and its property in any legal  action or
          proceeding   relating  to  this  Agreement  or  any  other   Operative
          Agreement,  or for  recognition  and  enforcement  of any  judgment in
          respect hereof or thereof, to the nonexclusive general jurisdiction of



          the courts of the State of New York,  the courts of the United  States
          of America for the Southern  District of New York,  and the  appellate
          courts from any thereof;

               (ii) consents  that any such action or proceeding  may be brought
          in such courts,  and waives any objection that it may now or hereafter
          have to the venue of any such action or  proceeding  in any such court
          or that such action or proceeding was brought in an inconvenient court
          and agrees not to plead or claim the same;

              (iii)  agrees  that  service  of  process  in  any such  action or
          proceeding  may be effected by mailing a copy thereof by registered or
          certified mail (or any substantially  similar form and mail),  postage
          prepaid, to each party hereto at its address set forth in Section 7.02
          hereof, or at such other address of which the Liquidity Provider shall
          have been notified pursuant thereto; and

               (iv) agrees that nothing  herein shall affect the right to effect
          service of process in any other manner permitted by law or shall limit
          the right to sue in any other jurisdiction.

          (b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED
UPON OR ARISING OUT OF THIS  AGREEMENT OR ANY DEALINGS  BETWEEN THEM RELATING TO
THE  SUBJECT  MATTER  OF THIS  AGREEMENT  AND  THE  RELATIONSHIP  THAT IS  BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory  claims.  The Borrower and
the  Liquidity  Provider  each warrant and  represent  that it has reviewed this
waiver with its legal counsel,  and that it knowingly and voluntarily waives its
jury trial rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT.

          (c) The Liquidity Provider hereby waives any immunity it may have from
the  jurisdiction  of the courts of the United States or of any State and waives
any immunity any of its  properties  located in the United  States may have from
attachment  or  execution  upon a judgment  entered by any such court  under the
United States Foreign Sovereign  Immunities Act of 1976 or any similar successor
legislation.

          Section  7.12.  EXECUTION  IN  COUNTERPARTS.  This  Agreement  may  be
executed  in any  number of  counterparts  and by  different  parties  hereto on
separate  counterparts,  each  of  which  counterparts,  when  so  executed  and
delivered,  shall be deemed  to be an  original  and all of which  counterparts,
taken together, shall constitute but one and the same Agreement.



          Section 7.13. ENTIRETY.  This Agreement,  the Intercreditor  Agreement
and the other  Operative  Agreements to which the Liquidity  Provider is a party
constitute  the entire  agreement  of the  parties  hereto  with  respect to the
subject matter hereof and supersedes all prior  understandings and agreements of
such parties.

          Section  7.14.  HEADINGS.  Section  headings  in  this  Agreement  are
included  herein for  convenience  of reference  only and shall not constitute a
part of this Agreement for any other purpose.

          Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT
AS EXPRESSLY  SET FORTH IN THIS  AGREEMENT,  THE  OBLIGATIONS  OF THE  LIQUIDITY
PROVIDER  TO MAKE  ADVANCES  HEREUNDER,  AND THE  BORROWER'S  RIGHTS TO  DELIVER
NOTICES OF  BORROWING  REQUESTING  THE MAKING OF  ADVANCES  HEREUNDER,  SHALL BE
UNCONDITIONAL  AND  IRREVOCABLE,  AND SHALL BE PAID OR  PERFORMED,  IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.



          IN WITNESS WHEREOF,  the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first set forth above.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination   Agent,  as  agent  and
                                          trustee  for  the  Class B  Trust,  as
                                          Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:


                                        WESTDEUTSCHE   LANDESBANK  GIROZENTRALE,
                                        acting  through its New York Branch as
                                        Liquidity Provider


                                        By:_____________________________________
                                           Name:
                                           Title:


                                        By:_____________________________________
                                           Name:
                                           Title:




                                                                      Annex I to
                                                      Revolving Credit Agreement

                      INTEREST ADVANCE NOTICE OF BORROWING

          The  undersigned,  a duly  authorized  signatory  of  the  undersigned
borrower  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE   LANDESBANK
GIROZENTRALE,  acting  through its New York Branch (the  "LIQUIDITY  PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2B) dated as of April 21,
1998,   between  the  Borrower  and  the  Liquidity   Provider  (the  "LIQUIDITY
AGREEMENT";  the terms defined  therein and not otherwise  defined  herein being
used herein as therein defined or referenced), that:

          (1) The Borrower is the  Subordination  Agent under the  Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of an Interest  Advance by the  Liquidity  Provider to be used,  subject to
     clause  (3)(v)  below,   for  the  payment  of  interest  on  the  Class  B
     Certificates  which was payable on  ____________,  ____ (the  "DISTRIBUTION
     DATE") in  accordance  with the terms and  provisions  of the Class B Trust
     Agreement  and the Class B  Certificates,  which Advance is requested to be
     made on ____________, ____.

          (3)  The  amount  of the  Interest  Advance  requested  hereby  (i) is
     $_______________.__,  to be applied in respect of the  payment of  interest
     which was due and payable on the Class B Certificates  on the  Distribution
     Date,  (ii) does not  include  any amount  with  respect to the  payment of
     principal  of,  or  premium  on,  the  Class A  Certificates,  the  Class B
     Certificates  or the  Class C  Certificates,  or  interest  on the  Class A
     Certificates or the Class C Certificates,  (iii) was computed in accordance
     with  the  provisions  of the  Class  B  Certificates,  the  Class  B Trust
     Agreement and the  Intercreditor  Agreement (a copy of which computation is
     attached hereto as Schedule I), (iv) does not exceed the Maximum  Available
     Commitment  on the date  hereof and (v) has not been and is not the subject
     of a prior or contemporaneous Notice of Borrowing.

          (4)  Upon  receipt  by or on  behalf  of the  Borrower  of the  amount
     requested  hereby,  (a) the Borrower will apply the same in accordance with
     the terms of Section 3.6(b) of the Intercreditor  Agreement, (b) no portion
     of such amount shall be applied by the  Borrower for any other  purpose and
     (c) no portion of such amount  until so applied  shall be  commingled  with
     other funds held by the Borrower.

          The  Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  the making of the  Interest  Advance as  requested by this Notice of
Borrowing shall  automatically  reduce,  subject to  reinstatement in accordance
with the terms of the Liquidity  Agreement,  the Maximum Available Commitment by
an amount  equal to the  amount of the  Interest  Advance  requested  to be made
hereby as set forth in clause (i) of paragraph (3) of this  Certificate and such
reduction shall automatically result in corresponding  reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.



          IN WITNESS  WHEREOF,  the Borrower has  executed  and  delivered  this
Notice of Borrowing as of the ____ day of ____________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:



               SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING

          [Insert Copy of  Computations  in  accordance  with  Interest  Advance
Notice of Borrowing]



                                                                     Annex II to
                                                      Revolving Credit Agreement

                    NON-EXTENSION ADVANCE NOTICE OF BORROWING

          The  undersigned,  a duly  authorized  signatory  of  the  undersigned
subordination   agent  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE
LANDESBANK  GIROZENTRALE,  acting  through its New York  Branch (the  "LIQUIDITY
PROVIDER"),  with reference to the Revolving Credit Agreement (1998-2B) dated as
of April  21,  1998,  between  the  Borrower  and the  Liquidity  Provider  (the
"LIQUIDITY  AGREEMENT";  the terms  defined  therein and not  otherwise  defined
herein being used herein as therein defined or referenced), that:

          (1) The Borrower is the  Subordination  Agent under the  Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the Non-Extension  Advance by the Liquidity  Provider to be used for the
     funding of the Class B Cash  Collateral  Account in accordance with Section
     3.6(d) of the  Intercreditor  Agreement,  which  Advance is requested to be
     made on __________, ____.

          (3) The amount of the  Non-Extension  Advance  requested hereby (i) is
     $_______________.__,  which equals the Maximum Available  Commitment on the
     date  hereof and is to be applied in respect of the  funding of the Class B
     Cash   Collateral   Account  in  accordance  with  Section  3.6(d)  of  the
     Intercreditor  Agreement,  (ii) does not include any amount with respect to
     the payment of the principal  of, or premium on, the Class B  Certificates,
     or principal of, or interest or premium on, the Class A Certificates or the
     Class C Certificates,  (iii) was computed in accordance with the provisions
     of  the  Class  B  Certificates,  the  Class  B  Trust  Agreement  and  the
     Intercreditor  Agreement (a copy of which computation is attached hereto as
     Schedule  I),  and (iv) has not been and is not the  subject  of a prior or
     contemporaneous Notice of Borrowing under the Liquidity Agreement.

          (4)  Upon  receipt  by or on  behalf  of the  Borrower  of the  amount
     requested hereby,  (a) the Borrower will deposit such amount in the Class B
     Cash Collateral  Account and apply the same in accordance with the terms of
     Section  3.6(d) of the  Intercreditor  Agreement,  (b) no  portion  of such
     amount shall be applied by the  Borrower  for any other  purpose and (c) no
     portion of such  amount  until so applied  shall be  commingled  with other
     funds held by the Borrower.

          The  Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the  Non-Extension  Advance as  requested  by this
Notice of Borrowing shall automatically and irrevocably terminate the obligation
of  the  Liquidity  Provider  to  make  further  Advances  under  the  Liquidity
Agreement;  and (B)  following  the  making  by the  Liquidity  Provider  of the
Non-Extension Advance requested by this Notice of Borrowing,  the Borrower shall
not be entitled to request any further Advances under the Liquidity Agreement.



          IN WITNESS  WHEREOF,  the Borrower has  executed  and  delivered  this
Notice of Borrowing as of the ____ day of ___________, _____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:



             SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING

          [Insert Copy of computations in accordance with Non-Extension  Advance
Notice of Borrowing]



                                                                    Annex III to
                                                      Revolving Credit Agreement

                      DOWNGRADE ADVANCE NOTICE OF BORROWING

          The  undersigned,  a duly  authorized  signatory  of  the  undersigned
subordination   agent  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE
LANDESBANK  GIROZENTRALE,  acting  through its New York  Branch (the  "LIQUIDITY
PROVIDER"),  with reference to the Revolving Credit Agreement (1998-2B) dated as
of April  21,  1998,  between  the  Borrower  and the  Liquidity  Provider  (the
"LIQUIDITY  AGREEMENT";  the terms  defined  therein and not  otherwise  defined
herein being used herein as therein defined or referenced), that:

          (1) The Borrower is the  Subordination  Agent under the  Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the  Downgrade  Advance  by the  Liquidity  Provider  to be used for the
     funding of the Class B Cash  Collateral  Account in accordance with Section
     3.6(c) of the  Intercreditor  Agreement by reason of the downgrading of the
     short-term unsecured debt rating of the Liquidity Provider issued by either
     Rating Agency below the Threshold Rating,  which Advance is requested to be
     made on __________, ____.

          (3) The  amount  of the  Downgrade  Advance  requested  hereby  (i) is
     $_______________.__,  which equals the Maximum Available  Commitment on the
     date  hereof and is to be applied in respect of the  funding of the Class B
     Cash   Collateral   Account  in  accordance  with  Section  3.6(c)  of  the
     Intercreditor  Agreement,  (ii) does not include any amount with respect to
     the payment of the principal  of, or premium on, the Class B  Certificates,
     or principal of, or interest or premium on, the Class A Certificates or the
     Class C Certificates,  (iii) was computed in accordance with the provisions
     of  the  Class  B  Certificates,  the  Class  B  Trust  Agreement  and  the
     Intercreditor  Agreement (a copy of which computation is attached hereto as
     Schedule  I),  and (iv) has not been and is not the  subject  of a prior or
     contemporaneous Notice of Borrowing under the Liquidity Agreement.

          (4)  Upon  receipt  by or on  behalf  of the  Borrower  of the  amount
     requested hereby,  (a) the Borrower will deposit such amount in the Class B
     Cash Collateral  Account and apply the same in accordance with the terms of
     Section  3.6(c) of the  Intercreditor  Agreement,  (b) no  portion  of such
     amount shall be applied by the  Borrower  for any other  purpose and (c) no
     portion of such  amount  until so applied  shall be  commingled  with other
     funds held by the Borrower.

          The  Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the Downgrade  Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity  Agreement;  and
(B)  following the making by the  Liquidity  Provider of the  Downgrade  Advance



requested by this Notice of  Borrowing,  the  Borrower  shall not be entitled to
request any further Advances under the Liquidity Agreement.

          IN WITNESS  WHEREOF,  the Borrower has  executed  and  delivered  this
Notice of Borrowing as of the ____ day of ___________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:



               SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING

          [Insert Copy of  computations  in accordance  with  Downgrade  Advance
Notice of Borrowing]



                                                                     Annex IV to
                                                      Revolving Credit Agreement

                        FINAL ADVANCE NOTICE OF BORROWING

          The  undersigned,  a duly  authorized  signatory  of  the  undersigned
borrower  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE   LANDESBANK
GIROZENTRALE,  acting  through its New York Branch (the  "LIQUIDITY  PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2B) dated as of April 21,
1998,   between  the  Borrower  and  the  Liquidity   Provider  (the  "LIQUIDITY
AGREEMENT";  the terms defined  therein and not otherwise  defined  herein being
used herein as therein defined or referenced), that:

          (1) The Borrower is the  Subordination  Agent under the  Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the Final Advance by the  Liquidity  Provider to be used for the funding
     of the Class B Cash Collateral Account in accordance with Section 3.6(i) of
     the  Intercreditor  Agreement by reason of the receipt by the Borrower of a
     Termination  Notice  from  the  Liquidity  Provider  with  respect  to  the
     Liquidity Agreement, which Advance is requested to be made on ____________,
     ____.

          (3)  The  amount  of  the  Final  Advance   requested  hereby  (i)  is
     $_________________.__, which equals the Maximum Available Commitment on the
     date  hereof and is to be applied in respect of the  funding of the Class B
     Cash   Collateral   Account  in  accordance  with  Section  3.6(i)  of  the
     Intercreditor  Agreement,  (ii) does not include any amount with respect to
     the payment of principal  of, or premium on, the Class B  Certificates,  or
     principal  of, or interest or premium on, the Class A  Certificates  or the
     Class C Certificates,  (iii) was computed in accordance with the provisions
     of  the  Class  B  Certificates,  the  Class  B  Trust  Agreement  and  the
     Intercreditor  Agreement (a copy of which computation is attached hereto as
     Schedule  I),  and (iv) has not been and is not the  subject  of a prior or
     contemporaneous Notice of Borrowing.

          (4)  Upon  receipt  by or on  behalf  of the  Borrower  of the  amount
     requested hereby,  (a) the Borrower will deposit such amount in the Class B
     Cash Collateral  Account and apply the same in accordance with the terms of
     Section  3.6(i) of the  Intercreditor  Agreement,  (b) no  portion  of such
     amount shall be applied by the  Borrower  for any other  purpose and (c) no
     portion of such  amount  until so applied  shall be  commingled  with other
     funds held by the Borrower.



          (5) The Borrower hereby requests that the Advance  requested hereby be
     a Base Rate Advance  [and that such Base Rate  Advance be converted  into a
     LIBOR  Advance on the third  Business  Day  following  your receipt of this
     notice.]

          The  Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the Final  Advance as  requested by this Notice of
Borrowing shall  automatically  and irrevocably  terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity  Agreement;  and
(B)  following  the  making  by the  Liquidity  Provider  of the  Final  Advance
requested by this Notice of  Borrowing,  the  Borrower  shall not be entitled to
request any further Advances under the Liquidity Agreement.

          IN WITNESS  WHEREOF,  the Borrower has  executed  and  delivered  this
Notice of Borrowing as of the ____ day of _____________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual capacity   but   solely  as
                                          Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:





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

  Bracketed language may be included at Borrower's option.




                 SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING

          [Insert Copy of  Computations  in accordance with Final Advance Notice
of Borrowing]



                                                                      Annex V to
                                                      Revolving Credit Agreement


                              NOTICE OF TERMINATION



                                               [Date]
Wilmington Trust Company,
  as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001

Attention:  Corporate Trust Administration

     Revolving Credit Agreement dated as of April 21, 1998,  between  Wilmington
     Trust  Company,  as  Subordination  Agent,  as agent  and  trustee  for the
     Continental  Airlines  Pass  Through  Trust,  1998-2B,  as  Borrower,   and
     Westdeutsche  Landesbank  Girozentrale,  acting through its New York Branch
     (the "LIQUIDITY AGREEMENT")

Ladies and Gentlemen:

          You are hereby notified that pursuant to Section 6.01 of the Liquidity
Agreement,  by reason of the occurrence of a Liquidity  Event of Default and the
existence of a Performing  Note  Deficiency  (each as defined  therein),  we are
giving this notice to you in order to cause (i) our obligations to make Advances
(as defined  therein) under such  Liquidity  Agreement to terminate on the fifth
Business  Day after the date on which you  receive  this  notice and (ii) you to
request a Final Advance under the Liquidity Agreement pursuant to Section 3.6(i)
of the  Intercreditor  Agreement  (as defined in the  Liquidity  Agreement) as a
consequence of your receipt of this notice.



          THIS  NOTICE IS THE  "NOTICE OF  TERMINATION"  PROVIDED  FOR UNDER THE
LIQUIDITY  AGREEMENT.  OUR  OBLIGATIONS  TO MAKE  ADVANCES  UNDER THE  LIQUIDITY
AGREEMENT  WILL  TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU
RECEIVE THIS NOTICE.


                                        Very truly yours,


                                        WESTDEUTSCHE  LANDESBANK   GIROZENTRALE,
                                          acting through its New York Branch, as
                                          Liquidity Provider


                                        By:_____________________________________
                                           Name:
                                           Title:

cc:  Wilmington Trust Company,
     as Class B Trustee


                                                                     Annex VI to
                                                      Revolving Credit Agreement

                    NOTICE OF REPLACEMENT SUBORDINATION AGENT

[Date]
Attention:

     Revolving Credit Agreement dated as of April 21, 1998,  between  Wilmington
     Trust  Company,  as  Subordination  Agent,  as agent  and  trustee  for the
     Continental  Airlines  Pass  Through  Trust,  1998-2B,  as  Borrower,   and
     Westdeutsche  Landesbank  Girozentrale,  acting through its New York Branch
     (the "LIQUIDITY AGREEMENT")

Ladies and Gentlemen:

          For value received,  the undersigned  beneficiary  hereby  irrevocably
transfers to:


                         ______________________________
                              [Name of Transferee]


                         ______________________________
                             [Address of Transferee]

all rights and  obligations  of the  undersigned as Borrower under the Liquidity
Agreement  referred to above.  The transferee  has succeeded the  undersigned as
Subordination  Agent under the Intercreditor  Agreement referred to in the first
paragraph of the  Liquidity  Agreement,  pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.

          By this transfer,  all rights of the undersigned as Borrower under the
Liquidity  Agreement are transferred to the transferee and the transferee  shall
hereafter  have the sole  rights and  obligations  as Borrower  thereunder.  The
undersigned  shall pay any costs and expenses of such transfer,  including,  but
not limited to, transfer taxes or governmental charges.



          We ask that this transfer be effective as of _______________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                          individual   capacity  but  solely  as
                                          Subordination Agent, as Borrower


                                        
                                        By:_____________________________________
                                           Name:
                                           Title:


                                                                       EXECUTION

================================================================================



                           REVOLVING CREDIT AGREEMENT
                                    (1998-2C)

                           DATED AS OF APRIL 21, 1998

                                     BETWEEN

                            WILMINGTON TRUST COMPANY,

                             AS SUBORDINATION AGENT,
                          AS AGENT AND TRUSTEE FOR THE
                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2C

                                   AS BORROWER

                                       AND

                      WESTDEUTSCHE LANDESBANK GIROZENTRALE,
                       ACTING THROUGH ITS NEW YORK BRANCH

                              AS LIQUIDITY PROVIDER


================================================================================


                                   RELATING TO

                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2C
             6.331% CONTINENTAL AIRLINES PASS THROUGH CERTIFICATES,
                                 SERIES 1998-2C



                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
ARTICLE I  DEFINITIONS
   Section 1.01. Certain Defined Terms...................................      1

ARTICLE II  AMOUNT AND TERMS OF THE COMMITMENT
   Section 2.01. The Advances............................................      7
   Section 2.02. Making the Advances.....................................      7
   Section 2.03. Fees....................................................      9
   Section 2.04. Reductions or Termination of the Maximum Commitment.....      9
   Section 2.05. Repayments of Interest Advances or the Final Advance....      9
   Section 2.06. Repayments of Provider Advances.........................     10
   Section 2.07. Payments to the Liquidity Provider Under the 
                 Intercreditor Agreement.................................     11
   Section 2.08. Book Entries............................................     11
   Section 2.09. Payments from Available Funds Only......................     11
   Section 2.10. Extension of the Expiry Date; Non-Extension Advance.....     11

ARTICLE III  OBLIGATIONS OF THE BORROWER
   Section 3.01. Increased Costs.........................................     12
   Section 3.02. Capital Adequacy........................................     13
   Section 3.03. Payments Free of Deductions.............................     13
   Section 3.04. Payments................................................     14
   Section 3.05. Computations............................................     14
   Section 3.06. Payment on Non-Business Days............................     14
   Section 3.07. Interest................................................     15
   Section 3.08. Replacement of Borrower.................................     16
   Section 3.09. Funding Loss Indemnification............................     16
   Section 3.10. Illegality..............................................     17

ARTICLE IV  CONDITIONS PRECEDENT
   Section 4.01. Conditions Precedent to Effectiveness of Section 2.01...     17
   Section 4.02. Conditions Precedent to Borrowing.......................     19

ARTICLE V  COVENANTS
   Section 5.01. Affirmative Covenants of the Borrower...................     19
   Section 5.02. Negative Covenants of the Borrower......................     19

ARTICLE VI  LIQUIDITY EVENTS OF DEFAULT
   Section 6.01. Liquidity Events of Default.............................     20

ARTICLE VII  MISCELLANEOUS
   Section 7.01. Amendments, Etc.........................................     20
   Section 7.02. Notices, Etc............................................     20



                               TABLE OF CONTENTS
                                  (Continued)

                                                                            Page
                                                                            ----

   Section 7.03. No Waiver; Remedies.....................................     21
   Section 7.04. Further Assurances......................................     21
   Section 7.05. Indemnification; Survival of Certain Provisions.........     21
   Section 7.06. Liability of the Liquidity Provider.....................     22
   Section 7.07    Costs, Expenses and Taxes.............................     23
   Section 7.08. Binding Effect; Participations..........................     23
   Section 7.09. Severability............................................     25
   Section 7.10. GOVERNING LAW...........................................     25
   Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; 
                 Waiver of Immunity......................................     25
   Section 7.12. Execution in Counterparts...............................     26
   Section 7.13. Entirety................................................     26
   Section 7.14. Headings................................................     26
   Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........     26

ANNEX I       Interest Advance Notice of Borrowing

ANNEX II      Non-Extension Advance Notice of Borrowing

ANNEX III     Downgrade Advance Notice of Borrowing

ANNEX IV      Final Advance Notice of Borrowing

ANNEX V       Notice of Termination

ANNEX VI      Notice of Replacement Subordination Agent




                           REVOLVING CREDIT AGREEMENT

This REVOLVING CREDIT AGREEMENT dated as of April 21, 1998,  between  WILMINGTON
TRUST COMPANY, a Delaware corporation, not in its individual capacity but solely
as  Subordination  Agent  under the  Intercreditor  Agreement  (each as  defined
below),  as agent and  trustee  for the Class C Trust (as  defined  below)  (the
"BORROWER"),  and WESTDEUTSCHE LANDESBANK  GIROZENTRALE,  a bank organized under
the laws of the State of North Rhine-Westphalia, Germany, acting through its New
York branch (the "LIQUIDITY PROVIDER").

                              W I T N E S S E T H:

           WHEREAS,  pursuant to the Class C Trust  Agreement (such term and all
other  capitalized terms used in these recitals having the meanings set forth or
referred  to in  Section  1.01),  the  Class  C Trust  is  issuing  the  Class C
Certificates; and

           WHEREAS,  the Borrower,  in order to support the timely  payment of a
portion of the interest on the Class C  Certificates  in  accordance  with their
terms,  has  requested  the  Liquidity  Provider  to enter into this  Agreement,
providing in part for the Borrower to request in  specified  circumstances  that
Advances be made hereunder.

           NOW, THEREFORE,  in consideration of the premises, the parties hereto
agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

           Section 1.01. CERTAIN DEFINED TERMS. (a) DEFINITIONS. As used in this
Agreement  and unless  otherwise  expressly  indicated,  or unless  the  context
clearly  requires  otherwise,  the  following  capitalized  terms shall have the
following respective meanings for all purposes of this Agreement:

           "ADDITIONAL  COST" has the  meaning  assigned to such term in Section
      3.01.

           "ADVANCE"  means an Interest  Advance,  a Final  Advance,  a Provider
      Advance, an Applied Provider Advance or an Unpaid Advance, as the case may
      be.

           "APPLICABLE  LIQUIDITY RATE" has the meaning assigned to such term in
      Section 3.07(g).

           "APPLICABLE  MARGIN" means (y) with respect to any Unpaid  Advance or
      Applied  Provider  Advance,  1.75%,  or (z) with respect to any  Unapplied
      Provider Advance, .40%.



           "APPLIED  DOWNGRADE ADVANCE" has the meaning assigned to such term in
      Section 2.06(a).

           "APPLIED NON-EXTENSION ADVANCE" has the meaning assigned to such term
      in Section 2.06(a).

           "APPLIED  PROVIDER  ADVANCE" has the meaning assigned to such term in
      Section 2.06(a).

           "BASE RATE"  means a  fluctuating  interest  rate per annum in effect
      from time to time, which rate per annum shall at all times be equal to (a)
      the weighted average of the rates on overnight Federal funds  transactions
      with  members of the Federal  Reserve  System  arranged  by Federal  funds
      brokers, as published for such day (or, if such day is not a Business Day,
      for the next  preceding  Business Day) by the Federal  Reserve Bank of New
      York,  or if such rate is not so published  for any day that is a Business
      Day,  the  average of the  quotations  for such day for such  transactions
      received by the  Liquidity  Provider  from three  Federal funds brokers of
      recognized  standing  selected by it, plus (b)  one-quarter of one percent
      (1/4 of 1%).

           "BASE RATE  ADVANCE"  means an Advance that bears  interest at a rate
      based upon the Base Rate.

           "BORROWER"  has the  meaning  assigned to such term in the recital of
      parties to this Agreement.

           "BORROWING"  means the making of Advances  requested by delivery of a
      Notice of Borrowing.

           "BUSINESS DAY" means any day other than a Saturday or 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  Class C  Certificate  is
      outstanding, the city and state in which the Class C Trustee, the Borrower
      or any Loan Trustee  maintains its  Corporate  Trust Office or receives or
      disburses  funds,  and,  if the  applicable  Business  Day  relates to any
      Advance or other amount bearing interest based on the LIBOR Rate, on which
      dealings are carried on in the London interbank market.

           "DOWNGRADE  ADVANCE"  means  an  Advance  made  pursuant  to  Section
      2.02(c).

           "EFFECTIVE  DATE" has the  meaning  specified  in Section  4.01.  The
      delivery of the  certificate  of the Liquidity  Provider  contemplated  by
      Section  4.01(e) shall be conclusive  evidence that the Effective Date has
      occurred.

           "EXCLUDED TAXES" means (i) taxes imposed on the overall net income of
      the Liquidity  Provider or of its Lending Office by the jurisdiction where
      such  Liquidity  Provider's  principal  office or such  Lending  Office is
      located, and (ii) Excluded Withholding Taxes.

           "EXCLUDED  WITHHOLDING  TAXES" means (i) withholding Taxes imposed by
      the United States except to the extent that such United States withholding
      Taxes are imposed as a result of any change in applicable  law  (excluding
      



      from change in  applicable  law for this purpose a change in an applicable
      treaty or other change in law  affecting  the  applicability  of a treaty)
      after the date hereof,  or in the case of a successor  Liquidity  Provider
      (including a transferee of an Advance) or Lending  Office,  after the date
      on which such  successor  Liquidity  Provider  obtains its  interest or on
      which  the  Lending  Office is  changed,  and (ii) any  withholding  Taxes
      imposed by the United States which are imposed or increased as a result of
      the Liquidity  Provider failing to deliver to the Borrower any certificate
      or document  (which  certificate or document in the good faith judgment of
      the  Liquidity  Provider  it is  legally  entitled  to  provide)  which is
      reasonably requested by the Borrower to establish that payments under this
      Agreement  are exempt from (or entitled to a reduced rate of)  withholding
      Tax.

           "EXPENSES"  means  liabilities,  obligations,  damages,  settlements,
      penalties,  claims,  actions,  suits, costs,  expenses,  and disbursements
      (including, without limitation, reasonable fees and disbursements of legal
      counsel and costs of  investigation),  provided  that  Expenses  shall not
      include any Taxes.

           "EXPIRY DATE" means April 19, 1999,  initially,  or any date to which
      the Expiry Date is extended pursuant to Section 2.10.

           "FINAL ADVANCE" means an Advance made pursuant to Section 2.02(d).

           "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated the
      date hereof,  among the Trustees,  the Liquidity  Provider,  the liquidity
      provider under each Liquidity Facility (other than this Agreement) and the
      Subordination Agent, as the same may be amended, supplemented or otherwise
      modified from time to time in accordance with its terms.

           "INTEREST ADVANCE" means an Advance made pursuant to Section 2.02(a).

           "INTEREST PERIOD" means,  with respect to any LIBOR Advance,  each of
      the following periods:

           (i)  the period  beginning on the third Business Day following either
                (x) the Liquidity  Provider's receipt of the Notice of Borrowing
                for  such  LIBOR  Advance  (or,  in  the  case  of an  Unapplied
                Downgrade  Advance,  the period beginning on the Expiry Date) or
                (y) the  withdrawal  of funds  from the Class C Cash  Collateral
                Account  for the  purpose  of  paying  interest  on the  Class C
                Certificates  as  contemplated by Section 2.06(a) hereof and, in
                either case,  ending on the next Regular  Distribution  Date (or
                ending,  in the case of an  Interest  Period  applicable  to any
                Unapplied Provider Advance, on the numerically corresponding day
                in the first or sixth  calendar month after the first day of the
                applicable   Interest   Period   and/or  on  the  next   Regular
                Distribution Date, as Continental may select by providing notice
                thereof to the Borrower and the Liquidity Provider no later than
                three Business Days prior to the  commencement  of such Interest
                Period,  provided that if  Continental  shall not provide such a
                notice at least three Business Days prior to the commencement of



                such Interest Period,  then Continental  shall be deemed to have
                selected  an  Interest   Period   ending  on  the  next  Regular
                Distribution Date); and

           (ii) each  subsequent  period  commencing  on  the  last  day  of the
                immediately  preceding  Interest  Period  and ending on the next
                Regular Distribution Date (or ending, in the case of an Interest
                Period  applicable to any  Unapplied  Provider  Advance,  on the
                numerically  corresponding  day in the  first or sixth  calendar
                month  after  the first day of the  applicable  Interest  Period
                and/or on the next Regular Distribution Date, as Continental may
                select by  providing  notice  thereof  to the  Borrower  and the
                Liquidity  Provider no later than three  Business  Days prior to
                the  commencement  of such  Interest  Period,  provided  that if
                Continental  shall  not  provide  such a notice  at least  three
                Business Days prior to the commencement of such Interest Period,
                then  Continental  shall be deemed to have  selected an Interest
                Period ending on the next Regular Distribution Date);

      PROVIDED,  HOWEVER,  that (I) if an Unapplied  Provider Advance which is a
      LIBOR Advance  becomes an Applied  Provider  Advance,  the Interest Period
      then applicable to such Unapplied  Provider Advance shall be applicable to
      such Applied Provider Advance and (II) if (x) the Final Advance shall have
      been made, or (y) other  outstanding  Advances  shall have been  converted
      into the Final  Advance,  then the Interest  Periods  shall be  successive
      periods of one month  beginning on the third  Business Day  following  the
      Liquidity  Provider's  receipt of the Notice of  Borrowing  for such Final
      Advance (in the case of clause (x) above) or the last day of the  Interest
      Period then applicable to such outstanding Advances (in the case of clause
      (y) above).

           "LENDING  OFFICE" means the lending office of the Liquidity  Provider
      presently  located at New York,  New York, or such other lending office as
      the Liquidity  Provider from time to time shall notify the Borrower as its
      lending office hereunder;  PROVIDED that the Liquidity  Provider shall not
      change its Lending Office to a Lending Office outside the United States of
      America except in accordance with Section 3.01, 3.02 or 3.03 hereof.

           "LIBOR  ADVANCE"  means an Advance  bearing  interest at a rate based
      upon the LIBOR Rate.

           "LIBOR RATE" means, with respect to any Interest Period,  the average
      (rounded upward, if necessary, to the next higher 1/16 of 1%) of the rates
      per annum at which  deposits  in dollars are offered to major banks in the
      London  interbank  market at  approximately  11:00 A.M.  (London time) two
      Business  Days before the first day of such  Interest  Period in an amount
      approximately  equal to the principal  amount of the Advance to which such
      Interest  Period is to apply and for a period of time  comparable  to such
      Interest Period.

           "LIQUIDITY  EVENT OF DEFAULT"  means the occurrence of either (a) the
      Acceleration of all of the Equipment Notes or (b) a Continental Bankruptcy
      Event.

           "LIQUIDITY  INDEMNITEE"  means (i) the Liquidity  Provider,  (ii) the
      directors,  officers,  employees and agents of the Liquidity Provider, and
      (iii) the  successors  and permitted  assigns of the persons  described in
      clauses (i) and (ii), inclusive.



           "LIQUIDITY  PROVIDER"  has the  meaning  assigned to such term in the
      recital of parties to this Agreement.

           "MAXIMUM  AVAILABLE  COMMITMENT"  shall mean,  subject to the proviso
      contained  in the  third  sentence  of  Section  2.02(a),  at any  time of
      determination,  (a) the  Maximum  Commitment  at such  time  LESS  (b) the
      aggregate  amount  of each  Interest  Advance  outstanding  at such  time;
      PROVIDED that following a Provider Advance or a Final Advance, the Maximum
      Available Commitment shall be zero.

           "MAXIMUM COMMITMENT" means initially  $4,028,890,  as the same may be
      reduced from time to time in accordance with Section 2.04(a).

           "NON-EXTENSION  ADVANCE"  means an Advance  made  pursuant to Section
      2.02(b).

           "NOTICE OF BORROWING" has the meaning specified in Section 2.02(e).

           "NOTICE OF REPLACEMENT SUBORDINATION AGENT" has the meaning specified
      in Section 3.08.

           "PERFORMING NOTE DEFICIENCY" means any time that less than 65% of the
      then aggregate  outstanding  principal  amount of all Equipment  Notes are
      Performing Equipment Notes.

           "PROSPECTUS  SUPPLEMENT" means the Prospectus  Supplement dated April
      15, 1998 relating to the Certificates,  as such Prospectus  Supplement may
      be amended or supplemented.

           "PROVIDER  ADVANCE"  means a  Downgrade  Advance  or a  Non-Extension
      Advance.

           "REGULATORY  CHANGE" has the meaning assigned to such term in Section
      3.01.

           "REPLENISHMENT  AMOUNT"  has the  meaning  assigned  to such  term in
      Section 2.06(b).

           "REQUIRED AMOUNT" means, for any day, the sum of the aggregate amount
      of interest, calculated at the rate per annum equal to the Stated Interest
      Rate for the Class C  Certificates,  that  would be payable on the Class C
      Certificates  on  each  of  the  three   successive   semiannual   Regular
      Distribution  Dates  immediately  following  such day or, if such day is a
      Regular  Distribution  Date, on such day and the succeeding two semiannual
      Regular  Distribution  Dates,  in each case calculated on the basis of the
      Pool Balance of the Class C Certificates on such day and without regard to
      expected future payments of principal on the Class C Certificates.

           "TAX  LETTER"  means the letter  dated the date  hereof  between  the
      Liquidity Provider and Continental pertaining to this Agreement.

           "TERMINATION DATE" means the earliest to occur of the following:  (i)
      the  Expiry  Date;  (ii) the date on which the  Borrower  delivers  to the
      Liquidity Provider a certificate,  signed by a Responsible  Officer of the
      Borrower,  certifying that all of the Class C Certificates  have been paid
      in full (or provision  has been made for such payment in  accordance  with
      


      the Intercreditor  Agreement and the Trust Agreements) or are otherwise no
      longer entitled to the benefits of this Agreement; (iii) the date on which
      the Borrower delivers to the Liquidity Provider a certificate, signed by a
      Responsible  Officer  of  the  Borrower,  certifying  that  a  Replacement
      Liquidity  Facility  has  been  substituted  for  this  Agreement  in full
      pursuant to Section 3.6(e) of the Intercreditor Agreement;  (iv) the fifth
      Business Day following the receipt by the Borrower of a Termination Notice
      from the Liquidity  Provider pursuant to Section 6.01 hereof;  and (v) the
      date on which no Advance is or may  (including by reason of  reinstatement
      as herein provided) become available for a Borrowing hereunder.

           "TERMINATION NOTICE" means the Notice of Termination substantially in
      the form of Annex V to this Agreement.

           "TRANSFEREE"  has  the  meaning  assigned  to such  term  in  Section
      7.08(b).

           "UNAPPLIED  DOWNGRADE ADVANCE" means any Downgrade Advance other than
      an Applied Downgrade Advance.

           "UNAPPLIED  NON-EXTENSION  ADVANCE" means any  Non-Extension  Advance
      other than an Applied Non-Extension Advance.

           "UNAPPLIED PROVIDER ADVANCE" means any Provider Advance other than an
      Applied Provider Advance.

           "UNPAID  ADVANCE"  has the  meaning  assigned to such term in Section
      2.05.

           (b) TERMS DEFINED IN THE INTERCREDITOR AGREEMENT. For all purposes of
this Agreement,  the following terms shall have the respective meanings assigned
to such terms in the Intercreditor Agreement:

           "ACCELERATION",  "CERTIFICATES",  "CLASS  A  CERTIFICATES",  "CLASS B
      CERTIFICATES",    "CLASS   C   CASH   COLLATERAL   ACCOUNT",    "CLASS   C
      CERTIFICATEHOLDERS",  "CLASS C  CERTIFICATES",  "CLASS C TRUST",  "CLASS C
      TRUST  AGREEMENT",  "CLASS  C  TRUSTEE",  "CLOSING  DATE",  "CONTINENTAL",
      "CONTINENTAL  BANKRUPTCY  EVENT",  "CONTROLLING  PARTY",  "CORPORATE TRUST
      OFFICE",  "DISTRIBUTION DATE",  "DOWNGRADED FACILITY",  "EQUIPMENT NOTES",
      "FEE LETTER",  "FINAL LEGAL DISTRIBUTION  DATE",  "INTEREST PAYMENT DATE",
      "INVESTMENT  EARNINGS",  "LIQUIDITY  FACILITY",  "LIQUIDITY  OBLIGATIONS",
      "LOAN   TRUSTEE",   "MOODY'S",    "NON-EXTENDED   FACILITY",    "OPERATIVE
      AGREEMENTS",   "PARTICIPATION  AGREEMENT",  "PERFORMING  EQUIPMENT  NOTE",
      "PERSON",  "POOL  BALANCE",   "RATING  AGENCY",   "RATINGS  CONFIRMATION",
      "REGULAR   DISTRIBUTION   DATE",    "REPLACEMENT    LIQUIDITY   FACILITY",
      "RESPONSIBLE OFFICER", "SCHEDULED PAYMENT", "SPECIAL PAYMENT", "STANDARD &
      POOR'S",   "STATED  INTEREST  RATE",   "SUBORDINATION   AGENT",   "TAXES",
      "THRESHOLD   RATING",   "TRANSFER",    "TRUST   AGREEMENTS",    "TRUSTEE",
      "UNDERWRITERS", "UNDERWRITING AGREEMENT", and "WRITTEN NOTICE".


                                   ARTICLE II

                       AMOUNT AND TERMS OF THE COMMITMENT

           Section 2.01. THE ADVANCES. The Liquidity Provider hereby irrevocably
agrees,  on the terms and conditions  hereinafter set forth, to make Advances to



the  Borrower  from time to time on any  Business Day during the period from the
Effective  Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the  obligations  of the  Liquidity  Provider  shall be  earlier  terminated  in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the Maximum Commitment.

           Section 2.02.  MAKING THE ADVANCES.  (a) Interest  Advances  shall be
made in one or more  Borrowings by delivery to the Liquidity  Provider of one or
more written and  completed  Notices of Borrowing in  substantially  the form of
Annex I attached hereto,  signed by a Responsible Officer of the Borrower, in an
amount not exceeding the Maximum Available  Commitment at such time and shall be
used solely for the payment when due of interest on the Class C Certificates  at
the Stated  Interest  Rate  therefor in  accordance  with Section  3.6(a) of the
Intercreditor   Agreement.   Each   Interest   Advance  made   hereunder   shall
automatically  reduce the Maximum Available  Commitment and the amount available
to be borrowed  hereunder by subsequent  Advances by the amount of such Interest
Advance  (subject  to  reinstatement  as provided  in the next  sentence).  Upon
repayment  to the  Liquidity  Provider  in full of the  amount  of any  Interest
Advance made pursuant to this Section  2.02(a),  together with accrued  interest
thereon  (as  provided  herein),  the  Maximum  Available  Commitment  shall  be
reinstated by the amount of such repaid Interest Advance,  but not to exceed the
Maximum Commitment;  PROVIDED,  HOWEVER,  that the Maximum Available  Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.

           (b) A  Non-Extension  Advance shall be made in a single  Borrowing if
this  Agreement  is not  extended  in  accordance  with  Section  3.6(d)  of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement  shall have been  delivered  to the Borrower as  contemplated  by said
Section 3.6(d) within the time period  specified in such Section) by delivery to
the  Liquidity  Provider  of a written  and  completed  Notice of  Borrowing  in
substantially  the form of Annex II  attached  hereto,  signed by a  Responsible
Officer of the Borrower,  in an amount equal to the Maximum Available Commitment
at such time, and shall be used to fund the Class C Cash  Collateral  Account in
accordance  with said  Section  3.6(d) and Section  3.6(f) of the  Intercreditor
Agreement.

           (c) A Downgrade  Advance shall be made in a single  Borrowing  upon a
downgrading of the Liquidity Provider's  short-term unsecured debt rating issued
by either Rating Agency below the applicable  Threshold  Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility to replace this Agreement shall have been  previously  delivered to the
Borrower in accordance  with said Section  3.6(c),  by delivery to the Liquidity
Provider of a written and  completed  Notice of Borrowing in  substantially  the
form of Annex III  attached  hereto,  signed  by a  Responsible  Officer  of the
Borrower,  in an amount equal to the Maximum Available  Commitment at such time,
and shall be used to fund the Class C Cash Collateral Account in accordance with
said Section 3.6(c) and Section 3.6(f) of the Intercreditor Agreement.

           (d) A Final  Advance  shall  be made in a single  Borrowing  upon the
receipt by the  Borrower of a  Termination  Notice from the  Liquidity  Provider



pursuant  to Section  6.01 hereof by  delivery  to the  Liquidity  Provider of a
written and completed Notice of Borrowing in substantially  the form of Annex IV
attached hereto,  signed by a Responsible Officer of the Borrower,  in an amount
equal to the Maximum  Available  Commitment  at such time,  and shall be used to
fund the Class C Cash  Collateral  Account (in accordance with Section 3.6(i) of
the Intercreditor Agreement) and Section 3.6(f) of the Intercreditor Agreement.

           (e) Each  Borrowing  shall be made on notice in writing (a "NOTICE OF
BORROWING")  in  substantially  the form required by Section  2.02(a),  2.02(b),
2.02(c) or 2.02(d),  as the case may be, given by the Borrower to the  Liquidity
Provider.  If a Notice of  Borrowing  is delivered by the Borrower in respect of
any  Borrowing no later than 12:00 Noon (New York City time) on a Business  Day,
upon  satisfaction  of the  conditions  precedent set forth in Section 4.02 with
respect to a requested Borrowing, the Liquidity Provider shall make available to
the Borrower,  in accordance with its payment  instructions,  the amount of such
Borrowing in U.S.  dollars and immediately  available  funds,  before 12:00 Noon
(New York City time) on the first Business Day next following the day of receipt
of such Notice of  Borrowing  or on such later  Business  Day  specified in such
Notice of  Borrowing.  If a Notice of  Borrowing is delivered by the Borrower in
respect  of any  Borrowing  after  12:00 Noon (New York City time) on a Business
Day, upon  satisfaction  of the  conditions  precedent set forth in Section 4.02
with  respect  to a  requested  Borrowing,  the  Liquidity  Provider  shall make
available to the Borrower,  in  accordance  with its payment  instructions,  the
amount of such  Borrowing in U.S.  dollars and in immediately  available  funds,
before 12:00 Noon (New York City time) on the second Business Day next following
the day of receipt of such Notice of  Borrowing  or on such later  Business  Day
specified by the Borrower in such Notice of Borrowing. Payments of proceeds of a
Borrowing  shall be made by wire transfer of immediately  available funds to the
Borrower in  accordance  with such wire  transfer  instructions  as the Borrower
shall furnish from time to time to the Liquidity Provider for such purpose. Each
Notice of Borrowing shall be irrevocable and binding on the Borrower.

           (f) Upon the making of any Advance requested  pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully  discharged of its obligation  hereunder with respect to
such Notice of Borrowing,  and the Liquidity  Provider  shall not  thereafter be
obligated  to make any further  Advances  hereunder in respect of such Notice of
Borrowing to the Borrower or to any other  Person.  Following  the making of any
Advance pursuant to Section 2.02(b),  (c) or (d) hereof to fund the Class C Cash
Collateral  Account,  the Liquidity Provider shall have no interest in or rights
to the Class C Cash Collateral  Account,  such Advance or any other amounts from
time to time on deposit in the Class C Cash  Collateral  Account;  PROVIDED that
the foregoing  shall not affect or impair the  obligations of the  Subordination
Agent to make the  distributions  contemplated  by Section  3.6(e) or (f) of the
Intercreditor  Agreement.  By  paying  to  the  Borrower  proceeds  of  Advances
requested by the Borrower in accordance  with the provisions of this  Agreement,
the  Liquidity   Provider  makes  no   representation  as  to,  and  assumes  no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.

           Section  2.03.  FEES.  The  Borrower  agrees to pay to the  Liquidity
Provider the fees set forth in the Fee Letter.



           Section 2.04.  REDUCTIONS OR TERMINATION  OF THE MAXIMUM  COMMITMENT.
(a)  AUTOMATIC  REDUCTION.  Promptly  following  each date on which the Required
Amount is reduced as a result of a reduction  in the Pool Balance of the Class C
Certificates or otherwise, the Maximum Commitment shall automatically be reduced
to an  amount  equal to such  reduced  Required  Amount  (as  calculated  by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Maximum  Commitment to the Liquidity  Provider within two Business Days thereof.
The failure by the  Borrower  to furnish  any such notice  shall not affect such
automatic reduction of the Maximum Commitment.

           (b)  TERMINATION.  Upon the making of any  Provider  Advance or Final
Advance  hereunder or the occurrence of the Termination  Date, the obligation of
the Liquidity  Provider to make further Advances  hereunder shall  automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.

           Section 2.05.  REPAYMENTS OF INTEREST  ADVANCES OR THE FINAL ADVANCE.
Subject to Sections  2.06,  2.07 and 2.09 hereof,  the Borrower  hereby  agrees,
without notice of an Advance or demand for repayment from the Liquidity Provider
(which notice and demand are hereby waived by the Borrower), to pay, or to cause
to be paid,  to the  Liquidity  Provider  on each  date on which  the  Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Advance (any such Advance,  until repaid,  is referred to
herein as an "UNPAID  ADVANCE"),  plus (b)  interest  on the amount of each such
Unpaid  Advance as provided in Section  3.07  hereof;  PROVIDED  that if (i) the
Liquidity Provider shall make a Provider Advance at any time after making one or
more Interest  Advances which shall not have been repaid in accordance with this
Section 2.05 or (ii) this Liquidity Facility shall become a Downgraded  Facility
or Non-Extended  Facility at any time when  unreimbursed  Interest Advances have
reduced the Maximum  Available  Commitment to zero, then such Interest  Advances
shall  cease to  constitute  Unpaid  Advances  and  shall be deemed to have been
changed into an Applied Downgrade Advance or an Applied  Non-Extension  Advance,
as the case may be,  for all  purposes  of this  Agreement  (including,  without
limitation,  for the  purpose  of  determining  when such  Interest  Advance  is
required to be repaid to the Liquidity  Provider in accordance with Section 2.06
and for the  purposes  of  Section  2.06(b)).  The  Borrower  and the  Liquidity
Provider  agree that the  repayment in full of each  Interest  Advance and Final
Advance on the date such  Advance is made is  intended  to be a  contemporaneous
exchange for new value given to the Borrower by the Liquidity Provider.

           Section 2.06.  REPAYMENTS OF PROVIDER ADVANCES.  (a) Amounts advanced
hereunder  in respect of a Provider  Advance  shall be  deposited in the Class C
Cash Collateral Account, invested and withdrawn from the Class C Cash Collateral
Account  as set  forth  in  Sections  3.6(c),  (d) and (f) of the  Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date,  commencing on the first Regular  Distribution Date after the
making of a  Provider  Advance,  interest  on the  principal  amount of any such
Provider Advance as provided in Section 3.07; PROVIDED, HOWEVER, that amounts in
respect of a Provider Advance withdrawn from the Class C Cash Collateral Account
for the purpose of paying  interest on the Class C  Certificates  in  accordance
with  Section  3.6(f) of the  Intercreditor  Agreement  (the  amount of any such
withdrawal being (y) in the case of a Downgrade  Advance,  an "APPLIED DOWNGRADE



ADVANCE"  and  (z)  in  the  case  of  a  Non-Extension   Advance,  an  "APPLIED
NON-EXTENSION  ADVANCE" and,  together  with an Applied  Downgrade  Advance,  an
"APPLIED  PROVIDER  ADVANCE") shall  thereafter  (subject to Section 2.06(b)) be
treated as an Interest  Advance under this Agreement for purposes of determining
the Applicable  Liquidity Rate for interest payable thereon;  PROVIDED  FURTHER,
HOWEVER,  that if,  following  the making of a Provider  Advance,  the Liquidity
Provider delivers a Termination  Notice to the Borrower pursuant to Section 6.01
hereof,  such Provider  Advance  shall  thereafter be treated as a Final Advance
under this Agreement for purposes of determining  the Applicable  Liquidity Rate
for  interest  payable  thereon.  Subject  to  Sections  2.07 and  2.09  hereof,
immediately  upon the withdrawal of any amounts from the Class C Cash Collateral
Account on account of a reduction in the  Required  Amount,  the Borrower  shall
repay  to the  Liquidity  Provider  a  portion  of the  Provider  Advances  in a
principal amount equal to such reduction,  plus interest on the principal amount
prepaid as provided in Section 3.07 hereof.

           (b) At any time when an  Applied  Provider  Advance  (or any  portion
thereof) is outstanding, upon the deposit in the Class C Cash Collateral Account
of any amount pursuant to clause "THIRD" of Section 2.4(b) of the  Intercreditor
Agreement,  clause  "THIRD" of Section  3.2 of the  Intercreditor  Agreement  or
clause "FOURTH" of Section 3.3 of the  Intercreditor  Agreement (any such amount
being a  "REPLENISHMENT  AMOUNT") for the purpose of  replenishing or increasing
the balance  thereof up to the Required  Amount at such time,  (i) the aggregate
outstanding  principal amount of all Applied Provider  Advances (and of Provider
Advances  treated  as an  Interest  Advance  for  purposes  of  determining  the
Applicable  Liquidity Rate for interest  payable thereon) shall be automatically
reduced  by the  amount  of such  Replenishment  Amount  and (ii) the  aggregate
outstanding  principal  amount  of all  Unapplied  Provider  Advances  shall  be
automatically increased by the amount of such Replenishment Amount.

           (c)  Upon  the  provision  of a  Replacement  Liquidity  Facility  in
replacement  of  this  Agreement  in  accordance  with  Section  3.6(e)  of  the
Intercreditor  Agreement,  amounts  remaining  on  deposit  in the  Class C Cash
Collateral  Account after giving effect to any Applied  Provider  Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only
to the extent  such  amounts  are  necessary  to repay in full to the  Liquidity
Provider all amounts owing to it hereunder.

           Section  2.07.   PAYMENTS  TO  THE  LIQUIDITY   PROVIDER   UNDER  THE
INTERCREDITOR  AGREEMENT.  In order to provide for payment or  repayment  to the
Liquidity  Provider  of  any  amounts  hereunder,  the  Intercreditor  Agreement
provides  that amounts  available  and referred to in Articles II and III of the
Intercreditor  Agreement,  to  the  extent  payable  to the  Liquidity  Provider
pursuant  to  the  terms  of the  Intercreditor  Agreement  (including,  without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof.  Amounts so paid to the
Liquidity  Provider  shall be applied by the  Liquidity  Provider  to  Liquidity
Obligations then due and payable in accordance with the Intercreditor  Agreement
or, if not provided for in the Intercreditor  Agreement,  then in such manner as
the Liquidity Provider shall deem appropriate.



           Section 2.08. BOOK ENTRIES.  The Liquidity Provider shall maintain in
accordance  with its usual  practice  an  account  or  accounts  evidencing  the
indebtedness of the Borrower  resulting from Advances made from time to time and
the amounts of principal  and interest  payable  hereunder and paid from time to
time in respect thereof;  PROVIDED,  HOWEVER,  that the failure by the Liquidity
Provider to maintain such account or accounts  shall not affect the  obligations
of the Borrower in respect of Advances.

           Section 2.09.  PAYMENTS FROM AVAILABLE FUNDS ONLY. All payments to be
made by the Borrower  under this  Agreement  shall be made only from the amounts
that constitute Scheduled Payments, Special Payments or payments under Section 9
of the  Participation  Agreements and only to the extent that the Borrower shall
have  sufficient  income or proceeds  therefrom  to enable the  Borrower to make
payments in accordance with the terms hereof after giving effect to the priority
of payments provisions set forth in the Intercreditor  Agreement.  The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for  distribution  to it as provided  in the  Intercreditor  Agreement  and this
Agreement and that the Borrower,  in its individual capacity,  is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly  provided  in  this  Agreement,  the  Intercreditor  Agreement  or any
Participation  Agreement.  Amounts  on  deposit  in the Class C Cash  Collateral
Account shall be available to the Borrower to make payments under this Agreement
only to the extent and for the purposes expressly contemplated in Section 3.6(f)
of the Intercreditor Agreement.

           Section 2.10. EXTENSION OF THE EXPIRY DATE; NON-EXTENSION ADVANCE. No
earlier  than  the 60th  day and no  later  than the 40th day  prior to the then
effective  Expiry Date  (unless such Expiry Date is on or after the date that is
15 days after the Final Legal  Distribution  Date for the Class C Certificates),
the Borrower  shall request that the Liquidity  Provider  extend the Expiry Date
for a period of 364 days  after  the then  effective  Expiry  Date  (unless  the
obligations of the Liquidity  Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower,  no earlier
than 40 days and no later than 25 days prior to the then effective  Expiry Date,
whether, in its sole discretion,  it agrees to so extend the Expiry Date. If the
Liquidity  Provider  advises the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such  Expiry Date shall not be so  extended,  or
fails to irrevocably  and  unconditionally  advise the Borrower on or before the
25th day prior to the Expiry  Date then in effect that such Expiry Date shall be
so extended  (and, in each case, if the Liquidity  Provider  shall not have been
replaced in accordance with Section 3.6(e) of the Intercreditor Agreement),  the
Borrower  shall be  entitled  on and after  such 25th day (but prior to the then
effective  Expiry Date) to request a  Non-Extension  Advance in accordance  with
Section 2.02(b) hereof and Section 3.6(d) of the Intercreditor Agreement.


                                   ARTICLE III

                           OBLIGATIONS OF THE BORROWER

           Section  3.01.  INCREASED  COSTS.  The  Borrower  shall  pay  to  the
Liquidity  Provider  from  time to time  such  amounts  as may be  necessary  to
compensate  the  Liquidity  Provider  for any  increased  costs  incurred by the



Liquidity Provider which are attributable to its making or maintaining any LIBOR
Advances hereunder or its obligation to make any such Advances hereunder, or any
reduction  in  any  amount  receivable  by the  Liquidity  Provider  under  this
Agreement or the Intercreditor Agreement in respect of any such Advances or such
obligation  (such increases in costs and reductions in amounts  receivable being
herein called "ADDITIONAL  COSTS"),  resulting from any change after the date of
this Agreement in U.S. federal, state, municipal, or foreign laws or regulations
(including  Regulation  D of the  Board  of  Governors  of the  Federal  Reserve
System),  or the  adoption  or making  after the date of this  Agreement  of any
interpretations,  directives,  or  requirements  applying  to a class  of  banks
including the Liquidity Provider under any U.S. federal,  state,  municipal,  or
any foreign laws or regulations  (whether or not having the force of law) by any
court,  central bank or monetary  authority  charged with the  interpretation or
administration thereof (a "REGULATORY CHANGE"),  which: (1) changes the basis of
taxation of any amounts  payable to the Liquidity  Provider under this Agreement
in respect of any such Advances (other than Excluded  Taxes);  or (2) imposes or
modifies any reserve,  special deposit,  compulsory loan or similar requirements
relating to any  extensions  of credit or other assets of, or any deposits  with
other liabilities of, the Liquidity Provider (including any such Advances or any
deposits  referred to in the  definition of LIBOR Rate or related  definitions).
The  Liquidity  Provider  agrees  to use  reasonable  efforts  (consistent  with
applicable legal and regulatory  restrictions) to change the jurisdiction of its
Lending  Office if making  such  change  would avoid the need for, or reduce the
amount of, any amount payable under this Section that may thereafter  accrue and
would not, in the reasonable  judgment of the Liquidity  Provider,  be otherwise
disadvantageous to the Liquidity Provider.

           The  Liquidity  Provider  will  notify  the  Borrower  of  any  event
occurring  after the date of this  Agreement  that will  entitle  the  Liquidity
Provider  to  compensation   pursuant  to  this  Section  3.01  as  promptly  as
practicable  after it obtains  knowledge  thereof and determines to request such
compensation,  which notice shall describe in reasonable  detail the calculation
of the amounts owed under this Section. Determinations by the Liquidity Provider
for purposes of this Section 3.01 of the effect of any Regulatory  Change on its
costs of  making or  maintaining  Advances  or on  amounts  receivable  by it in
respect of Advances,  and of the additional  amounts  required to compensate the
Liquidity  Provider  in respect of any  Additional  Costs,  shall be prima facie
evidence of the amount owed under this Section.

           Section 3.02. CAPITAL ADEQUACY.  If (1) the adoption,  after the date
hereof, of any applicable governmental law, rule or regulation regarding capital
adequacy,  (2) any  change,  after the date  hereof,  in the  interpretation  or
administration  of any such law, rule or regulation by any central bank or other
governmental authority charged with the interpretation or administration thereof
or (3) compliance by the Liquidity  Provider or any corporation  controlling the
Liquidity  Provider  with  any  applicable   guideline  or  request  of  general
applicability,  issued  after  the date  hereof,  by any  central  bank or other
governmental authority (whether or not having the force of law) that constitutes
a change of the nature  described  in clause (2), has the effect of requiring an
increase in the amount of capital  required to be  maintained  by the  Liquidity
Provider  or any  corporation  controlling  the  Liquidity  Provider,  and  such
increase is based upon the Liquidity Provider's  obligations hereunder and other



similar obligations,  the Borrower shall pay to the Liquidity Provider from time
to time such  additional  amount or amounts as are necessary to  compensate  the
Liquidity  Provider  for such  portion of such  increase as shall be  reasonably
allocable to the Liquidity Provider's obligations to the Borrower hereunder. The
Liquidity Provider agrees to use reasonable efforts  (consistent with applicable
legal and regulatory  restrictions)  to change the  jurisdiction  of its Lending
Office if making such change  would avoid the need for, or reduce the amount of,
any amount payable under this Section that may thereafter  accrue and would not,
in the reasonable  judgment of the Liquidity Provider,  be otherwise  materially
disadvantageous to the Liquidity Provider.

           The  Liquidity  Provider  will  notify  the  Borrower  of  any  event
occurring  after the date of this  Agreement  that will  entitle  the  Liquidity
Provider  to  compensation   pursuant  to  this  Section  3.02  as  promptly  as
practicable  after it obtains  knowledge  thereof and determines to request such
compensation,  which notice shall describe in reasonable  detail the calculation
of the amounts owed under this Section. Determinations by the Liquidity Provider
for purposes of this Section 3.02 of the effect of any increase in the amount of
capital  required to be maintained  by the Liquidity  Provider and of the amount
allocable to the  Liquidity  Provider's  obligations  to the Borrower  hereunder
shall be prima facie evidence of the amounts owed under this Section.

           Section 3.03.  PAYMENTS FREE OF DEDUCTIONS.  (a) All payments made by
the Borrower under this  Agreement  shall be made free and clear of, and without
reduction  for or on account  of, any  present or future  stamp or other  taxes,
levies, imposts, duties, charges, fees, deductions,  withholdings,  restrictions
or  conditions  of any  nature  whatsoever  now or  hereafter  imposed,  levied,
collected,  withheld or assessed,  excluding  Excluded Taxes (such  non-excluded
taxes  being  referred to herein,  collectively,  as  "NON-EXCLUDED  TAXES" and,
individually,  as a "NON-EXCLUDED  TAX"). If any Non-Excluded Taxes are required
to be withheld  from any amounts  payable to the Liquidity  Provider  under this
Agreement,  the amounts so payable to the Liquidity  Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded  Taxes)  interest  or any other  such  amounts  payable  under this
Agreement  at the  rates or in the  amounts  specified  in this  Agreement.  The
Liquidity  Provider  agrees  to use  reasonable  efforts  (consistent  with  its
internal   policy  and  legal  and  regulatory   restrictions)   to  change  the
jurisdiction  of its Lending  Office if making such change  would avoid the need
for, or reduce the amount of, any such  additional  amounts that may  thereafter
accrue and would not, in the reasonable judgment of the Liquidity  Provider,  be
otherwise  disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower,  the Liquidity Provider agrees to provide to
the  Borrower  two  original  Internal  Revenue  Service  Form 1001 or 4224,  as
appropriate,  or any successor or other form prescribed by the Internal  Revenue
Service,  certifying that the Liquidity Provider is exempt from or entitled to a
reduced  rate of United  States  withholding  tax on  payments  pursuant to this
Agreement.

           (b) All payments  (including,  without limitation,  Advances) made by
the Liquidity Provider under this Agreement shall be made free and clear of, and
without  reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted  from any  amounts  payable to the  Borrower  under this
Agreement,  the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate  governmental  or taxing  authority the
full  amount of any such  Taxes  (and any  additional  Taxes in  respect  of the
payment  required  under clause (ii) hereof) and make such reports or returns in
connection  therewith  at the  time or times  and in the  manner  prescribed  by



applicable  law, and (ii) pay to the Borrower an additional  amount which (after
deduction  of all such Taxes) will be  sufficient  to yield to the  Borrower the
full amount  which would have been  received  by it had no such  withholding  or
deduction  been made.  Within 30 days after the date of each payment  hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other  documentary  evidence of) the payment of the Taxes applicable
to such payment.

           Section 3.04.  PAYMENTS.  The Borrower shall make or cause to be made
each payment to the Liquidity  Provider  under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due.  The  Borrower  shall make all such  payments in
lawful  money of the United  States of  America,  to the  Liquidity  Provider in
immediately  available  funds, by wire transfer to The Chase Manhattan Bank, One
Chase  Manhattan  Plaza,  New York,  New York 10081,  ABA No.  021-000-021,  for
account of Westdeutsche  Landesbank  Girozentrale,  New York branch, Account No.
920-1-060663, Reference: Continental Airlines Liquidity Facility 1998-2C.

           Section 3.05. COMPUTATIONS. All computations of interest based on the
Base Rate  shall be made on the basis of a year of 365 or 366 days,  as the case
may be, and all  computations  of interest based on the LIBOR Rate shall be made
on the basis of a year of 360 days,  in each case for the actual  number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.

           Section 3.06. PAYMENT ON NON-BUSINESS  DAYS.  Whenever any payment to
be made hereunder  shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made,  shall be deemed to have been
made when  due).  If any  payment in  respect  of  interest  on an Advance is so
deferred to the next succeeding  Business Day, such deferral shall not delay the
commencement  of the next Interest Period for such Advance (if such Advance is a
LIBOR  Advance) or reduce the number of days for which  interest will be payable
on such Advance on the next interest payment date for such Advance.

           Section 3.07.  INTEREST.  (a) Subject to Section  2.09,  the Borrower
shall pay, or shall cause to be paid, without  duplication,  interest on (i) the
unpaid  principal  amount of each  Advance from and  including  the date of such
Advance (or, in the case of an Applied Provider Advance,  from and including the
date on which the amount thereof was withdrawn from the Class C Cash  Collateral
Account to pay interest on the Class C  Certificates)  to but excluding the date
such  principal  amount  shall be paid in full  (or,  in the case of an  Applied
Provider Advance, the date on which the Class C Cash Collateral Account is fully
replenished  in respect of such Advance) and (ii) any other amount due hereunder
(whether  fees,  commissions,  expenses  or  other  amounts  or,  to the  extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due  (whether  at stated  maturity,  by  acceleration  or
otherwise)  from and  including  the due date thereof to but  excluding the date
such amount is paid in full, in each such case,  at a fluctuating  interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate  permitted by applicable  law;
PROVIDED,  HOWEVER,  that, if at any time the otherwise applicable interest rate



as set forth in this Section  3.07 shall  exceed the maximum  rate  permitted by
applicable  law,  then any  subsequent  reduction in such interest rate will not
reduce the rate of  interest  payable  pursuant to this  Section  3.07 below the
maximum  rate  permitted  by  applicable  law until the total amount of interest
accrued  equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.

           (b) Except as  provided  in clause (e) below,  each  Advance  will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section.  Each
such  Advance  will be a Base Rate  Advance  for the period from the date of its
borrowing to (but  excluding)  the third  Business Day  following  the Liquidity
Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such
Advance shall be a LIBOR  Advance;  provided that the Borrower (at the direction
of  the  Controlling  Party,  so  long  as the  Liquidity  Provider  is not  the
Controlling Party) may (x) convert the Final Advance into a Base Rate Advance on
the last day of an  Interest  Period for such  Advance  by giving the  Liquidity
Provider no less than four Business  Days' prior written notice of such election
or (y)  elect to  maintain  the Final  Advance  as a Base  Rate  Advance  by not
requesting a conversion of the Final Advance to a LIBOR Advance under Clause (5)
of the  applicable  Notice of Borrowing  (or, if such Final Advance is deemed to
have been made,  without  delivery of a Notice of Borrowing  pursuant to Section
2.06, by requesting,  prior to 11:00 A.M. on the first Business Day  immediately
following the Borrower's receipt of the applicable Termination Notice, that such
Final Advance not be converted from a Base Rate Advance to a LIBOR Advance).

           (c) Each LIBOR  Advance  shall bear  interest  during  each  Interest
Period at a rate per annum equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such  Interest  Period and, in the event of the payment of  principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).

           (d) Each Base Rate  Advance  shall bear  interest at a rate per annum
equal to the Base Rate plus the  Applicable  Margin for such Base Rate  Advance,
payable in arrears on each  Regular  Distribution  Date and, in the event of the
payment  of  principal  of such Base Rate  Advance on a day other than a Regular
Distribution  Date,  on the date of such  payment  (to the  extent  of  interest
accrued on the amount of principal repaid).

           (e) Each  outstanding  Unapplied  Downgrade  Advance  (i)  during the
period from and  including  the date of the making of such  Unapplied  Downgrade
Advance  through but  excluding  the Expiry  Date (or,  if earlier,  the date of
repayment  thereof or of conversion  thereof into a Final  Advance),  shall bear
interest in an amount equal to the Investment  Earnings on amounts on deposit in
the  Class C Cash  Collateral  Account  for such  period  plus  .325%  per annum
(through and including the first  anniversary of the date of this  Agreement) or
 .35% per annum (after the first  anniversary  of the date of this  Agreement) on
the amount of such  Unapplied  Downgrade  Advance  from time to time during such
period,  payable  in  arrears  on  each  Regular  Distribution  Date,  and  (ii)
thereafter,  shall be a LIBOR Advance and shall bear interest in accordance with
clause (c) above.



           (f)  Each  amount  not  paid  when  due  hereunder   (whether   fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law,  installments  of interest on Advances but excluding  Advances)  shall bear
interest at a rate per annum equal to the Base Rate plus 2.00% until paid.

           (g) Each change in the Base Rate shall become effective  immediately.
The rates of interest specified in this Section 3.07 with respect to any Advance
or other amount shall be referred to as the "APPLICABLE LIQUIDITY RATE".

           Section 3.08. REPLACEMENT OF BORROWER.  From time to time and subject
to the successor  Borrower's  meeting the eligibility  requirements set forth in
Section  6.9 of the  Intercreditor  Agreement  applicable  to the  Subordination
Agent,  upon the  effective  date and time  specified in a written and completed
Notice of Replacement  Subordination Agent in substantially the form of Annex VI
attached hereto (a "NOTICE OF REPLACEMENT SUBORDINATION AGENT") delivered to the
Liquidity  Provider by the then  Borrower,  the  successor  Borrower  designated
therein shall be substituted for as the Borrower for all purposes hereunder.

           Section 3.09. FUNDING LOSS INDEMNIFICATION. The Borrower shall pay to
the Liquidity Provider,  upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient  (in the  reasonable  opinion of the Liquidity
Provider) to compensate it for any loss,  cost, or expense incurred by reason of
the  liquidation  or  redeployment  of deposits  or other funds  acquired by the
Liquidity  Provider to fund or maintain any LIBOR Advance (but excluding loss of
anticipated profits) incurred as a result of:

                (1) Any  repayment  of a LIBOR  Advance on a date other than the
           last day of the Interest Period for such Advance; or

                (2) Any failure by the Borrower to borrow a LIBOR Advance on the
           date for  borrowing  specified in the relevant  notice under  Section
           2.02.

           Section 3.10. ILLEGALITY. Notwithstanding any other provision in this
Agreement,  if any change in any  applicable  law,  rule or  regulation,  or any
change in the  interpretation  or  administration  thereof  by any  governmental
authority,  central bank or comparable agency charged with the interpretation or
administration  thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or  directive  (whether or not having the force of law)
of any such authority,  central bank or comparable agency shall make it unlawful
or impossible for the Liquidity  Provider (or its Lending Office) to maintain or
fund its LIBOR  Advances,  then upon  notice to the  Borrower  by the  Liquidity
Provider,  the  outstanding  principal  amount  of the LIBOR  Advances  shall be
converted to Base Rate  Advances (a)  immediately  upon demand of the  Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider,  requires immediate  repayment;  or (b) at the expiration of
the last Interest  Period to expire before the effective date of any such change
or request.



                                   ARTICLE IV

                              CONDITIONS PRECEDENT

           Section 4.01.  CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECTION 2.01.
Section 2.01 of this  Agreement  shall  become  effective on and as of the first
date (the  "EFFECTIVE  DATE") on which the following  conditions  precedent have
been satisfied or waived:

           (a) The  Liquidity  Provider  shall  have  received  on or before the
      Closing  Date  each of the  following,  and in the  case of each  document
      delivered  pursuant to paragraphs  (i),  (ii) and (iii),  each in form and
      substance satisfactory to the Liquidity Provider:

               (i) This Agreement duly executed on behalf of the Borrower;

               (ii) The Intercreditor  Agreement duly executed on behalf of each
           of the parties thereto;

               (iii) Fully executed  copies of each of the Operative  Agreements
           executed and delivered on or before the Closing Date (other than this
           Agreement and the Intercreditor Agreement);

               (iv) A copy of the Prospectus  Supplement and specimen  copies of
           the Class C Certificates;

               (v) An executed copy of each  document,  instrument,  certificate
           and opinion  delivered on or before the Closing Date  pursuant to the
           Class C Trust Agreement,  the  Intercreditor  Agreement and the other
           Operative  Agreements  (in the case of each such opinion,  other than
           the opinion of counsel for the Underwriters,  either addressed to the
           Liquidity  Provider  or  accompanied  by a letter  from  the  counsel
           rendering  such opinion to the effect that the Liquidity  Provider is
           entitled  to  rely  on  such  opinion  as of its  date  as if it were
           addressed to the Liquidity Provider);

               (vi)  Evidence  that  there  shall have been made and shall be in
           full force and effect, all filings,  recordings and/or registrations,
           and there shall have been given or taken any notice or other  similar
           action as may be reasonably  necessary  or, to the extent  reasonably
           requested by the Liquidity Provider,  reasonably advisable,  in order
           to  establish,  perfect,  protect and preserve  the right,  title and
           interest,  remedies, powers, privileges, liens and security interests
           of,  or for the  benefit  of,  the  Trustees,  the  Borrower  and the
           Liquidity Provider created by the Operative  Agreements  executed and
           delivered on or prior to the Closing Date;

               (vii) An  agreement  from  Continental,  pursuant  to  which  (i)
           Continental   agrees  to  provide   copies  of  quarterly   financial
           statements and audited annual  financial  statements to the Liquidity
           Provider,  and such other information as the Liquidity Provider shall
           reasonably  request with respect to the transactions  contemplated by



           the  Operative  Agreements,  in each case,  only to the  extent  that
           Continental  is  obligated to provide  such  information  pursuant to
           Section  8.2.1  of  the  Leases  to  the  parties  thereto  and  (ii)
           Continental  agrees  to  allow  the  Liquidity  Provider  to  inspect
           Continental's  books and records regarding such transactions,  and to
           discuss such transactions with officers and employees of Continental;
           and

               (viii) Such other documents,  instruments, opinions and approvals
           pertaining to the  transactions  contemplated  hereby or by the other
           Operative  Agreements as the Liquidity Provider shall have reasonably
           requested.

           (b) The following  statement shall be true on and as of the Effective
      Date:  no event has occurred and is  continuing,  or would result from the
      entering  into of this  Agreement  or the  making  of any  Advance,  which
      constitutes a Liquidity Event of Default.

           (c) The Liquidity Provider shall have received payment in full of all
      fees and  other  sums  required  to be paid to or for the  account  of the
      Liquidity Provider on or prior to the Effective Date.

           (d) All  conditions  precedent  to the  issuance of the  Certificates
      under the Trust  Agreements  shall  have been  satisfied  or  waived,  all
      conditions   precedent  to  the   effectiveness  of  the  other  Liquidity
      Facilities  shall  have  been  satisfied  or  waived,  and all  conditions
      precedent to the purchase of the  Certificates by the  Underwriters  under
      the Underwriting  Agreement shall have been satisfied  (unless any of such
      conditions precedent shall have been waived by the Underwriters).

           (e) The Borrower  shall have received a  certificate,  dated the date
      hereof,  signed  by a duly  authorized  representative  of  the  Liquidity
      Provider, certifying that all conditions precedent to the effectiveness of
      Section 2.01 have been satisfied or waived.

           Section 4.02.  CONDITIONS  PRECEDENT TO BORROWING.  The obligation of
the  Liquidity  Provider to make an Advance on the  occasion  of each  Borrowing
shall be subject to the conditions  precedent that the Effective Date shall have
occurred  and,  prior to the date of such  Borrowing,  the  Borrower  shall have
delivered a Notice of Borrowing  which  conforms to the terms and  conditions of
this Agreement and has been completed as may be required by the relevant form of
the Notice of Borrowing for the type of Advances requested.


                                    ARTICLE V

                                    COVENANTS

           Section 5.01.  AFFIRMATIVE  COVENANTS OF THE BORROWER. So long as any
Advance  shall remain unpaid or the  Liquidity  Provider  shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity  Provider  hereunder,  the Borrower will,  unless the Liquidity
Provider shall otherwise consent in writing:



           (a) PERFORMANCE OF THIS AND OTHER AGREEMENTS. Punctually pay or cause
      to be paid all amounts  payable by it under this  Agreement  and the other
      Operative  Agreements and observe and perform in all material respects the
      conditions,  covenants and requirements applicable to it contained in this
      Agreement and the other Operative Agreements.

           (b) REPORTING  REQUIREMENTS.  Furnish to the Liquidity  Provider with
      reasonable promptness, such other information and data with respect to the
      transactions contemplated by the Operative Agreements as from time to time
      may be  reasonably  requested by the  Liquidity  Provider;  and permit the
      Liquidity  Provider,  upon  reasonable  notice,  to inspect the Borrower's
      books and  records  with  respect  to such  transactions  and to meet with
      officers and employees of the Borrower to discuss such transactions.

           (c) CERTAIN OPERATIVE  AGREEMENTS.  Furnish to the Liquidity Provider
      with reasonable  promptness,  such Operative Agreements entered into after
      the date hereof as from time to time may be  reasonably  requested  by the
      Liquidity Provider.

           Section  5.02.  NEGATIVE  COVENANTS OF THE  BORROWER.  So long as any
Advance  shall remain unpaid or the  Liquidity  Provider  shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder,  the Borrower will not appoint or permit or
suffer to be appointed any successor  Borrower without the prior written consent
of the Liquidity Provider,  which consent shall not be unreasonably  withheld or
delayed.


                                   ARTICLE VI

                           LIQUIDITY EVENTS OF DEFAULT

           Section 6.01. LIQUIDITY EVENTS OF DEFAULT. If (a) any Liquidity Event
of Default has occurred  and is  continuing  and (b) there is a Performing  Note
Deficiency,  the  Liquidity  Provider  may,  in its  discretion,  deliver to the
Borrower a  Termination  Notice,  the effect of which  shall be to cause (i) the
obligation of the Liquidity Provider to make Advances hereunder to expire on the
fifth Business Day after the date on which such  Termination  Notice is received
by the  Borrower,  (ii) the  Borrower to  promptly  request,  and the  Liquidity
Provider to promptly  make, a Final Advance in accordance  with Section  2.02(d)
hereof  and  Section  3.6(i)  of the  Intercreditor  Agreement,  (iii) all other
outstanding  Advances to be  automatically  converted  into Final  Advances  for
purposes of  determining  the  Applicable  Liquidity  Rate for interest  payable
thereon,  and (iv)  subject  to  Sections  2.07 and 2.09  hereof,  all  Advances
(including,  without  limitation,  any  Provider  Advance and  Applied  Provider
Advance),  any  accrued  interest  thereon  and any  other  amounts  outstanding
hereunder to become immediately due and payable to the Liquidity Provider.



                                   ARTICLE VII

                                  MISCELLANEOUS

           Section  7.01.  AMENDMENTS,  ETC.  No  amendment  or  waiver  of  any
provision  of this  Agreement,  nor  consent to any  departure  by the  Borrower
therefrom,  shall in any event be effective  unless the same shall be in writing
and signed by the Liquidity  Provider,  and, in the case of an amendment or of a
waiver by the Borrower,  the Borrower,  and then such waiver or consent shall be
effective only in the specific  instance and for the specific  purpose for which
given.

           Section 7.02.  NOTICES,  ETC. Except as otherwise  expressly provided
herein, all notices and other communications  provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):

                Borrower:               WILMINGTON TRUST COMPANY
                                        Rodney Square North
                                        1100 North Market Square
                                        Wilmington, DE 19890-0001
                                        Attention:  Corporate Trust
                                                       Administration

                                        Telephone: (302) 651-1000
                                        Telecopy: (302) 651-8882

                Liquidity Provider:     WESTDEUTSCHE LANDESBANK GIROZENTRALE
                                        Global Structured Finance
                                        1211 Avenue of the Americas
                                        New York, NY 10036
                                        Attention: Alfred Heynen

                                        Telephone: (212) 852-6115
                                        Telecopy: (212) 869-7634

                 with a copy to:        WESTDEUTSCHE LANDESBANK GIROZENTRALE
                                        Loan Administration
                                        1211 Avenue of the Americas
                                        New York, NY 10036
                                        Attention: Cheryl Wilson

                                        Telephone: (212) 852-6152
                                        Telecopy: (212) 302-7946

or, as to each of the foregoing, at such other address as shall be designated by
such  Person  in  a  written  notice  to  the  others.   All  such  notices  and
communications  shall be effective (i) if given by telecopier,  when transmitted
to the telecopier  number specified above, (ii) if given by mail, when deposited
in the mails  addressed as specified  above,  and (iii) if given by other means,
when delivered at the address  specified  above,  except that written notices to



the Liquidity  Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity  Provider.  A copy of all
notices  delivered  hereunder  to either party shall in addition be delivered to
each  of the  parties  to  the  Participation  Agreements  at  their  respective
addresses set forth therein.

           Section  7.03.  NO  WAIVER;  REMEDIES.  No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise  of any right  under  this  Agreement  preclude  any  other or  further
exercise  thereof  or the  exercise  of any other  right.  The  remedies  herein
provided are cumulative and not exclusive of any remedies provided by law.

           Section  7.04.  FURTHER  ASSURANCES.  The Borrower  agrees to do such
further  acts and things and to execute  and deliver to the  Liquidity  Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider  may  reasonably  require or deem  advisable  to carry into  effect the
purposes  of this  Agreement  and the other  Operative  Agreements  or to better
assure and confirm unto the Liquidity  Provider its rights,  powers and remedies
hereunder and under the other Operative Agreements.

           Section 7.05.  INDEMNIFICATION;  SURVIVAL OF CERTAIN PROVISIONS.  The
Liquidity  Provider  shall be  indemnified  hereunder  to the  extent and in the
manner described in Section 9 of the Participation  Agreements. In addition, the
Borrower  agrees to indemnify,  protect,  defend and hold harmless the Liquidity
Provider from,  against and in respect of, and shall pay on demand, all Expenses
of any  kind or  nature  whatsoever  (other  than  any  Expenses  of the  nature
described in Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless
of  whether  indemnified  against  pursuant  to said  Sections  or in  such  Fee
Letter)),  that may be imposed,  incurred by or asserted  against any  Liquidity
Indemnitee,  in any way relating  to,  resulting  from,  or arising out of or in
connection  with any action,  suit or proceeding by any third party against such
Liquidity  Indemnitee  and  relating  to this  Agreement,  the Fee  Letter,  the
Intercreditor Agreement or any Participation Agreement;  PROVIDED, HOWEVER, that
the  Borrower  shall not be  required  to  indemnify,  protect,  defend and hold
harmless any Liquidity  Indemnitee  in respect of any Expense of such  Liquidity
Indemnitee  to the  extent  such  Expense  is  (i)  attributable  to  the  gross
negligence  or willful  misconduct  of such  Liquidity  Indemnitee  or any other
Liquidity  Indemnitee,  (ii) ordinary and usual operating  overhead expense,  or
(iii)  attributable  to the failure by such  Liquidity  Indemnitee  or any other
Liquidity Indemnitee to perform or observe any agreement,  covenant or condition
on its part to be performed  or observed in this  Agreement,  the  Intercreditor
Agreement,  the Fee Letter,  the Tax Letter or any other Operative  Agreement to
which it is a party. The indemnities contained in Section 9 of the Participation
Agreements,  an the provisions of Sections 3.01, 3.02, 3.03, 3.09, 7.05 and 7.07
hereof, shall survive the termination of this Agreement.

           Section 7.06.  LIABILITY OF THE LIQUIDITY  PROVIDER.  (a) Neither the
Liquidity Provider nor any of its officers,  employees,  directors or affiliates
shall  be  liable  or  responsible  for:  (i) the use  which  may be made of the
Advances  or any  acts  or  omissions  of the  Borrower  or any  beneficiary  or
transferee  in  connection   therewith;   (ii)  the  validity,   sufficiency  or



genuineness of documents,  or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid,  insufficient,  fraudulent or
forged;  or (iii) the  making of  Advances  by the  Liquidity  Provider  against
delivery of a Notice of Borrowing and other  documents  which do not comply with
the terms  hereof;  PROVIDED,  HOWEVER,  that the  Borrower  shall  have a claim
against the Liquidity  Provider,  and the Liquidity  Provider shall be liable to
the Borrower,  to the extent of any damages  suffered by the Borrower which were
the result of (A) the Liquidity  Provider's  willful misconduct or negligence in
determining  whether documents presented hereunder comply with the terms hereof,
or (B)  any  breach  by the  Liquidity  Provider  of any of the  terms  of  this
Agreement,  including,  but not limited to, the Liquidity  Provider's failure to
make lawful  payment  hereunder  after the  delivery to it by the  Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.

           (b)  Neither  the  Liquidity   Provider  nor  any  of  its  officers,
employees, directors or affiliates shall be liable or responsible in any respect
for (i) any error, omission, interruption or delay in transmission,  dispatch or
delivery of any message or advice, however transmitted,  in connection with this
Agreement or any Notice of Borrowing  delivered  hereunder,  or (ii) any action,
inaction or  omission  which may be taken by it in good  faith,  absent  willful
misconduct  or negligence  (in which event the extent of t expenses  (including,
without limitation,  the reasonable fees and expenses of outside counsel for the
Liquidity   Provider)  of  the  Liquidity   Provider  in  connection   with  the
preparation,  negotiation,  execution,  delivery,  filing and  recording of this
Agreement,  any other  Operative  Agreement and any other documents which may be
delivered in connection  with this  Agreement and (B) on demand,  all reasonable
costs and  expenses  (including  reasonable  counsel  fees and  expenses) of the
Liquidity  Provider in connection  with (i) the enforcement of this Agreement or
any  other  Operative  Agreement,  (ii) the  modification  or  amendment  of, or
supplement  to, this  Agreement or any other  Operative  Agreement or such other
documents which may be delivered in connection herewith or therewith (whether or
not the same shall become effective) or (iii) any action or proceeding  relating
to any order,  injunction,  or other process or decree restraining or seeking to
restrain the Liquidity Provider from paying any amount under this Agreement, the
Intercreditor  Agreement or any other Operative Agreement or otherwise affecting
the application of funds in the Class C Cash Collateral  Accounts.  In addition,
the Borrower shall pay any and all recording,  stamp and other similar taxes and
fees  payable or  determined  to be payable in  connection  with the  execution,
delivery,  filing and recording of this Agreement, any other Operative Agreement
and such other  documents,  and agrees to save the Liquidity  Provider  harmless
from and against any and all  liabilities  with respect to or resulting from any
delay in paying or omission to pay such taxes or fees.

           Section 7.07 COSTS,  EXPENSES AND TAXES.  The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity  Provider shall make demand,  all  reasonable  out-of-pocket
costs and expenses  (including,  without  limitation,  the  reasonable  fees and
expenses  of  outside  counsel  for the  Liquidity  Provider)  of the  Liquidity
Provider in connection with the preparation,  negotiation,  execution, delivery,
filing and recording of this Agreement,  any other  Operative  Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable costs and expenses (including  reasonable counsel fees
and expenses) of the Liquidity  Provider in connection  with (i) the enforcement



of this Agreement or any other  Operative  Agreement,  (ii) the  modification or
amendment of, or supplement to, this Agreement or any other Operative  Agreement
or such  other  documents  which may be  delivered  in  connection  herewith  or
therewith  (whether or not the same shall become  effective) or (iii) any action
or  proceeding  relating to any order,  injunction,  or other  process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under  this  Agreement,  the  Intercreditor  Agreement  or any  other  Operative
Agreement or otherwise  affecting the  application  of funds in the Class C Cash
Collateral Accounts. In addition,  the Borrower shall pay any and all recording,
stamp and other  similar  taxes and fees payable or  determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative  Agreement and such other documents,  and agrees to save the
Liquidity  Provider  harmless  from and  against  any and all  liabilities  with
respect to or  resulting  from any delay in paying or omission to pay such taxes
or fees.

           Section 7.08.  BINDING  EFFECT;  PARTICIPATIONS.  (a) This  Agreement
shall be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their  respective  successors and assigns,  except that neither the
Liquidity  Provider  (except as  otherwise  provided in this  Section  7.08) nor
(except as  contemplated  by Section 3.08) the Borrower  shall have the right to
assign its rights or  obligations  hereunder or any interest  herein without the
prior written consent of the other party, subject to the requirements of Section
7.08(b). The Liquidity Provider may grant participations herein or in any of its
rights hereunder  (including,  without  limitation,  funded  participations  and
participations in rights to receive interest  payments  hereunder) and under the
other Operative  Agreements to such Persons as the Liquidity Provider may in its
sole discretion select,  subject to the requirements of Section 7.08(b). No such
participation  by the Liquidity  Provider,  however,  will relieve the Liquidity
Provider of its obligations  hereunder.  In connection with any participation or
any  proposed  participation,   the  Liquidity  Provider  may  disclose  to  the
participant or the proposed  participant  any  information  that the Borrower is
required to deliver or to disclose to the  Liquidity  Provider  pursuant to this
Agreement.  The Borrower  acknowledges and agrees that the Liquidity  Provider's
source  of  funds  may  derive  in  part  from  its  participants   (other  than
Continental).  Accordingly, references in this Agreement and the other Operative
Agreements  to  determinations,   reserve  and  capital  adequacy  requirements,
increased costs,  reduced receipts,  additional  amounts due pursuant to Section
3.03 and the like as they pertain to the Liquidity Provider shall be deemed also
to include  those of each of its  participants  (subject,  in each case,  to the
maximum amount that would have been incurred by or attributable to the Liquidity
Provider directly if the Liquidity  Provider,  rather than the participant,  had
held the interest participated).

           (b) If,  pursuant to subsection  (a) above,  the  Liquidity  Provider
sells any  participation  in this Agreement to any bank or other entity (each, a
"TRANSFEREE"),  then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the  Liquidity  Provider and the  Borrower)  either (A) that it is  incorporated
under  the laws of the  United  States  or a state  thereof  or (B)  that  under
applicable  law and  treaties,  no taxes will be required  to be  withheld  with
respect  to any  payments  to be made  to such  Transferee  in  respect  of this
Agreement,  (ii) furnish to the Liquidity Provider and the Borrower either (x) a



statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated,  two copies of a properly completed
United States  Internal  Revenue Service Form 4224 or Form 1001, as appropriate,
or other  applicable  form,  certificate or document  prescribed by the Internal
Revenue Service  certifying,  in each case, such  Transferee's  entitlement to a
complete exemption from United States federal  withholding tax in respect to any
and all payments to be made  hereunder,  and (iii) agree (for the benefit of the
Liquidity  Provider and the Borrower) to provide the Liquidity  Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes  obsolete or (B) after the  occurrence  of
any event requiring a change in the most recent form previously  delivered by it
and prior to the  immediately  following due date of any payment by the Borrower
hereunder,  certifying  in the  case  of a Form  1001  or Form  4224  that  such
Transferee  is  entitled to a complete  exemption  from  United  States  federal
withholding  tax on  payments  under this  Agreement.  Unless the  Borrower  has
received forms or other documents reasonably satisfactory to it (and required by
applicable  law)  indicating  that payments  hereunder are not subject to United
States federal  withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.

           (c)  Notwithstanding  the other  provisions of this Section 7.08, the
Liquidity  Provider  may assign and  pledge all or any  portion of the  Advances
owing  to it to any  Federal  Reserve  Bank or the  United  States  Treasury  as
collateral  security  pursuant to  Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower  to the  Liquidity  Provider  in  accordance  with  the  terms  of this
Agreement shall satisfy the Borrower's  obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.

           Section 7.09. SEVERABILITY.  Any provision of this Agreement which is
prohibited,  unenforceable  or not authorized in any  jurisdiction  shall, as to
such   jurisdiction,   be  ineffective  to  the  extent  of  such   prohibition,
unenforceability  or   non-authorization   without  invalidating  the  remaining
provisions hereof or affecting the validity,  enforceability or legality of such
provision in any other jurisdiction.

           Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

           Section  7.11.  SUBMISSION  TO  JURISDICTION;  WAIVER OF JURY  TRIAL;
WAIVER OF  IMMUNITY.  (a) Each of the  parties  hereto  hereby  irrevocably  and
unconditionally:

               (i)  submits for itself and its  property in any legal  action or
           proceeding   relating  to  this  Agreement  or  any  other  Operative
           Agreement,  or for  recognition  and  enforcement  of any judgment in
           respect hereof or thereof, to the nonexclusive  general  jurisdiction
           of the  courts  of the State of New York,  the  courts of the  United
           States of America  for the  Southern  District  of New York,  and the
           appellate courts from any thereof;

               (ii) consents  that any such action or proceeding  may be brought
           in such courts, and waives any objection that it may now or hereafter



           have to the venue of any such action or  proceeding in any such court
           or that such  action or  proceeding  was  brought in an  inconvenient
           court and agrees not to plead or claim the same;

               (iii)  agrees  that  service  of  process  in any such  action or
           proceeding may be effected by mailing a copy thereof by registered or
           certified mail (or any substantially  similar form and mail), postage
           prepaid,  to each party  hereto at its  address  set forth in Section
           7.02 hereof, or at such other address of which the Liquidity Provider
           shall have been notified pursuant thereto; and

               (iv) agrees that nothing  herein shall affect the right to effect
           service  of  process in any other  manner  permitted  by law or shall
           limit the right to sue in any other jurisdiction.

           (b) THE  BORROWER  AND THE  LIQUIDITY  PROVIDER  EACH HEREBY AGREE TO
WAIVE  THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED  UPON OR  ARISING  OUT OF THIS  AGREEMENT  OR ANY  DEALINGS  BETWEEN  THEM
RELATING TO THE SUBJECT  MATTER OF THIS AGREEMENT AND THE  RELATIONSHIP  THAT IS
BEING ESTABLISHED,  including, without limitation, contract claims, tort claims,
breach of duty  claims  and all  other  common  law and  statutory  claims.  The
Borrower  and the  Liquidity  Provider  each warrant and  represent  that it has
reviewed  this  waiver  with  its  legal  counsel,  and  that it  knowingly  and
voluntarily waives its jury trial rights following  consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE,  AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING,  AND THIS WAIVER SHALL APPLY TO ANY  SUBSEQUENT  AMENDMENTS,  RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

           (c) The  Liquidity  Provider  hereby  waives any immunity it may have
from the  jurisdiction  of the courts of the  United  States or of any State and
waives any immunity any of its properties  located in the United States may have
from attachment or execution upon a judgment entered by any such court under the
United States Foreign Sovereign  Immunities Act of 1976 or any similar successor
legislation.

           Section  7.12.  EXECUTION  IN  COUNTERPARTS.  This  Agreement  may be
executed  in any  number of  counterparts  and by  different  parties  hereto on
separate  counterparts,  each  of  which  counterparts,  when  so  executed  and
delivered,  shall be deemed  to be an  original  and all of which  counterparts,
taken together, shall constitute but one and the same Agreement.

           Section 7.13. ENTIRETY.  This Agreement,  the Intercreditor Agreement
and the other  Operative  Agreements to which the Liquidity  Provider is a party
constitute  the entire  agreement  of the  parties  hereto  with  respect to the
subject matter hereof and supersedes all prior  understandings and agreements of
such parties.

           Section  7.14.  HEADINGS.  Section  headings  in this  Agreement  are
included  herein for  convenience  of reference  only and shall not constitute a
part of this Agreement for any other purpose.



           Section  7.15.  LIQUIDITY  PROVIDER'S  OBLIGATION  TO MAKE  ADVANCES.
EXCEPT  AS  EXPRESSLY  SET  FORTH  IN THIS  AGREEMENT,  THE  OBLIGATIONS  OF THE
LIQUIDITY  PROVIDER TO MAKE ADVANCES  HEREUNDER,  AND THE  BORROWER'S  RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER,  SHALL
BE UNCONDITIONAL AND IRREVOCABLE,  AND SHALL BE PAID OR PERFORMED,  IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.



           IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first set forth above.


                                        WILMINGTON TRUST COMPANY,
                                           not in its  individual  capacity  but
                                           solely  as  Subordination  Agent,  as
                                           agent  and  trustee  for the  Class C
                                           Trust, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:



                                        WESTDEUTSCHE  LANDESBANK   GIROZENTRALE,
                                        acting  through  its New York  Branch as
                                        Liquidity Provider


                                        By:_____________________________________
                                           Name:
                                           Title:


                                        By:_____________________________________
                                           Name:
                                           Title:




                                                                      Annex I to
                                                      Revolving Credit Agreement

                      INTEREST ADVANCE NOTICE OF BORROWING

           The  undersigned,  a duly  authorized  signatory  of the  undersigned
borrower  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE   LANDESBANK
GIROZENTRALE,  acting  through its New York Branch (the  "LIQUIDITY  PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2C) dated as of April 21,
1998,   between  the  Borrower  and  the  Liquidity   Provider  (the  "LIQUIDITY
AGREEMENT";  the terms defined  therein and not otherwise  defined  herein being
used herein as therein defined or referenced), that:

               (1)  The   Borrower   is  the   Subordination   Agent  under  the
           Intercreditor Agreement.

               (2) The Borrower is  delivering  this Notice of Borrowing for the
           making of an Interest  Advance by the Liquidity  Provider to be used,
           subject to clause  (3)(v)  below,  for the payment of interest on the
           Class C  Certificates  which was payable on  ____________,  ____ (the
           "DISTRIBUTION  DATE") in accordance  with the terms and provisions of
           the  Class C Trust  Agreement  and the  Class C  Certificates,  which
           Advance is requested to be made on ____________, ____.

               (3) The amount of the Interest  Advance  requested  hereby (i) is
           $_______________.__,  to be  applied  in  respect  of the  payment of
           interest which was due and payable on the Class C Certificates on the
           Distribution  Date,  (ii) does not include any amount with respect to
           the payment of principal of, or premium on, the Class A Certificates,
           the Class B Certificates or the Class C Certificates,  or interest on
           the  Class A  Certificates  or the  Class B  Certificates,  (iii) was
           computed  in   accordance   with  the   provisions  of  the  Class  C
           Certificates,  the  Class C  Trust  Agreement  and the  Intercreditor
           Agreement (a copy of which computation is attached hereto as Schedule
           I), (iv) does not exceed the Maximum Available Commitment on the date
           hereof  and (v) has not  been  and is not the  subject  of a prior or
           contemporaneous Notice of Borrowing.

               (4) Upon  receipt by or on behalf of the  Borrower  of the amount
           requested hereby,  (a) the Borrower will apply the same in accordance
           with the terms of Section 3.6(b) of the Intercreditor  Agreement, (b)
           no portion of such amount  shall be applied by the  Borrower  for any
           other  purpose  and (c) no  portion of such  amount  until so applied
           shall be commingled with other funds held by the Borrower.

           The Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  the making of the  Interest  Advance as  requested by this Notice of
Borrowing shall  automatically  reduce,  subject to  reinstatement in accordance
with the terms of the Liquidity  Agreement,  the Maximum Available Commitment by
an amount  equal to the  amount of the  Interest  Advance  requested  to be made



hereby as set forth in clause (i) of paragraph (3) of this  Certificate and such
reduction shall automatically result in corresponding  reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.

           IN WITNESS  WHEREOF,  the Borrower has  executed and  delivered  this
Notice of Borrowing as of the ____ day of _________, ____.


                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                        individual   capacity   but   solely  as
                                        Subordination Agent, as Borrower



                                        By:_____________________________________
                                           Name:
                                           Title:



               SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING

            [Insert Copy of Computations in accordance with Interest
                          Advance Notice of Borrowing]



                                                                     Annex II to
                                                      Revolving Credit Agreement

                    NON-EXTENSION ADVANCE NOTICE OF BORROWING

           The  undersigned,  a duly  authorized  signatory  of the  undersigned
subordination   agent  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE
LANDESBANK  GIROZENTRALE,  acting  through its New York  Branch (the  "LIQUIDITY
PROVIDER"),  with reference to the Revolving Credit Agreement (1998-2C) dated as
of April  21,  1998,  between  the  Borrower  and the  Liquidity  Provider  (the
"LIQUIDITY  AGREEMENT";  the terms  defined  therein and not  otherwise  defined
herein being used herein as therein defined or referenced), that:

               (1)  The   Borrower   is  the   Subordination   Agent  under  the
           Intercreditor Agreement.

               (2) The Borrower is  delivering  this Notice of Borrowing for the
           making of the Non-Extension  Advance by the Liquidity  Provider to be
           used  for the  funding  of the  Class C Cash  Collateral  Account  in
           accordance with Section 3.6(d) of the Intercreditor Agreement,  which
           Advance is requested to be made on __________, ____.

               (3) The amount of the Non-Extension  Advance requested hereby (i)
           is $_______________.__, which equals the Maximum Available Commitment
           on the date  hereof and is to be applied in respect of the funding of
           the Class C Cash Collateral Account in accordance with Section 3.6(d)
           of the Intercreditor Agreement, (ii) does not include any amount with
           respect to the payment of the  principal of, or premium on, the Class
           C Certificates, or principal of, or interest or premium on, the Class
           A  Certificates  or the Class B  Certificates,  (iii) was computed in
           accordance with the provisions of the Class C Certificates, the Class
           C Trust  Agreement and the  Intercreditor  Agreement (a copy of which
           computation is attached  hereto as Schedule I), and (iv) has not been
           and is not  the  subject  of a prior  or  contemporaneous  Notice  of
           Borrowing under the Liquidity Agreement.

               (4) Upon  receipt by or on behalf of the  Borrower  of the amount
           requested  hereby,  (a) the Borrower  will deposit such amount in the
           Class C Cash Collateral Account and apply the same in accordance with
           the terms of Section 3.6(d) of the  Intercreditor  Agreement,  (b) no
           portion of such amount shall be applied by the Borrower for any other
           purpose and (c) no portion of such amount  until so applied  shall be
           commingled with other funds held by the Borrower.

           The Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the  Non-Extension  Advance as  requested  by this
Notice of Borrowing shall automatically and irrevocably terminate the obligation
of  the  Liquidity  Provider  to  make  further  Advances  under  the  Liquidity
Agreement;  and (B)  following  the  making  by the  Liquidity  Provider  of the



Non-Extension Advance requested by this Notice of Borrowing,  the Borrower shall
not be entitled to request any further Advances under the Liquidity Agreement.

           IN WITNESS  WHEREOF,  the Borrower has  executed and  delivered  this
Notice of Borrowing as of the ____ day of _________, ____.

                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                        individual   capacity   but   solely  as
                                        Subordination Agent, as Borrower



                                        By:_____________________________________
                                           Name:
                                           Title:





             SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING

         [Insert Copy of computations in accordance with Non-Extension
                          Advance Notice of Borrowing]



                                                                    Annex III to
                                                      Revolving Credit Agreement

                      DOWNGRADE ADVANCE NOTICE OF BORROWING

           The  undersigned,  a duly  authorized  signatory  of the  undersigned
subordination   agent  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE
LANDESBANK  GIROZENTRALE,  acting  through its New York  Branch (the  "LIQUIDITY
PROVIDER"),  with reference to the Revolving Credit Agreement (1998-2C) dated as
of April  21,  1998,  between  the  Borrower  and the  Liquidity  Provider  (the
"LIQUIDITY  AGREEMENT";  the terms  defined  therein and not  otherwise  defined
herein being used herein as therein defined or referenced), that:

               (1)  The   Borrower   is  the   Subordination   Agent  under  the
           Intercreditor Agreement.

               (2) The Borrower is  delivering  this Notice of Borrowing for the
           making of the Downgrade Advance by the Liquidity  Provider to be used
           for the funding of the Class C Cash Collateral  Account in accordance
           with Section 3.6(c) of the  Intercreditor  Agreement by reason of the
           downgrading of the short-term  unsecured debt rating of the Liquidity
           Provider  issued by either Rating Agency below the Threshold  Rating,
           which Advance is requested to be made on __________, ____.

               (3) The amount of the Downgrade  Advance  requested hereby (i) is
           $_______________.__, which equals the Maximum Available Commitment on
           the date hereof and is to be applied in respect of the funding of the
           Class C Cash Collateral  Account in accordance with Section 3.6(c) of
           the  Intercreditor  Agreement,  (ii) does not include any amount with
           respect to the payment of the  principal of, or premium on, the Class
           C Certificates, or principal of, or interest or premium on, the Class
           A  Certificates  or the Class B  Certificates,  (iii) was computed in
           accordance with the provisions of the Class C Certificates, the Class
           C Trust  Agreement and the  Intercreditor  Agreement (a copy of which
           computation is attached  hereto as Schedule I), and (iv) has not been
           and is not  the  subject  of a prior  or  contemporaneous  Notice  of
           Borrowing under the Liquidity Agreement.

               (4) Upon  receipt by or on behalf of the  Borrower  of the amount
           requested  hereby,  (a) the Borrower  will deposit such amount in the
           Class C Cash Collateral Account and apply the same in accordance with
           the terms of Section 3.6(c) of the  Intercreditor  Agreement,  (b) no
           portion of such amount shall be applied by the Borrower for any other
           purpose and (c) no portion of such amount  until so applied  shall be
           commingled with other funds held by the Borrower.

           The Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the Downgrade  Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the



Liquidity Provider to make further Advances under the Liquidity  Agreement;  and
(B)  following the making by the  Liquidity  Provider of the  Downgrade  Advance
requested by this Notice of  Borrowing,  the  Borrower  shall not be entitled to
request any further Advances under the Liquidity Agreement.

           IN WITNESS  WHEREOF,  the Borrower has  executed and  delivered  this
Notice of Borrowing as of the ____ day of _________, ____.

                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                        individual   capacity   but   solely  as
                                        Subordination Agent, as Borrower


                                        By:_____________________________________
                                           Name:
                                           Title:



               SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING

           [Insert Copy of computations in accordance with Downgrade
                          Advance Notice of Borrowing]



                                                                     Annex IV to
                                                      Revolving Credit Agreement

                        FINAL ADVANCE NOTICE OF BORROWING

           The  undersigned,  a duly  authorized  signatory  of the  undersigned
borrower  (the   "BORROWER"),   hereby  certifies  to  WESTDEUTSCHE   LANDESBANK
GIROZENTRALE,  acting  through its New York Branch (the  "LIQUIDITY  PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2C) dated as of April 21,
1998,   between  the  Borrower  and  the  Liquidity   Provider  (the  "LIQUIDITY
AGREEMENT";  the terms defined  therein and not otherwise  defined  herein being
used herein as therein defined or referenced), that:

               (1)  The   Borrower   is  the   Subordination   Agent  under  the
           Intercreditor Agreement.

               (2) The Borrower is  delivering  this Notice of Borrowing for the
           making of the Final Advance by the Liquidity  Provider to be used for
           the funding of the Class C Cash Collateral Account in accordance with
           Section  3.6(i)  of the  Intercreditor  Agreement  by  reason  of the
           receipt by the Borrower of a  Termination  Notice from the  Liquidity
           Provider  with respect to the Liquidity  Agreement,  which Advance is
           requested to be made on ____________, ____.

               (3) The  amount  of the Final  Advance  requested  hereby  (i) is
           $_________________.__,  which equals the Maximum Available Commitment
           on the date  hereof and is to be applied in respect of the funding of
           the Class C Cash Collateral Account in accordance with Section 3.6(i)
           of the Intercreditor Agreement, (ii) does not include any amount with
           respect to the  payment of  principal  of, or premium on, the Class C
           Certificates, or principal of, or interest or premium on, the Class A
           Certificates  or the  Class B  Certificates,  (iii) was  computed  in
           accordance with the provisions of the Class C Certificates, the Class
           C Trust  Agreement and the  Intercreditor  Agreement (a copy of which
           computation is attached  hereto as Schedule I), and (iv) has not been
           and is not  the  subject  of a prior  or  contemporaneous  Notice  of
           Borrowing.

               (4) Upon  receipt by or on behalf of the  Borrower  of the amount
           requested  hereby,  (a) the Borrower  will deposit such amount in the
           Class C Cash Collateral Account and apply the same in accordance with
           the terms of Section 3.6(i) of the  Intercreditor  Agreement,  (b) no
           portion of such amount shall be applied by the Borrower for any other
           purpose and (c) no portion of such amount  until so applied  shall be
           commingled with other funds held by the Borrower.



               (5) The  Borrower  hereby  requests  that the  Advance  requested
           hereby be a Base Rate  Advance  [and that such Base Rate  Advance  be
           converted  into a LIBOR  Advance on the third  Business Day following
           your receipt of this notice.]1

           The Borrower  hereby  acknowledges  that,  pursuant to the  Liquidity
Agreement,  (A) the making of the Final  Advance as  requested by this Notice of
Borrowing shall  automatically  and irrevocably  terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity  Agreement;  and
(B)  following  the  making  by the  Liquidity  Provider  of the  Final  Advance
requested by this Notice of  Borrowing,  the  Borrower  shall not be entitled to
request any further Advances under the Liquidity Agreement.

           IN WITNESS  WHEREOF,  the Borrower has  executed and  delivered  this
Notice of Borrowing as of the ____ day of _________, ____.

                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                        individual   capacity   but   solely  as
                                        Subordination Agent, as Borrower



                                        By:_____________________________________
                                           Name:
                                           Title:






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

1  Bracketed language may be included at Borrower's option.




                 SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING

             [Insert Copy of Computations in accordance with Final
                          Advance Notice of Borrowing]



                                                                      Annex V to
                                                      Revolving Credit Agreement

                              NOTICE OF TERMINATION

                                                                          [Date]


Wilmington Trust Company,
  as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001

Attention:  Corporate Trust Administration

           Revolving  Credit  Agreement  dated as of  April  21,  1998,  between
           Wilmington  Trust  Company,  as  Subordination  Agent,  as agent  and
           trustee for the Continental Airlines Pass Through Trust,  1998-2C, as
           Borrower, and Westdeutsche  Landesbank  Girozentrale,  acting through
           its New York Branch (the "LIQUIDITY AGREEMENT")

Ladies and Gentlemen:

           You  are  hereby  notified  that  pursuant  to  Section  6.01  of the
Liquidity Agreement, by reason of the occurrence of a Liquidity Event of Default
and the existence of a Performing Note Deficiency (each as defined therein),  we
are  giving  this  notice to you in order to cause (i) our  obligations  to make
Advances (as defined therein) under such Liquidity Agreement to terminate on the
fifth  Business Day after the date on which you receive this notice and (ii) you
to request a Final  Advance under the  Liquidity  Agreement  pursuant to Section
3.6(i) of the Intercreditor Agreement (as defined in the Liquidity Agreement) as
a consequence of your receipt of this notice.



           THIS NOTICE IS THE  "NOTICE OF  TERMINATION"  PROVIDED  FOR UNDER THE
LIQUIDITY  AGREEMENT.  OUR  OBLIGATIONS  TO MAKE  ADVANCES  UNDER THE  LIQUIDITY
AGREEMENT  WILL  TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU
RECEIVE THIS NOTICE.

                                        Very truly yours,

                                        WESTDEUTSCHE  LANDESBANK   GIROZENTRALE,
                                        acting through its New York Branch,
                                        as Liquidity Provider


                                        By:_____________________________________
                                           Name:
                                           Title:


cc:  Wilmington Trust Company,  
     as Class C Trustee



                                                                     Annex VI to
                                                      Revolving Credit Agreement


                    NOTICE OF REPLACEMENT SUBORDINATION AGENT



[Date]
Attention:

           Revolving  Credit  Agreement  dated as of  April  21,  1998,  between
           Wilmington  Trust  Company,  as  Subordination  Agent,  as agent  and
           trustee for the Continental Airlines Pass Through Trust,  1998-2C, as
           Borrower, and Westdeutsche  Landesbank  Girozentrale,  acting through
           its New York Branch (the "LIQUIDITY AGREEMENT")

Ladies and Gentlemen:

           For value received,  the undersigned  beneficiary  hereby irrevocably
transfers to:

                         ------------------------------
                              [Name of Transferee]


                         ------------------------------
                             [Address of Transferee]

all rights and  obligations  of the  undersigned as Borrower under the Liquidity
Agreement  referred to above.  The transferee  has succeeded the  undersigned as
Subordination  Agent under the Intercreditor  Agreement referred to in the first
paragraph of the  Liquidity  Agreement,  pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.

           By this transfer, all rights of the undersigned as Borrower under the
Liquidity  Agreement are transferred to the transferee and the transferee  shall
hereafter  have the sole  rights and  obligations  as Borrower  thereunder.  The
undersigned  shall pay any costs and expenses of such transfer,  including,  but
not limited to, transfer taxes or governmental charges.



           We ask that this transfer be effective as of _______________, ____.

                                        WILMINGTON  TRUST  COMPANY,  not  in its
                                        individual   capacity   but   solely  as
                                        Subordination Agent, as Borrower


                                        By: ____________________________________
                                            Name:
                                            Title:



                                                                  EXECUTION COPY










                          TRUST SUPPLEMENT No. 1998-2A

                              Dated April 21, 1998


                                     between


                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                  $105,797,000


                 Continental Airlines Pass Through Trust 1998-2A
                           6.410% Continental Airlines
                           Pass Through Certificates,
                                 Series 1998-2A






          This Trust Supplement No. 1998-2A,  dated as of April 21, 1998 (herein
called the "TRUST SUPPLEMENT"),  between Continental Airlines,  Inc., a Delaware
corporation  (the "COMPANY"),  and Wilmington Trust Company (the "TRUSTEE"),  to
the Pass Through Trust  Agreement,  dated as of September 25, 1997,  between the
Company and the Trustee (the "BASIC AGREEMENT").

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS, the Basic Agreement,  unlimited as to the aggregate principal
amount of Certificates  (unless otherwise  specified  herein,  capitalized terms
used herein without  definition having the respective  meanings specified in the
Basic  Agreement) which may be issued  thereunder,  has heretofore been executed
and delivered;

          WHEREAS, the Company wishes to lease the eight Boeing 737-3T0 aircraft
and six  McDonnell  Douglas  MD-82  aircraft  listed in  Schedule I hereto  (the
"AIRCRAFT")  from the Owner Trustee,  who intends to purchase such Aircraft from
the Company;

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

          WHEREAS,  the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-2A (the "APPLICABLE  TRUST") for the benefit of
the Applicable Certificateholders, and the initial Applicable Certificateholders
as the grantors of the Applicable Trust, by their respective  acceptances of the
Applicable  Certificates,  join in the creation of the Applicable Trust with the
Trustee;

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

          WHEREAS,  pursuant to the terms and conditions of the Basic  Agreement
as supplemented  by this Trust  Supplement (the  "AGREEMENT"),  the Trustee,  on
behalf of the  Applicable  Trust,  shall  purchase one or more  Equipment  Notes
having the same  interest  rate as, and final  maturity  date not later than the
final Regular Distribution Date of, the Applicable Certificates issued hereunder
and, subject to the Intercreditor Agreement,  shall hold such Equipment Notes in
trust for the benefit of the Applicable Certificateholders;

          WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement,  when duly executed and delivered,  a valid, binding and legal
instrument in accordance with its terms and for the purposes  herein  expressed,
have been done, performed and fulfilled,  and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;



          WHEREAS,  this Trust  Supplement  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;

          NOW THEREFORE,  in consideration of the premises herein,  it is agreed
between the Company and the Trustee as follows:


                                    ARTICLE I
                                THE CERTIFICATES

          Section 1.01.  THE  CERTIFICATES.  There is hereby created a series of
Certificates to be issued under the Agreement to be  distinguished  and known as
"6.410%  Continental  Airlines  Pass  Through   Certificates,   Series  1998-2A"
(hereinafter  defined  as  the  "APPLICABLE   CERTIFICATES").   Each  Applicable
Certificate  represents a fractional  undivided interest in the Applicable Trust
created  hereby.  The  Applicable  Certificates  shall be the  only  instruments
evidencing a fractional undivided interest in the Applicable Trust.

          The terms and conditions applicable to the Applicable Certificates are
as follows:

          (a) The aggregate principal amount of the Applicable Certificates that
     shall  be  authenticated   under  the  Agreement   (except  for  Applicable
     Certificates  authenticated  and delivered  pursuant to Sections 3.03, 3.04
     and 3.06 of the Basic Agreement) is $105,797,000.

          (b) The Cut-off Date is April 27, 1998.

          (c) The  Regular  Distribution  Dates with  respect to any  payment of
     Scheduled  Payments means April 15 and October 15 of each year,  commencing
     on October 15, 1998,  until payment of all of the Scheduled  Payments to be
     made under the Equipment Notes has been made.

          (d) The  Special  Distribution  Dates with  respect to the  Applicable
     Certificates  means any  Business  Day on which a Special  Payment is to be
     distributed pursuant to the Agreement.

          (e) (i) The  Applicable  Certificates  shall be in the  form  attached
          hereto as Exhibit A. Any Person  acquiring or accepting an  Applicable
          Certificate  or an  interest  therein  will,  by such  acquisition  or
          acceptance,  be deemed to represent and warrant to and for the benefit
          of the Owner Participant and the Company that either (i) the assets of
          an employee benefit plan subject to Title I of the Employee Retirement
          Income  Security  Act of  1974,  as  amended  ("ERISA"),  or of a plan
          subject to  Section  4975 of the  Internal  Revenue  Code of 1986,  as
          amended  (the  "Code"),  have not  been  used to  purchase  Applicable
          Certificates  or an interest  therein or (ii) the purchase and holding
          of Applicable  Certificates or an interest  therein is exempt from the



          prohibited transaction  restrictions of ERISA and the Code pursuant to
          one  or  more  prohibited   transaction  statutory  or  administrative
          exemptions.

               (ii) The Applicable Certificates shall be Book-Entry Certificates
          and shall be  subject  to the  conditions  set forth in the  Letter of
          Representations  between the Company and the Clearing  Agency attached
          hereto as Exhibit B.

          (f) The  Equipment  Notes to be  acquired  and held in the  Applicable
     Trust are the Equipment Notes  described in each of the Indentures  bearing
     interest  at a rate  that  is the  same  as the  designated  rates  for the
     Applicable Certificates,  the related Aircraft are as described in Schedule
     I to this Trust Supplement,  the  "Participation  Agreements" as defined in
     this Trust Supplement are the "Note Purchase Agreements" referred to in the
     Basic Agreement,  and the "Indentures" and "Leases" are, collectively,  the
     "Trust  Indenture"  and "Lease"  (as  defined in each of the  Participation
     Agreements), respectively.

          (g) The  Applicable  Certificates  are  subject  to the  Intercreditor
     Agreement.

          (h) The Applicable Certificates will have the benefit of the Liquidity
     Facility.

          (i) Except as contemplated by Section 2.02(b) of the Basic  Agreement,
     there  will be no  deposit  agreement  or  other  arrangement  prior to the
     delivery of the Aircraft.

          (j) The Responsible Party is the Company.

          (k) The  "final  expiration  date"  for the  Applicable  Trust  is one
     hundred  (110) years  following  the Issuance  Date,  and the "minimum" and
     "maximum"  number  of days for  purposes  of  Section  11.01  of the  Basic
     Agreement are 15 and 60 days, respectively.

          (l) The date  referred to in clause (i) of the  definition of the term
     "PTC Event of Default" in the Basic Agreement is the Final Maturity Date.

          (m) The  particular  "sections of the Note Purchase  Agreements,"  for
     purposes of clause (3) of Section 7.07 of the Basic Agreement,  are Section
     9.1 of each Participation Agreement.


                                   ARTICLE II
                                   DEFINITIONS

          Section 2.01. DEFINITIONS.  For all purposes of the Basic Agreement as
supplemented by this Trust Supplement,  the following capitalized terms have the
following  meanings  (any term used  herein  which is defined in both this Trust
Supplement and the Basic  Agreement shall have the meaning  assigned  thereto in
this Trust  Supplement for purposes of the Basic  Agreement as  supplemented  by
this Trust Supplement):

          AGREEMENT: Has the meaning specified in the recitals hereto.



          AIRCRAFT: Has the meaning specified in the recitals hereto.

          APPLICABLE  CERTIFICATE:  Has the meaning specified in Section 1.01 of
     this Trust Supplement.

          APPLICABLE  CERTIFICATEHOLDER:  Means  the  Person  in  whose  name an
     Applicable  Certificate  is registered  on the Register for the  Applicable
     Certificates.

          APPLICABLE TRUST: Has the meaning specified in the recitals hereto.

          BASIC AGREEMENT:  Has the meaning  specified in the first paragraph of
     this Trust Supplement.

          BOEING: Means The Boeing Company.

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

          COMPANY:  Has the meaning  specified  in the first  paragraph  of this
     Trust Supplement.

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

          FINAL MATURITY DATE: Means October 15, 2008.

          INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as of
     April  21,  1998  among the  Trustee,  the Other  Trustees,  the  Liquidity
     Provider, the liquidity providers relating to the Certificates issued under
     (and as defined  in) each of the Other  Agreements,  and  Wilmington  Trust
     Company,  as  Subordination  Agent and as trustee  thereunder,  as amended,
     supplemented or otherwise modified from time to time in accordance with its
     terms.

          ISSUANCE DATE: Means April 21, 1998.

          LIQUIDITY FACILITY:  Means, initially,  the Revolving Credit Agreement
     dated as of April 21, 1998 relating to the Applicable Certificates, between
     the Liquidity Provider and Wilmington Trust Company as Subordination Agent,
     as agent and  trustee for the  Applicable  Trust,  and,  from and after the
     replacement of such agreement pursuant to the Intercreditor  Agreement, the
     replacement   liquidity  facility  therefor,   in  each  case  as  amended,
     supplemented  or otherwise  modified from time to time in  accordance  with
     their respective terms.



          LIQUIDITY  PROVIDER:   Means,   initially,   Westdeutsche   Landesbank
     Girozentrale,  acting through its New York Branch,  and any replacements or
     successors   therefor   appointed  in  accordance  with  the  Intercreditor
     Agreement.

          OTHER TRUSTEES: Means the trustees under the Other Agreements, and any
     successor or other trustee appointed as provided therein.

          OTHER  TRUSTS:  Means the  Continental  Airlines  Pass  Through  Trust
     1998-2B and the  Continental  Airlines  Pass Through  Trust  1998-2C,  each
     created on the date hereof.

          OWNER  TRUSTEE'S   PURCHASE   AGREEMENTS:   Means  the   Participation
     Agreements.

          PARTICIPATION   AGREEMENTS:   Means  each  of  the  fourteen  separate
     Participation  Agreements  relating to the Aircraft  dated the date hereof,
     among the  Company,  the Trustee,  the Other  Trustees,  the relevant  Loan
     Trustee and the Subordination  Agent providing for, among other things, the
     purchase of Equipment  Notes by the Trustee on behalf of the Trust,  as the
     same may be amended,  supplemented or otherwise modified in accordance with
     its terms.

          TRUST SUPPLEMENT:  Has the meaning specified in the first paragraph of
     this trust supplement.


                                   ARTICLE III
                                     DEFAULT


          Section 3.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) By acceptance
of its Applicable Certificate,  each Applicable Certificateholder agrees that at
any time after the occurrence and during the continuation of a Triggering Event,

               (i)  each  Class B  Certificateholder  shall  have  the  right to
          purchase  all, but not less than all, of the  Applicable  Certificates
          upon ten days'  written  notice to the  Trustee and each other Class B
          Certificateholder,  PROVIDED  that  (A) if  prior  to the  end of such
          ten-day  period  any other  Class B  Certificateholder  notifies  such
          purchasing  Class  B   Certificateholder   that  such  other  Class  B
          Certificateholder  wants to participate  in such  purchase,  then such
          other Class B  Certificateholder  may join with the purchasing Class B
          Certificateholder  to  purchase  all,  but not less than  all,  of the
          Applicable  Certificates  pro rata based on the  Fractional  Undivided
          Interest   in  the  Class  B  Trust   held  by  each   such   Class  B
          Certificateholder  and (B) if prior to the end of such ten-day  period
          any other  Class B  Certificateholder  fails to notify the  purchasing
          Class B  Certificateholder  of such other Class B  Certificateholder's
          desire to  participate  in such a  purchase,  then such other  Class B
          Certificateholder  shall  lose its right to  purchase  the  Applicable
          Certificates pursuant to this Section 3.01(a); and



               (ii) each Class C  Certificateholder  shall have the right (which
          shall not expire  upon any  purchase  of the  Applicable  Certificates
          pursuant to clause (i) above) to purchase  all, but not less than all,
          of the Applicable  Certificates and the Class B Certificates  upon ten
          days'  written  notice to the  Trustee,  the Class B Trustee  and each
          other Class C Certificateholder, PROVIDED that (A) if prior to the end
          of such ten-day  period any other Class C  Certificateholder  notifies
          such  purchasing  Class C  Certificateholder  that such other  Class C
          Certificateholder  wants to participate  in such  purchase,  then such
          other Class C  Certificateholder  may join with the purchasing Class C
          Certificateholder  to  purchase  all,  but not less than  all,  of the
          Applicable Certificates and the Class B Certificates pro rata based on
          the  Fractional  Undivided  Interest in the Class C Trust held by each
          such  Class C  Certificateholder  and (B) if  prior to the end of such
          ten-day period any other Class C Certificateholder fails to notify the
          purchasing   Class  C   Certificateholder   of  such  other   Class  C
          Certificateholder's  desire to  participate  in such a purchase,  then
          such other Class C Certificateholder  shall lose its right to purchase
          the Applicable Certificates pursuant to this Section 3.01(a).

          As  used  in  this  Section   3.01(a)  and  elsewhere  in  this  Trust
Supplement, the terms "Class B Certificate", "Class B Certificateholder", "Class
B Trust", "Class B Trustee", "Class C Certificate", "Class C Certificateholder",
"Class C Trust"  and  "Class C  Trustee",  shall  have the  respective  meanings
assigned to such terms in the Intercreditor Agreement.

          (b) For purposes of the Agreement,  the following sentence  supersedes
and replaces the fourth sentence of Section 6.01(b) of the Basic Agreement:

          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  (subject to the
          first proviso in the second  sentence of this  paragraph and 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.



                                   ARTICLE IV
                                   THE TRUSTEE

          Section 4.01.  DELIVERY OF DOCUMENTS;  DELIVERY DATES. (a) The Trustee
is hereby  directed (i) to execute and deliver the  Intercreditor  Agreement and
each of the  Participation  Agreements on or prior to the Issuance Date, each in
the form  delivered  to the  Trustee  by the  Company  and (ii)  subject  to the
respective terms thereof, to perform its obligations thereunder.  The provisions
of this Section  4.01(a)  supplement  and do not  supersede  the  provisions  of
Section 2.02(a) of the Basic Agreement.

          (b) The Trustee  acknowledges  its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 2.02 of
the  Basic  Agreement,  Section  4.01(a)  of  this  Trust  Supplement  and  each
Participation  Agreement,  and declares  that it holds and will hold such right,
title  and  interest  for the  benefit  of all  present  and  future  Applicable
Certificateholders,  upon  the  trusts  set  forth  in  this  Agreement.  By its
acceptance   of   an   Applicable    Certificate,    each   initial   Applicable
Certificateholder,  as a grantor of the Applicable Trust, joins with the Trustee
in the creation of the Applicable Trust.

          Section 4.02.  THE TRUSTEE.  (a) Subject to Section 4.03 of this Trust
Supplement  and Section 7.15 of the Basic  Agreement,  the Trustee  shall not be
responsible  in any  manner  whatsoever  for or in respect  of the  validity  or
sufficiency of this Trust  Supplement or the due execution hereof by the Company
(other than the  Trustee),  or for or in respect of the recitals and  statements
contained  herein,  all of which  recitals and statements are made solely by the
Company,  except that the Trustee  hereby  represents  and warrants that each of
this Trust Supplement,  the Basic Agreement, each Applicable Certificate and the
Intercreditor  Agreement  has been executed and delivered by one of its officers
who is duly authorized to execute and deliver such document on its behalf.

          (b)  Except  as  herein  otherwise  provided  and  except  during  the
continuance  of an Event of Default in respect of the  Applicable  Trust created
hereby,  no duties,  responsibilities  or liabilities  are assumed,  or shall be
construed to be assumed, by the Trustee by reason of this Trust Supplement other
than as set forth in the  Agreement,  and this Trust  Supplement is executed and
accepted on behalf of the Trustee,  subject to all the terms and  conditions set
forth in the  Agreement,  as fully to all intents as if the same were herein set
forth at length.

          Section  4.03.  REPRESENTATIONS  AND  WARRANTIES  OF THE TRUSTEE.  The
Trustee hereby represents and warrants that:

          (a) the Trustee has full power,  authority and legal right to execute,
     deliver  and  perform  this Trust  Supplement  and has taken all  necessary
     action to authorize the execution,  delivery and  performance by it of this
     Trust Supplement;

          (b) the  execution,  delivery and  performance  by the Trustee of this
     Trust  Supplement  (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;

          (c) the  execution,  delivery and  performance  by the Trustee of this
     Trust Supplement will not require the authorization,  consent,  or approval
     of, the giving of notice to, the filing or registration with, or the taking
     of any other action in respect of, any governmental  authority or agency of
     the  United  States or the state of the United  States  where it is located
     regulating the banking and corporate trust activities of the Trustee; and

          (d) this Trust  Supplement has been duly executed and delivered by the
     Trustee  and  constitutes  the legal,  valid and binding  agreement  of the
     Trustee,  enforceable  against it in accordance  with its 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 4.04.  TRUSTEE LIENS.  The Trustee in its individual  capacity
agrees,  in addition to the  agreements  contained  in Section 7.17 of the Basic
Agreement,  that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is  attributable  to the Trustee in its
individual  capacity and which is unrelated to the transactions  contemplated by
the Intercreditor Agreement.


                                    ARTICLE V
                            MISCELLANEOUS PROVISIONS

          Section 5.01.  BASIC AGREEMENT  RATIFIED.  Except and so far as herein
expressly  provided,  all of the  provisions,  terms and conditions of the Basic
Agreement are in all respects  ratified and confirmed;  and the Basic  Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.

          SECTION  5.02.  GOVERNING  LAW.  THIS  AGREEMENT  AND  THE  APPLICABLE
CERTIFICATES  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF
THE STATE OF NEW YORK.

          Section 5.03. EXECUTION IN COUNTERPARTS.  This Trust Supplement may be
executed in any number of counterparts,  each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.



          Section 5.04. INTENTION OF PARTIES. The parties hereto intend that the
Applicable 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.  Each  Applicable  Certificateholder  and  Investor,  by  its
acceptance  of its  Applicable  Certificate  or a beneficial  interest  therein,
agrees to treat the  Applicable  Trust as a grantor trust for all U.S.  federal,
state  and local  income  tax  purposes.  The  powers  granted  and  obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.



          IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement  to be duly  executed  by  their  respective  officers  thereto  duly
authorized, as of the day and year first written above.

                                       CONTINENTAL AIRLINES, INC.



                                       By:______________________________________
                                          Name:  Gerald Laderman
                                          Title: Vice President



                                       WILMINGTON TRUST COMPANY, as Trustee



                                       By:______________________________________
                                          Name:
                                          Title:



                                    EXHIBIT A
                                    ---------

                               FORM OF CERTIFICATE

Certificate
No. _________

          [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 the registered owner hereof,
Cede & Co., has an interest herein.]*



                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2A

      6.410% Continental Airlines Pass Through Certificate, Series 1998-2A
                          Issuance Date: April 21, 1998

                      Final Maturity Date: October 15, 2008

             Evidencing  A  Fractional   Undivided   Interest  In  The
             Continental  Airlines  Pass Through  Trust  1998-2A,  The
             Property Of Which Includes  Certain  Equipment Notes Each
             Secured By An Aircraft  Leased To Or Owned By Continental
             Airlines, Inc.


                   $__________ Fractional Undivided Interest
          representing .000945206% 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 1998-2A (the "TRUST") created by Wilmington Trust Company, as trustee (the
"TRUSTEE"),  pursuant to a Pass Through Trust  Agreement,  dated as of September
25, 1997 (the "BASIC AGREEMENT"),  between the Trustee and Continental Airlines,
Inc.,  a  Delaware  corporation  (the  "Company"),   as  supplemented  by  Trust
Supplement No. 1998-2A thereto, dated as of

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

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




April 21, 1998 (the "Trust  Supplement" and,  together with the Basic Agreement,
the "AGREEMENT"),  between the Trustee and 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 "6.410% Continental Airlines Pass Through
Certificates,   Series  1998-2A"  (herein  called  the   "CERTIFICATES").   This
Certificate  is  issued  under  and is  subject  to the  terms,  provisions  and
conditions of the Agreement.  By virtue of its acceptance  hereof, the holder of
this Certificate (the  "CERTIFICATEHOLDER"  and, together with all other holders
of Certificates  issued by the Trust, the  "CERTIFICATEHOLDERS")  assents to and
agrees to be bound by the  provisions  of the  Agreement  and the  Intercreditor
Agreement.  The property of the Trust includes  certain  Equipment Notes and all
rights of the Trust to receive  payments under the  Intercreditor  Agreement and
any Liquidity  Facilities  (the "TRUST  PROPERTY").  Each issue of the Equipment
Notes is secured by,  among  other  things,  a security  interest in an Aircraft
leased to 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 the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each April 15 and  October 15 (a  "REGULAR  DISTRIBUTION  DATE")
commencing  October 15, 1998,  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 the Intercreditor Agreement, in the event that Special Payments on
the Equipment  Notes are received by the Trustee,  from funds then  available to
the Trustee,  there shall be distributed on the applicable Special  Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special  Distribution  Date, an amount in
respect of such Special  Payments on the Equipment  Notes,  the receipt of which
has been  confirmed  by the  Trustee,  equal to the  product  of the  percentage
interest in the Trust  evidenced by this  Certificate and an amount equal to the
sum of such Special  Payments so  received.  If a Regular  Distribution  Date or
Special  Distribution Date is not a Business Day,  distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular  Distribution Date or Special  Distribution Date and no interest
shall accrue  during the  intervening  period.  The Trustee shall mail notice of
each  Special  Payment  and  the  Special  Distribution  Date  therefor  to  the
Certificateholder of this Certificate.

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

          Each  Certificateholder  and  Investor,  by  its  acceptance  of  this
Certificate  or a  beneficial  interest  herein,  agrees to treat the Trust as a
grantor trust for all U.S. federal, state and local income tax purposes.

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

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

          Any Person  acquiring or  accepting  this  Certificate  or an interest
herein will, by such  acquisition or acceptance,  be deemed to have  represented
and warranted to and for the benefit of each Owner  Participant  and the Company
that  either:  (i) the assets of an employee  benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
a plan subject to Section 4975 of the Internal  Revenue Code of 1986, as amended
(the  "CODE"),  have not been used to purchase this  Certificate  or an interest
herein or (ii) the  purchase  and  holding of this  Certificate  or an  interest
herein are exempt from the prohibited transaction  restrictions of ERISA and the
Code pursuant to one or more prohibited  transaction statutory or administrative
exemptions.

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

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



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

                                       CONTINENTAL AIRLINES PASS THROUGH TRUST
                                       1998-2A

                                       By:  WILMINGTON TRUST COMPANY, as Trustee



                                       By:______________________________________
                                          Name:
                                          Title:



               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:______________________________________
                                          Name:
                                          Title:



                                    EXHIBIT B
                                    ---------

                         [DTC Letter of Representations]





                                   SCHEDULE I
                                   ----------

AIRCRAFT -------- AIRCRAFT TYPE REGISTRATION NUMBER - ------------- ------------------- Boeing 737-3T0 N14336 Boeing 737-3T0 N14337 Boeing 737-3T0 N59338 Boeing 737-3T0 N14341 Boeing 737-3T0 N14342 Boeing 737-3T0 N39343 Boeing 737-3T0 N17344 Boeing 737-3T0 N17345 McDonnell Douglas MD-82 N72821 McDonnell Douglas MD-82 N76823 McDonnell Douglas MD-82 N72829 McDonnell Douglas MD-82 N72830 McDonnell Douglas MD-82 N57837 McDonnell Douglas MD-82 N34838

                                                                  EXECUTION COPY




                          TRUST SUPPLEMENT No. 1998-2B

                              Dated April 21, 1998


                                     between


                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.


                                       to


                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                   $38,978,000


                 Continental Airlines Pass Through Trust 1998-2B
                           6.465% Continental Airlines
                           Pass Through Certificates,
                                 Series 1998-2B



           This Trust Supplement No. 1998-2B, dated as of April 21, 1998 (herein
called the "TRUST SUPPLEMENT"),  between Continental Airlines,  Inc., a Delaware
corporation  (the "COMPANY"),  and Wilmington Trust Company (the "TRUSTEE"),  to
the Pass Through Trust  Agreement,  dated as of September 25, 1997,  between the
Company and the Trustee (the "BASIC AGREEMENT").

                              W I T N E S S E T H:

           WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates  (unless otherwise  specified  herein,  capitalized terms
used herein without  definition having the respective  meanings specified in the
Basic  Agreement) which may be issued  thereunder,  has heretofore been executed
and delivered;

           WHEREAS,  the  Company  wishes  to lease  the  eight  Boeing  737-3T0
aircraft and six McDonnell  Douglas MD-82  aircraft  listed in Schedule I hereto
(the "AIRCRAFT")  from the Owner Trustee,  who intends to purchase such Aircraft
from the Company;

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

           WHEREAS, the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-2B (the "APPLICABLE  TRUST") for the benefit of
the Applicable Certificateholders, and the initial Applicable Certificateholders
as the grantors of the Applicable Trust, by their respective  acceptances of the
Applicable  Certificates,  join in the creation of the Applicable Trust with the
Trustee;

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

           WHEREAS,  pursuant to the terms and conditions of the Basic Agreement
as supplemented  by this Trust  Supplement (the  "AGREEMENT"),  the Trustee,  on
behalf of the  Applicable  Trust,  shall  purchase one or more  Equipment  Notes
having the same  interest  rate as, and final  maturity  date not later than the
final Regular Distribution Date of, the Applicable Certificates issued hereunder
and, subject to the Intercreditor Agreement,  shall hold such Equipment Notes in
trust for the benefit of the Applicable Certificateholders;

           WHEREAS,  all of the  conditions and  requirements  necessary to make
this Trust Supplement,  when duly executed and delivered,  a valid,  binding and
legal  instrument  in  accordance  with its  terms and for the  purposes  herein
expressed,  have been done,  performed  and  fulfilled,  and the  execution  and
delivery  of this Trust  Supplement  in the form and with the terms  hereof have
been in all respects duly authorized;



           WHEREAS,  this Trust  Supplement 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;

           NOW THEREFORE,  in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:


                                    ARTICLE I
                                THE CERTIFICATES

           Section 1.01. THE  CERTIFICATES.  There is hereby created a series of
Certificates to be issued under the Agreement to be  distinguished  and known as
"6.465%  Continental  Airlines  Pass  Through   Certificates,   Series  1998-2B"
(hereinafter  defined  as  the  "APPLICABLE   CERTIFICATES").   Each  Applicable
Certificate  represents a fractional  undivided interest in the Applicable Trust
created  hereby.  The  Applicable  Certificates  shall be the  only  instruments
evidencing a fractional undivided interest in the Applicable Trust.

           The terms and conditions  applicable to the  Applicable  Certificates
are as follows:

           (a) The aggregate  principal  amount of the  Applicable  Certificates
      that shall be  authenticated  under the Agreement  (except for  Applicable
      Certificates  authenticated and delivered  pursuant to Sections 3.03, 3.04
      and 3.06 of the Basic Agreement) is $38,978,000.

           (b) The Cut-off Date is April 27, 1998.

           (c) The  Regular  Distribution  Dates with  respect to any payment of
      Scheduled Payments means April 15 and October 15 of each year,  commencing
      on October 15, 1998, until payment of all of the Scheduled  Payments to be
      made under the Equipment Notes has been made.

           (d) The Special  Distribution  Dates with  respect to the  Applicable
      Certificates  means any Business  Day on which a Special  Payment is to be
      distributed pursuant to the Agreement.

           (e) (i) The  Applicable  Certificates  shall be in the form  attached
           hereto as Exhibit A. Any Person  acquiring or accepting an Applicable
           Certificate  or an interest  therein  will,  by such  acquisition  or
           acceptance, be deemed to represent and warrant to and for the benefit
           of the Owner  Participant  and the Company that either (i) the assets
           of an  employee  benefit  plan  subject  to  Title I of the  Employee
           Retirement Income Security Act of 1974, as amended ("ERISA"), or of a
           plan subject to Section 4975 of the Internal Revenue Code of 1986, as
           amended  (the  "Code"),  have not been  used to  purchase  Applicable
           Certificates or an interest  therein or (ii) the purchase and holding
           of Applicable  Certificates or an interest therein is exempt from the
           prohibited transaction restrictions of ERISA and the Code pursuant to



           one  or  more  prohibited  transaction  statutory  or  administrative
           exemptions.

                (ii)   The   Applicable   Certificates   shall   be   Book-Entry
           Certificates  and shall be subject to the conditions set forth in the
           Letter of Representations between the Company and the Clearing Agency
           attached hereto as Exhibit B.

           (f) The  Equipment  Notes to be acquired  and held in the  Applicable
      Trust are the Equipment Notes described in each of the Indentures  bearing
      interest  at a rate  that is the  same  as the  designated  rates  for the
      Applicable Certificates, the related Aircraft are as described in Schedule
      I to this Trust Supplement,  the "Participation  Agreements" as defined in
      this Trust  Supplement are the "Note Purchase  Agreements"  referred to in
      the Basic Agreement,  and the "Indentures" and "Leases" are, collectively,
      the "Trust Indenture" and "Lease" (as defined in each of the Participation
      Agreements), respectively.

           (g) The  Applicable  Certificates  are  subject to the  Intercreditor
      Agreement.

           (h)  The  Applicable  Certificates  will  have  the  benefit  of  the
      Liquidity Facility.

           (i) Except as contemplated by Section 2.02(b) of the Basic Agreement,
      there  will be no  deposit  agreement  or other  arrangement  prior to the
      delivery of the Aircraft.

           (j) The Responsible Party is the Company.

           (k) The  "final  expiration  date"  for the  Applicable  Trust is one
      hundred  (110) years  following the Issuance  Date,  and the "minimum" and
      "maximum"  number  of days for  purposes  of  Section  11.01 of the  Basic
      Agreement are 15 and 60 days, respectively.

           (l) The date referred to in clause (i) of the  definition of the term
      "PTC Event of Default" in the Basic Agreement is the Final Maturity Date.

           (m) The particular  "sections of the Note Purchase  Agreements,"  for
      purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
      9.1 of each Participation Agreement.


                                   ARTICLE II
                                   DEFINITIONS

           Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement,  the following capitalized terms have the
following  meanings  (any term used  herein  which is defined in both this Trust
Supplement and the Basic  Agreement shall have the meaning  assigned  thereto in
this Trust  Supplement for purposes of the Basic  Agreement as  supplemented  by
this Trust Supplement):

           AGREEMENT: Has the meaning specified in the recitals hereto.



           AIRCRAFT: Has the meaning specified in the recitals hereto.

           APPLICABLE CERTIFICATE:  Has the meaning specified in Section 1.01 of
      this Trust Supplement.

           APPLICABLE  CERTIFICATEHOLDER:  Means  the  Person  in whose  name an
      Applicable  Certificate  is registered on the Register for the  Applicable
      Certificates.

           APPLICABLE TRUST: Has the meaning specified in the recitals hereto.

           BASIC AGREEMENT:  Has the meaning specified in the first paragraph of
      this Trust Supplement.

           BOEING: Means The Boeing Company.

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

           COMPANY:  Has the meaning  specified  in the first  paragraph of this
      Trust Supplement.

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

           FINAL MATURITY DATE: Means April 15, 2006.

           INTERCREDITOR  AGREEMENT:  Means the Intercreditor Agreement dated as
      of April 21, 1998 among the Trustee,  the Other  Trustees,  the  Liquidity
      Provider,  the liquidity  providers  relating to the  Certificates  issued
      under (and as defined  in) each of the Other  Agreements,  and  Wilmington
      Trust  Company,  as  Subordination  Agent and as  trustee  thereunder,  as
      amended,   supplemented  or  otherwise  modified  from  time  to  time  in
      accordance with its terms.

           ISSUANCE DATE: Means April 21, 1998.

           LIQUIDITY FACILITY:  Means, initially, the Revolving Credit Agreement
      dated  as of April  21,  1998  relating  to the  Applicable  Certificates,
      between  the   Liquidity   Provider  and   Wilmington   Trust  Company  as
      Subordination  Agent, as agent and trustee for the Applicable  Trust, and,
      from  and  after  the  replacement  of  such  agreement  pursuant  to  the
      Intercreditor  Agreement,  the replacement liquidity facility therefor, in
      each case as amended, supplemented or otherwise modified from time to time
      in accordance with their respective terms.



           LIQUIDITY  PROVIDER:   Means,   initially,   Westdeutsche  Landesbank
      Girozentrale,  acting through its New York Branch, and any replacements or
      successors   therefor  appointed  in  accordance  with  the  Intercreditor
      Agreement.

           OTHER TRUSTEES:  Means the trustees under the Other  Agreements,  and
      any successor or other trustee appointed as provided therein.

           OTHER  TRUSTS:  Means the  Continental  Airlines  Pass Through  Trust
      1998-2A and the  Continental  Airlines  Pass Through Trust  1998-2C,  each
      created on the date hereof.

           OWNER  TRUSTEE'S   PURCHASE   AGREEMENTS:   Means  the  Participation
      Agreements.

           PARTICIPATION  AGREEMENTS:   Means  each  of  the  fourteen  separate
      Participation  Agreements  relating to the Aircraft dated the date hereof,
      among the Company,  the Trustee,  the Other  Trustees,  the relevant  Loan
      Trustee and the Subordination Agent providing for, among other things, the
      purchase of Equipment  Notes by the Trustee on behalf of the Trust, as the
      same may be amended, supplemented or otherwise modified in accordance with
      its terms.

           TRUST SUPPLEMENT: Has the meaning specified in the first paragraph of
      this trust supplement.


                                   ARTICLE III
                                     DEFAULT

           Section 3.01. PURCHASE RIGHTS OF CERTIFICATES.  (a) At any time after
the occurrence and during the continuance of a Triggering Event, each Applicable
Certificateholder  shall have the right to purchase,  for the purchase price set
forth in the Class A Trust Agreement, all, but not less than all, of the Class A
Certificates upon ten days' written notice to the Class A Trustee and each other
Applicable  Certificateholder,  provided  that  (i) if  prior to the end of such
ten-day period any other Applicable  Certificateholder  notifies such purchasing
Applicable  Certificateholder that such other Applicable Certificateholder wants
to participate in such purchase,  then such other  Applicable  Certificateholder
may join with the purchasing  Applicable  Certificateholder to purchase all, but
not less than all, of the Class A Certificates  pro rata based on the Fractional
Undivided  Interest  in the  Applicable  Trust  held  by  each  such  Applicable
Certificateholder  and (ii) if prior to the end of such ten-day period any other
Applicable   Certificateholder   fails  to  notify  the  purchasing   Applicable
Certificateholder  of  such  other  Applicable   Certificateholder's  desire  to
participate  in such a purchase,  then such other  Applicable  Certificateholder
shall  lose its right to  purchase  the Class A  Certificates  pursuant  to this
Section 3.01(a); and

           (b) By  acceptance of its  Applicable  Certificate,  each  Applicable
Certificateholder  agrees that at any time after the  occurrence  and during the
continuation of a Triggering  Event, each Class C  Certificateholder  shall have
the right (which shall not expire upon any purchase of the Class A  Certificates



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

           As used in this Section 3.01 and elsewhere in this Trust  Supplement,
the terms "Class A Certificate",  "Class A Certificateholder",  "Class A Trust",
"Class A Trustee",  "Class A Trust Agreement",  "Class C Certificate",  "Class C
Certificateholder",  "Class  C Trust"  and  "Class C  Trustee",  shall  have the
respective meanings assigned to such terms in the Intercreditor Agreement.

           (c) For purposes of the Agreement,  the following sentence supersedes
and replaces the fourth sentence of Section 6.01(b) of the Basic Agreement:

           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 (subject to the
           first proviso in the second  sentence of this paragraph and 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.



                                   ARTICLE IV
                                   THE TRUSTEE

           Section 4.01. DELIVERY OF DOCUMENTS;  DELIVERY DATES. (a) The Trustee
is hereby  directed (i) to execute and deliver the  Intercreditor  Agreement and
each of the  Participation  Agreements on or prior to the Issuance Date, each in
the form  delivered  to the  Trustee  by the  Company  and (ii)  subject  to the
respective terms thereof, to perform its obligations thereunder.  The provisions
of this Section  4.01(a)  supplement  and do not  supersede  the  provisions  of
Section 2.02(a) of the Basic Agreement.

           (b) The Trustee  acknowledges its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 2.02 of
the  Basic  Agreement,  Section  4.01(a)  of  this  Trust  Supplement  and  each
Participation  Agreement,  and declares  that it holds and will hold such right,
title  and  interest  for the  benefit  of all  present  and  future  Applicable
Certificateholders,  upon  the  trusts  set  forth  in  this  Agreement.  By its
acceptance   of   an   Applicable    Certificate,    each   initial   Applicable
Certificateholder,  as a grantor of the Applicable Trust, joins with the Trustee
in the creation of the Applicable Trust.

           Section 4.02. THE TRUSTEE.  (a) Subject to Section 4.03 of this Trust
Supplement  and Section 7.15 of the Basic  Agreement,  the Trustee  shall not be
responsible  in any  manner  whatsoever  for or in respect  of the  validity  or
sufficiency of this Trust  Supplement or the due execution hereof by the Company
(other than the  Trustee),  or for or in respect of the recitals and  statements
contained  herein,  all of which  recitals and statements are made solely by the
Company,  except that the Trustee  hereby  represents  and warrants that each of
this Trust Supplement,  the Basic Agreement, each Applicable Certificate and the
Intercreditor  Agreement  has been executed and delivered by one of its officers
who is duly authorized to execute and deliver such document on its behalf.

           (b)  Except  as herein  otherwise  provided  and  except  during  the
continuance  of an Event of Default in respect of the  Applicable  Trust created
hereby,  no duties,  responsibilities  or liabilities  are assumed,  or shall be
construed to be assumed, by the Trustee by reason of this Trust Supplement other
than as set forth in the  Agreement,  and this Trust  Supplement is executed and
accepted on behalf of the Trustee,  subject to all the terms and  conditions set
forth in the  Agreement,  as fully to all intents as if the same were herein set
forth at length.

           Section 4.03.  REPRESENTATIONS  AND  WARRANTIES  OF THE TRUSTEE.  The
Trustee hereby represents and warrants that:

           (a) the Trustee has full power, authority and legal right to execute,
      deliver  and perform  this Trust  Supplement  and has taken all  necessary
      action to authorize the execution,  delivery and performance by it of this
      Trust Supplement;

           (b) the  execution,  delivery and  performance by the Trustee of this
      Trust  Supplement  (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;

           (c) the  execution,  delivery and  performance by the Trustee of this
      Trust Supplement will not require the authorization,  consent, or approval
      of,  the giving of notice to,  the  filing or  registration  with,  or the
      taking of any other  action in respect of, any  governmental  authority or
      agency of the United  States or the state of the United States where it is
      located  regulating  the banking and  corporate  trust  activities  of the
      Trustee; and

           (d) this Trust Supplement has been duly executed and delivered by the
      Trustee and  constitutes  the legal,  valid and binding  agreement  of the
      Trustee,  enforceable  against it in accordance with its 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 4.04.  TRUSTEE LIENS. The Trustee in its individual  capacity
agrees,  in addition to the  agreements  contained  in Section 7.17 of the Basic
Agreement,  that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is  attributable  to the Trustee in its
individual  capacity and which is unrelated to the transactions  contemplated by
the Intercreditor Agreement.


                                    ARTICLE V
                            MISCELLANEOUS PROVISIONS

           Section 5.01. BASIC AGREEMENT  RATIFIED.  Except and so far as herein
expressly  provided,  all of the  provisions,  terms and conditions of the Basic
Agreement are in all respects  ratified and confirmed;  and the Basic  Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.

           SECTION  5.02.  GOVERNING  LAW.  THIS  AGREEMENT  AND THE  APPLICABLE
CERTIFICATES  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF
THE STATE OF NEW YORK.

           Section 5.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may be
executed in any number of counterparts,  each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.



           Section 5.04.  INTENTION OF PARTIES.  The parties  hereto intend that
the  Applicable  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. Each Applicable Certificateholder and Investor,
by its  acceptance  of  its  Applicable  Certificate  or a  beneficial  interest
therein,  agrees to treat the  Applicable  Trust as a grantor trust for all U.S.
federal, state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.



           IN WITNESS  WHEREOF,  the Company  and the  Trustee  have caused this
Trust Supplement to be duly executed by their  respective  officers thereto duly
authorized, as of the day and year first written above.


                                        CONTINENTAL AIRLINES, INC.


                                        By:_____________________________________
                                           Name:   Gerald  Laderman   
                                           Title:   Vice President


                                        WILMINGTON TRUST COMPANY, as Trustee


                                        By:_____________________________________
                                           Name: 
                                           Title:



                                    EXHIBIT A
                                    ---------

                               FORM OF CERTIFICATE

Certificate
No. ___

          [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 the registered owner hereof,
Cede & Co., has an interest herein.]*


                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2B

      6.465% Continental Airlines Pass Through Certificate, Series 1998-2B
                          Issuance Date: April 21, 1998

                       Final Maturity Date: April 15, 2006

            Evidencing A Fractional Undivided Interest In The Continental
            Airlines Pass Through Trust 1998-2B, The Property Of Which
            Includes Certain Equipment Notes Each Secured By An Aircraft
            Leased To Or Owned By Continental Airlines, Inc.


                    $__________ Fractional Undivided Interest
          representing .002565550% 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
1998-2B (the  "TRUST")  created by  Wilmington  Trust  Company,  as trustee (the



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

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



"TRUSTEE"),  pursuant to a Pass Through Trust  Agreement,  dated as of September
25, 1997 (the "BASIC AGREEMENT"),  between the Trustee and Continental Airlines,
Inc.,  a  Delaware  corporation  (the  "Company"),   as  supplemented  by  Trust
Supplement  No.  1998-2B  thereto,  dated  as of  April  21,  1998  (the  "Trust
Supplement" and, together with the Basic Agreement,  the  "AGREEMENT"),  between
the Trustee and 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 "6.465%  Continental  Airlines Pass Through  Certificates,  Series
1998-2B"  (herein called the  "CERTIFICATES").  This Certificate is issued under
and is subject to the terms,  provisions  and  conditions of the  Agreement.  By
virtue  of  its  acceptance   hereof,   the  holder  of  this  Certificate  (the
"CERTIFICATEHOLDER"  and, together with all other holders of Certificates issued
by the Trust, the "CERTIFICATEHOLDERS") assents to and agrees to be bound by the
provisions of the Agreement and the Intercreditor Agreement. The property of the
Trust includes  certain  Equipment  Notes and all rights of the Trust to receive
payments under the  Intercreditor  Agreement and any Liquidity  Facilities  (the
"TRUST PROPERTY").  Each issue of the Equipment Notes is secured by, among other
things, a security interest in an Aircraft leased to 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 the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each April 15 and  October 15 (a  "REGULAR  DISTRIBUTION  DATE")
commencing  October 15, 1998,  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 the Intercreditor Agreement, in the event that Special Payments on
the Equipment  Notes are received by the Trustee,  from funds then  available to
the Trustee,  there shall be distributed on the applicable Special  Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special  Distribution  Date, an amount in
respect of such Special  Payments on the Equipment  Notes,  the receipt of which
has been  confirmed  by the  Trustee,  equal to the  product  of the  percentage
interest in the Trust  evidenced by this  Certificate and an amount equal to the
sum of such Special  Payments so  received.  If a Regular  Distribution  Date or
Special  Distribution Date is not a Business Day,  distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular  Distribution Date or Special  Distribution Date and no interest
shall accrue  during the  intervening  period.  The Trustee shall mail notice of
each  Special  Payment  and  the  Special  Distribution  Date  therefor  to  the
Certificateholder of this Certificate.

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

           Each  Certificateholder  and  Investor,  by its  acceptance  of  this
Certificate  or a  beneficial  interest  herein,  agrees to treat the Trust as a
grantor trust for all U.S. federal, state and local income tax purposes.

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

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

           Any Person  acquiring or accepting  this  Certificate  or an interest
herein will, by such  acquisition or acceptance,  be deemed to have  represented
and warranted to and for the benefit of each Owner  Participant  and the Company
that  either:  (i) the assets of an employee  benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
a plan subject to Section 4975 of the Internal  Revenue Code of 1986, as amended
(the  "CODE"),  have not been used to purchase this  Certificate  or an interest
herein or (ii) the  purchase  and  holding of this  Certificate  or an  interest
herein are exempt from the prohibited transaction  restrictions of ERISA and the
Code pursuant to one or more prohibited  transaction statutory or administrative
exemptions.

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

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



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


                                        CONTINENTAL  AIRLINES PASS THROUGH TRUST
                                        1998-2B


                                        By: WILMINGTON TRUST COMPANY, as Trustee

                                        
                                        
                                            By:_________________________________
                                               Name:
                                               Title:



               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:_____________________________________
                                           Name: 
                                           Title:



                                    EXHIBIT B


                         [DTC Letter of Representations]



                                   SCHEDULE I


AIRCRAFT AIRCRAFT TYPE REGISTRATION NUMBER - ------------- ------------------- Boeing 737-3T0 N14336 Boeing 737-3T0 N14337 Boeing 737-3T0 N59338 Boeing 737-3T0 N14341 Boeing 737-3T0 N14342 Boeing 737-3T0 N39343 Boeing 737-3T0 N17344 Boeing 737-3T0 N17345 McDonnell Douglas MD-82 N72821 McDonnell Douglas MD-82 N76823 McDonnell Douglas MD-82 N72829 McDonnell Douglas MD-82 N72830 McDonnell Douglas MD-82 N57837 McDonnell Douglas MD-82 N34838

                                                                  EXECUTION COPY




                          TRUST SUPPLEMENT No. 1998-2C

                              Dated April 21, 1998


                                     between

                            WILMINGTON TRUST COMPANY
                                   as Trustee,


                                       and


                           CONTINENTAL AIRLINES, INC.

                                       to

                          PASS THROUGH TRUST AGREEMENT
                         Dated as of September 25, 1997


                                   $42,425,000

                 Continental Airlines Pass Through Trust 1998-2C
                           6.331% Continental Airlines
                           Pass Through Certificates,
                                 Series 1998-2C



           This Trust Supplement No. 1998-2C, dated as of April 21, 1998 (herein
called the "TRUST SUPPLEMENT"),  between Continental Airlines,  Inc., a Delaware
corporation  (the "COMPANY"),  and Wilmington Trust Company (the "TRUSTEE"),  to
the Pass Through Trust  Agreement,  dated as of September 25, 1997,  between the
Company and the Trustee (the "BASIC AGREEMENT").

                              W I T N E S S E T H:

           WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates  (unless otherwise  specified  herein,  capitalized terms
used herein without  definition having the respective  meanings specified in the
Basic  Agreement) which may be issued  thereunder,  has heretofore been executed
and delivered;

           WHEREAS,  the  Company  wishes  to lease  the  eight  Boeing  737-3T0
aircraft and six McDonnell  Douglas MD-82  aircraft  listed in Schedule I hereto
(the "AIRCRAFT")  from the Owner Trustee,  who intends to purchase such Aircraft
from the Company;

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

           WHEREAS, the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-2C (the "APPLICABLE  TRUST") for the benefit of
the Applicable Certificateholders, and the initial Applicable Certificateholders
as the grantors of the Applicable Trust, by their respective  acceptances of the
Applicable  Certificates,  join in the creation of the Applicable Trust with the
Trustee;

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

           WHEREAS,  pursuant to the terms and conditions of the Basic Agreement
as supplemented  by this Trust  Supplement (the  "AGREEMENT"),  the Trustee,  on
behalf of the  Applicable  Trust,  shall  purchase one or more  Equipment  Notes
having the same  interest  rate as, and final  maturity  date not later than the
final Regular Distribution Date of, the Applicable Certificates issued hereunder
and, subject to the Intercreditor Agreement,  shall hold such Equipment Notes in
trust for the benefit of the Applicable Certificateholders;

           WHEREAS,  all of the  conditions and  requirements  necessary to make
this Trust Supplement,  when duly executed and delivered,  a valid,  binding and
legal  instrument  in  accordance  with its  terms and for the  purposes  herein
expressed,  have been done,  performed  and  fulfilled,  and the  execution  and
delivery  of this Trust  Supplement  in the form and with the terms  hereof have
been in all respects duly authorized;



           WHEREAS,  this Trust  Supplement 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;

           NOW THEREFORE,  in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:

                                    ARTICLE I
                                THE CERTIFICATES

           Section 1.01. THE  CERTIFICATES.  There is hereby created a series of
Certificates to be issued under the Agreement to be  distinguished  and known as
"6.331%  Continental  Airlines  Pass  Through   Certificates,   Series  1998-2C"
(hereinafter  defined  as  the  "APPLICABLE   CERTIFICATES").   Each  Applicable
Certificate  represents a fractional  undivided interest in the Applicable Trust
created  hereby.  The  Applicable  Certificates  shall be the  only  instruments
evidencing a fractional undivided interest in the Applicable Trust.

           The terms and conditions  applicable to the  Applicable  Certificates
are as follows:

           (a) The aggregate  principal  amount of the  Applicable  Certificates
      that shall be  authenticated  under the Agreement  (except for  Applicable
      Certificates  authenticated and delivered  pursuant to Sections 3.03, 3.04
      and 3.06 of the Basic Agreement) is $42,425,000.

           (b) The Cut-off Date is April 27, 1998.

           (c) The  Regular  Distribution  Dates with  respect to any payment of
      Scheduled Payments means April 15 and October 15 of each year,  commencing
      on October 15, 1998, until payment of all of the Scheduled  Payments to be
      made under the Equipment Notes has been made.

           (d) The Special  Distribution  Dates with  respect to the  Applicable
      Certificates  means any Business  Day on which a Special  Payment is to be
      distributed pursuant to the Agreement.

            (e) (i) The  Applicable  Certificates  shall be in the form attached
            hereto as Exhibit A. Any Person acquiring or accepting an Applicable
            Certificate  or an interest  therein  will, by such  acquisition  or
            acceptance,  be  deemed  to  represent  and  warrant  to and for the
            benefit of the Owner Participant and the Company that either (i) the
            assets  of an  employee  benefit  plan  subject  to  Title  I of the
            Employee   Retirement  Income  Security  Act  of  1974,  as  amended
            ("ERISA"),  or of a plan  subject  to Section  4975 of the  Internal
            Revenue Code of 1986, as amended (the "Code"), have not been used to
            purchase Applicable  Certificates or an interest therein or (ii) the
            purchase  and  holding of  Applicable  Certificates  or an  interest
            therein is exempt from the



      prohibited transaction  restrictions of ERISA and the Code pursuant to one
      or more prohibited transaction statutory or administrative exemptions.

                (ii)   The   Applicable   Certificates   shall   be   Book-Entry
           Certificates  and shall be subject to the conditions set forth in the
           Letter of Representations between the Company and the Clearing Agency
           attached hereto as Exhibit B.

           (f) The  Equipment  Notes to be acquired  and held in the  Applicable
      Trust are the Equipment Notes described in each of the Indentures  bearing
      interest  at a rate  that is the  same  as the  designated  rates  for the
      Applicable Certificates, the related Aircraft are as described in Schedule
      I to this Trust Supplement,  the "Participation  Agreements" as defined in
      this Trust  Supplement are the "Note Purchase  Agreements"  referred to in
      the Basic Agreement,  and the "Indentures" and "Leases" are, collectively,
      the "Trust Indenture" and "Lease" (as defined in each of the Participation
      Agreements), respectively.

           (g) The  Applicable  Certificates  are  subject to the  Intercreditor
      Agreement.

           (h)  The  Applicable  Certificates  will  have  the  benefit  of  the
      Liquidity Facility.

           (i) Except as contemplated by Section 2.02(b) of the Basic Agreement,
      there  will be no  deposit  agreement  or other  arrangement  prior to the
      delivery of the Aircraft.

           (j) The Responsible Party is the Company.

           (k) The  "final  expiration  date"  for the  Applicable  Trust is one
      hundred  (110) years  following the Issuance  Date,  and the "minimum" and
      "maximum"  number  of days for  purposes  of  Section  11.01 of the  Basic
      Agreement are 15 and 60 days, respectively.

           (l) The date referred to in clause (i) of the  definition of the term
      "PTC Event of Default" in the Basic Agreement is the Final Maturity Date.

           (m) The particular  "sections of the Note Purchase  Agreements,"  for
      purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
      9.1 of each Participation Agreement.

                                   ARTICLE II
                                   DEFINITIONS

           Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement,  the following capitalized terms have the
following  meanings  (any term used  herein  which is defined in both this Trust
Supplement and the Basic  Agreement shall have the meaning  assigned  thereto in
this Trust  Supplement for purposes of the Basic  Agreement as  supplemented  by
this Trust Supplement):

           AGREEMENT: Has the meaning specified in the recitals hereto.



           AIRCRAFT: Has the meaning specified in the recitals hereto.

           APPLICABLE CERTIFICATE:  Has the meaning specified in Section 1.01 of
      this Trust Supplement.

           APPLICABLE  CERTIFICATEHOLDER:  Means  the  Person  in whose  name an
      Applicable  Certificate  is registered on the Register for the  Applicable
      Certificates.

           APPLICABLE TRUST: Has the meaning specified in the recitals hereto.

           BASIC AGREEMENT:  Has the meaning specified in the first paragraph of
      this Trust Supplement.

           BOEING: Means The Boeing Company.

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

           COMPANY:  Has the meaning  specified  in the first  paragraph of this
      Trust Supplement.

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

           FINAL MATURITY DATE: Means April 15, 2004.

           INTERCREDITOR  AGREEMENT:  Means the Intercreditor Agreement dated as
      of April 21, 1998 among the Trustee,  the Other  Trustees,  the  Liquidity
      Provider,  the liquidity  providers  relating to the  Certificates  issued
      under (and as defined  in) each of the Other  Agreements,  and  Wilmington
      Trust  Company,  as  Subordination  Agent and as  trustee  thereunder,  as
      amended,   supplemented  or  otherwise  modified  from  time  to  time  in
      accordance with its terms.

           ISSUANCE DATE: Means April 21, 1998.

           LIQUIDITY FACILITY:  Means, initially, the Revolving Credit Agreement
      dated  as of April  21,  1998  relating  to the  Applicable  Certificates,
      between  the   Liquidity   Provider  and   Wilmington   Trust  Company  as
      Subordination  Agent, as agent and trustee for the Applicable  Trust, and,
      from  and  after  the  replacement  of  such  agreement  pursuant  to  the
      Intercreditor  Agreement,  the replacement liquidity facility therefor, in
      each case as amended, supplemented or otherwise modified from time to time
      in accordance with their respective terms.



           LIQUIDITY  PROVIDER:   Means,   initially,   Westdeutsche  Landesbank
      Girozentrale,  acting through its New York Branch, and any replacements or
      successors   therefor  appointed  in  accordance  with  the  Intercreditor
      Agreement.

           OTHER TRUSTEES:  Means the trustees under the Other  Agreements,  and
      any successor or other trustee appointed as provided therein.

           OTHER  TRUSTS:  Means the  Continental  Airlines  Pass Through  Trust
      1998-2A and the  Continental  Airlines  Pass Through Trust  1998-2B,  each
      created on the date hereof.

           OWNER  TRUSTEE'S   PURCHASE   AGREEMENTS:   Means  the  Participation
      Agreements.

           PARTICIPATION  AGREEMENTS:   Means  each  of  the  fourteen  separate
      Participation  Agreements  relating to the Aircraft dated the date hereof,
      among the Company,  the Trustee,  the Other  Trustees,  the relevant  Loan
      Trustee and the Subordination Agent providing for, among other things, the
      purchase of Equipment  Notes by the Trustee on behalf of the Trust, as the
      same may be amended, supplemented or otherwise modified in accordance with
      its terms.

           TRUST SUPPLEMENT: Has the meaning specified in the first paragraph of
      this trust supplement.

                                   ARTICLE III
                                     DEFAULT

           Section 3.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS.  (a) At any time
after the occurrence  and during the  continuance  of a Triggering  Event,  each
Applicable  Certificateholder  shall have the right (which shall not expire upon
any  purchase  of the  Class  A  Certificates  pursuant  to the  Class  B  Trust
Agreement) to purchase,  for the purchase  prices set forth in the Class A Trust
Agreement and the Class B Trust Agreement,  respectively, all, but not less than
all, of the Class A  Certificates  and the Class B  Certificates  upon ten days'
written  notice to the Class A  Trustee,  the  Class B  Trustee  and each  other
Applicable  Certificateholder,  provided  that  (i) if  prior to the end of such
ten-day period any other Applicable  Certificateholder  notifies such purchasing
Applicable  Certificateholder that such other Applicable Certificateholder wants
to participate in such purchase,  then such other  Applicable  Certificateholder
may join with the purchasing  Applicable  Certificateholder to purchase all, but
not less than all, of the Class A Certificates  and the Class B Certificates pro
rata based on the Fractional  Undivided Interest in the Applicable Trust held by
each  such  Applicable  Certificateholder  and  (ii) if prior to the end of such
ten-day  period  any other  Applicable  Certificateholder  fails to  notify  the
purchasing    Applicable    Certificateholder    of   such   other    Applicable
Certificateholder's  desire to participate  in such a purchase,  then such other
Applicable  Certificateholder  shall  lose its  right to  purchase  the  Class A
Certificates and the Class B Certificates pursuant to this Section 3.01(a).

           As  used  in  this  Section  3.01(a)  and  elsewhere  in  this  Trust
Supplement, the terms "Class A Certificate", "Class A Certificateholder", "Class
A Trust", "Class A Trustee",  "Class A Trust Agreement",  "Class B Certificate",
"Class B  Certificateholder",  "Class B Trust",  "Class B Trustee"  and "Class B



Trust Agreement",  shall have the respective  meanings assigned to such terms in
the Intercreditor Agreement.

           (b) For purposes of the Agreement,  the following sentence supersedes
and replaces the fourth sentence of Section 6.01(b) of the Basic Agreement:

           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 (subject to the
           first proviso in the second  sentence of this paragraph and 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.

                                   ARTICLE IV
                                   THE TRUSTEE

           Section 4.01. DELIVERY OF DOCUMENTS;  DELIVERY DATES. (a) The Trustee
is hereby  directed (i) to execute and deliver the  Intercreditor  Agreement and
each of the  Participation  Agreements on or prior to the Issuance Date, each in
the form  delivered  to the  Trustee  by the  Company  and (ii)  subject  to the
respective terms thereof, to perform its obligations thereunder.  The provisions
of this Section  4.01(a)  supplement  and do not  supersede  the  provisions  of
Section 2.02(a) of the Basic Agreement.

           (b) The Trustee  acknowledges its acceptance of all right,  title and
interest in and to the Trust Property to be acquired pursuant to Section 2.02 of
the  Basic  Agreement,  Section  4.01(a)  of  this  Trust  Supplement  and  each
Participation  Agreement,  and declares  that it holds and will hold such right,
title  and  interest  for the  benefit  of all  present  and  future  Applicable
Certificateholders,  upon  the  trusts  set  forth  in  this  Agreement.  By its
acceptance   of   an   Applicable    Certificate,    each   initial   Applicable
Certificateholder,  as a grantor of the Applicable Trust, joins with the Trustee
in the creation of the Applicable Trust.

           Section 4.02. THE TRUSTEE.  (a) Subject to Section 4.03 of this Trust
Supplement  and Section 7.15 of the Basic  Agreement,  the Trustee  shall not be
responsible  in any  manner  whatsoever  for or in respect  of the  validity  or



sufficiency of this Trust  Supplement or the due execution hereof by the Company
(other than the  Trustee),  or for or in respect of the recitals and  statements
contained  herein,  all of which  recitals and statements are made solely by the
Company,  except that the Trustee  hereby  represents  and warrants that each of
this Trust Supplement,  the Basic Agreement, each Applicable Certificate and the
Intercreditor  Agreement  has been executed and delivered by one of its officers
who is duly authorized to execute and deliver such document on its behalf.

           (b)  Except  as herein  otherwise  provided  and  except  during  the
continuance  of an Event of Default in respect of the  Applicable  Trust created
hereby,  no duties,  responsibilities  or liabilities  are assumed,  or shall be
construed to be assumed, by the Trustee by reason of this Trust Supplement other
than as set forth in the  Agreement,  and this Trust  Supplement is executed and
accepted on behalf of the Trustee,  subject to all the terms and  conditions set
forth in the  Agreement,  as fully to all intents as if the same were herein set
forth at length.

           Section 4.03.  REPRESENTATIONS  AND  WARRANTIES  OF THE TRUSTEE.  The
Trustee hereby represents and warrants that:

           (a) the Trustee has full power, authority and legal right to execute,
      deliver  and perform  this Trust  Supplement  and has taken all  necessary
      action to authorize the execution,  delivery and performance by it of this
      Trust Supplement;

           (b) the  execution,  delivery and  performance by the Trustee of this
      Trust  Supplement  (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;

           (c) the  execution,  delivery and  performance by the Trustee of this
      Trust Supplement will not require the authorization,  consent, or approval
      of,  the giving of notice to,  the  filing or  registration  with,  or the
      taking of any other  action in respect of, any  governmental  authority or
      agency of the United  States or the state of the United States where it is
      located  regulating  the banking and  corporate  trust  activities  of the
      Trustee; and

           (d) this Trust Supplement has been duly executed and delivered by the
      Trustee and  constitutes  the legal,  valid and binding  agreement  of the
      Trustee,  enforceable  against it in accordance with its 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 4.04.  TRUSTEE LIENS. The Trustee in its individual  capacity
agrees,  in addition to the  agreements  contained  in Section 7.17 of the Basic
Agreement,  that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is  attributable  to the Trustee in its
individual  capacity and which is unrelated to the transactions  contemplated by
the Intercreditor Agreement.

                                    ARTICLE V
                            MISCELLANEOUS PROVISIONS

           Section 5.01. BASIC AGREEMENT  RATIFIED.  Except and so far as herein
expressly  provided,  all of the  provisions,  terms and conditions of the Basic
Agreement are in all respects  ratified and confirmed;  and the Basic  Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.

           SECTION  5.02.  GOVERNING  LAW.  THIS  AGREEMENT  AND THE  APPLICABLE
CERTIFICATES  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF
THE STATE OF NEW YORK.

           Section 5.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may be
executed in any number of counterparts,  each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

           Section 5.04.  INTENTION OF PARTIES.  The parties  hereto intend that
the  Applicable  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. Each Applicable Certificateholder and Investor,
by its  acceptance  of  its  Applicable  Certificate  or a  beneficial  interest
therein,  agrees to treat the  Applicable  Trust as a grantor trust for all U.S.
federal, state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.



           IN WITNESS  WHEREOF,  the Company  and the  Trustee  have caused this
Trust Supplement to be duly executed by their  respective  officers thereto duly
authorized, as of the day and year first written above.

                                        CONTINENTAL AIRLINES, INC.


                                        By:____________________________________
                                           Name:  Gerald Laderman
                                           Title: Vice President



                                        WILMINGTON TRUST COMPANY, as Trustee


                                        By:____________________________________
                                           Name:
                                           Title:



                                    EXHIBIT A

                               FORM OF CERTIFICATE

Certificate
No.____

           [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 the registered owner hereof,
Cede & Co., has an interest herein.]*


                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2C

      6.331% Continental Airlines Pass Through Certificate, Series 1998-2C
                          Issuance Date: April 21, 1998

                       Final Maturity Date: April 15, 2004

                Evidencing A Fractional Undivided Interest In The
                Continental  Airlines Pass Through Trust 1998-2C,
                The Property Of Which Includes Certain  Equipment
                Notes Each  Secured By An  Aircraft  Leased To Or
                Owned By Continental Airlines, Inc.

                    $__________ Fractional Undivided Interest
          representing .002357101% 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
1998-2C (the  "TRUST")  created by  Wilmington  Trust  Company,  as trustee (the


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

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



"TRUSTEE"),  pursuant to a Pass Through Trust  Agreement,  dated as of September
25, 1997 (the "BASIC AGREEMENT"),  between the Trustee and Continental Airlines,
Inc.,  a  Delaware  corporation  (the  "Company"),   as  supplemented  by  Trust
Supplement  No.  1998-2C  thereto,  dated  as of  April  21,  1998  (the  "Trust
Supplement" and, together with the Basic Agreement,  the  "AGREEMENT"),  between
the Trustee and 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 "6.331%  Continental  Airlines Pass Through  Certificates,  Series
1998-2C"  (herein called the  "CERTIFICATES").  This Certificate is issued under
and is subject to the terms,  provisions  and  conditions of the  Agreement.  By
virtue  of  its  acceptance   hereof,   the  holder  of  this  Certificate  (the
"CERTIFICATEHOLDER"  and, together with all other holders of Certificates issued
by the Trust, the "CERTIFICATEHOLDERS") assents to and agrees to be bound by the
provisions of the Agreement and the Intercreditor Agreement. The property of the
Trust includes  certain  Equipment  Notes and all rights of the Trust to receive
payments under the  Intercreditor  Agreement and any Liquidity  Facilities  (the
"TRUST PROPERTY").  Each issue of the Equipment Notes is secured by, among other
things, a security interest in an Aircraft leased to 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 the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed  on each April 15 and  October 15 (a  "REGULAR  DISTRIBUTION  DATE")
commencing  October 15, 1998,  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 the Intercreditor Agreement, in the event that Special Payments on
the Equipment  Notes are received by the Trustee,  from funds then  available to
the Trustee,  there shall be distributed on the applicable Special  Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special  Distribution  Date, an amount in
respect of such Special  Payments on the Equipment  Notes,  the receipt of which
has been  confirmed  by the  Trustee,  equal to the  product  of the  percentage
interest in the Trust  evidenced by this  Certificate and an amount equal to the
sum of such Special  Payments so  received.  If a Regular  Distribution  Date or
Special  Distribution Date is not a Business Day,  distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular  Distribution Date or Special  Distribution Date and no interest
shall accrue  during the  intervening  period.  The Trustee shall mail notice of
each  Special  Payment  and  the  Special  Distribution  Date  therefor  to  the
Certificateholder of this Certificate.

           Distributions  on this  Certificate  will be made by the  Trustee  by
check mailed to the Person entitled thereto,  without  presentation or surrender



of this  Certificate  or the making of any  notation  hereon,  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.
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
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 therein,  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.

           Each  Certificateholder  and  Investor,  by its  acceptance  of  this
Certificate  or a  beneficial  interest  herein,  agrees to treat the Trust as a
grantor trust for all U.S. federal, state and local income tax purposes.

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

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

           Any Person  acquiring or accepting  this  Certificate  or an interest
herein will, by such  acquisition or acceptance,  be deemed to have  represented
and warranted to and for the benefit of each Owner  Participant  and the Company
that  either:  (i) the assets of an employee  benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
a plan subject to Section 4975 of the Internal  Revenue Code of 1986, as amended
(the  "CODE"),  have not been used to purchase this  Certificate  or an interest
herein or (ii) the  purchase  and  holding of this  Certificate  or an  interest
herein are exempt from the prohibited transaction  restrictions of ERISA and the
Code pursuant to one or more prohibited  transaction statutory or administrative
exemptions.

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

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



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

                                        CONTINENTAL  AIRLINES PASS THROUGH TRUST
                                        1998-2C

                                        By: WILMINGTON TRUST COMPANY, as Trustee




                                        By:_____________________________________
                                           Name:
                                           Title:



               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:_____________________________________
                                           Name: 
                                           Title:



                                    EXHIBIT B


                         [DTC Letter of Representations]




                                   SCHEDULE I

AIRCRAFT AIRCRAFT TYPE REGISTRATION NUMBER - ------------- ------------------- Boeing 737-3T0 N14336 Boeing 737-3T0 N14337 Boeing 737-3T0 N59338 Boeing 737-3T0 N14341 Boeing 737-3T0 N14342 Boeing 737-3T0 N39343 Boeing 737-3T0 N17344 Boeing 737-3T0 N17345 McDonnell Douglas MD-82 N72821 McDonnell Douglas MD-82 N76823 McDonnell Douglas MD-82 N72829 McDonnell Douglas MD-82 N72830 McDonnell Douglas MD-82 N57837 McDonnell Douglas MD-82 N34838
                                                                       EXECUTION




================================================================================


                             INTERCREDITOR AGREEMENT

                           DATED AS OF April 21, 1998

                                      AMONG

                            WILMINGTON TRUST COMPANY,

                         NOT IN ITS INDIVIDUAL CAPACITY
                         BUT SOLELY AS TRUSTEE UNDER THE
                CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2A,
                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2B
                                       AND
                 CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2C


                      WESTDEUTSCHE LANDESBANK GIROZENTRALE,
                       ACTING THROUGH ITS NEW YORK BRANCH

                         AS CLASS A LIQUIDITY PROVIDER,
                          AS CLASS B LIQUIDITY PROVIDER
                                       AND
                         AS CLASS C LIQUIDITY PROVIDER,


                                       AND

                            WILMINGTON TRUST COMPANY,
                      NOT IN ITS INDIVIDUAL CAPACITY EXCEPT
                        AS EXPRESSLY SET FORTH HEREIN BUT
                    SOLELY AS SUBORDINATION AGENT AND TRUSTEE


================================================================================



                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

                             ARTICLE I - DEFINITIONS

    SECTION 1.1.   Definitions...........................................      2


                 ARTICLE II - TRUST ACCOUNTS; CONTROLLING PARTY

    SECTION 2.1.   Agreement to Terms of Subordination; Payments from 
                   Monies Received Only..................................     19
    SECTION 2.2.   Trust Accounts........................................     19
    SECTION 2.3.   Deposits to the Collection Account and Special 
                   Payments Account......................................     21
    SECTION 2.4.   Distributions of Special Payments.....................     21
    SECTION 2.5.   Designated Representatives............................     24
    SECTION 2.6.   Controlling Party.....................................     24


     ARTICLE III - RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED

    SECTION 3.1.   Written Notice of Distribution........................     26
    SECTION 3.2.   Distribution of Amounts on Deposit in the 
                   Collection Account....................................     28
    SECTION 3.3.   Distribution of Amounts on Deposit Following a 
                   Triggering Event......................................     29
    SECTION 3.4.   Other Payments........................................     31
    SECTION 3.5.   Payments to the Trustees and the Liquidity 
                   Providers.............................................     32
    SECTION 3.6.   Liquidity Facilities..................................     32


                        ARTICLE IV - EXERCISE OF REMEDIES

    SECTION 4.1.   Directions from the Controlling Party.................     39
    SECTION 4.2.   Remedies Cumulative...................................     40
    SECTION 4.3.   Discontinuance of Proceedings.........................     40
    SECTION 4.4.   Right of Certificateholders to Receive Payments 
                   Not to Be Impaired....................................     41
    SECTION 4.5.   Undertaking for Costs.................................     41


   ARTICLE V - DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC.

    SECTION 5.1.   Notice of Indenture Default or Triggering Event.......     41



                               TABLE OF CONTENTS
                                  (Continued)

                                                                            Page
                                                                            ----

    SECTION 5.2.   Indemnification.......................................     42
    SECTION 5.3.   No Duties Except as Specified in Intercreditor 
                   Agreement.............................................     42
    SECTION 5.4.   Notice from the Liquidity Providers and Trustees......     42


                      ARTICLE VI - THE SUBORDINATION AGENT

    SECTION 6.1.   Authorization; Acceptance of Trusts and Duties........     43
    SECTION 6.2.   Absence of Duties.....................................     43
    SECTION 6.3.   No Representations or Warranties as to Documents......     43
    SECTION 6.4.   No Segregation of Monies; No Interest.................     43
    SECTION 6.5.   Reliance; Agents; Advice of Counsel...................     44
    SECTION 6.6.   Capacity in Which Acting..............................     44
    SECTION 6.7.   Compensation..........................................     44
    SECTION 6.8.   May Become Certificateholder..........................     44
    SECTION 6.9.   Subordination Agent Required; Eligibility.............     45
    SECTION 6.10.  Money to Be Held in Trust.............................     45


              ARTICLE VII - INDEMNIFICATION OF SUBORDINATION AGENT

    SECTION 7.1.   Scope of Indemnification..............................     45


                  ARTICLE VIII - SUCCESSOR SUBORDINATION AGENT

    SECTION 8.1.   Replacement of Subordination Agent; Appointment 
                   of Successor..........................................     46


                     ARTICLE IX - SUPPLEMENTS AND AMENDMENTS

    SECTION 9.1.   Amendments, Waivers, etc..............................     47
    SECTION 9.2.   Subordination Agent Protected.........................     48
    SECTION 9.3.   Effect of Supplemental Agreements.....................     48
    SECTION 9.4.   Notice to Rating Agencies.............................     48


                            ARTICLE X - MISCELLANEOUS

    SECTION 10.1.  Termination of Intercreditor Agreement................     48
    SECTION 10.2.  Intercreditor Agreement for Benefit of Trustees,  
                   Liquidity Providers and Subordination Agent...........     49
    SECTION 10.3.  Notices...............................................     49
    SECTION 10.4.  Severability..........................................     50
    SECTION 10.5.  No Oral Modifications or Continuing Waivers...........     50



                               TABLE OF CONTENTS
                                  (Continued)

                                                                            Page
                                                                            ----

    SECTION 10.6.  Successors and Assigns................................     50
    SECTION 10.7.  Headings..............................................     51
    SECTION 10.8.  Counterpart Form......................................     51
    SECTION 10.9.  Subordination.........................................     51
    SECTION 10.10. Governing Law.........................................     52
    SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial; 
                   Waiver of Immunity....................................     52



                             INTERCREDITOR AGREEMENT

           INTERCREDITOR  AGREEMENT dated as of April 21, 1998, among WILMINGTON
TRUST COMPANY, a Delaware  corporation  ("WTC"),  not in its individual capacity
but  solely as  Trustee of each  Trust  (each as  defined  below);  WESTDEUTSCHE
LANDESBANK GIROZENTRALE ("WESTLB"), a bank organized under the laws of the State
of North Rhine-Westphalia, Germany, acting through its New York Branch, as Class
A Liquidity  Provider,  as Class B Liquidity  Provider  and as Class C Liquidity
Provider; and WILMINGTON TRUST COMPANY, not in its individual capacity except as
expressly  set forth  herein,  but  solely as  Subordination  Agent and  trustee
hereunder (in such capacity,  together with any successor  appointed pursuant to
Article VIII hereof, the "SUBORDINATION AGENT").

           WHEREAS,  all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;

           WHEREAS,  pursuant to each Indenture,  the related Owner Trustee will
issue on a  nonrecourse  basis three  series of  Equipment  Notes to finance the
purchase of the Aircraft;

           WHEREAS,  pursuant to the Participation  Agreements,  each Trust will
acquire  Equipment  Notes  having an interest  rate equal to the  interest  rate
applicable to the Certificates to be issued by such Trust;

           WHEREAS,  pursuant to each Trust Agreement, the Trust created thereby
proposes  to issue a single  class  of  Certificates  (a  "CLASS")  bearing  the
interest  rate and having the final  distribution  date  described in such Trust
Agreement on the terms and subject to the conditions set forth therein;

           WHEREAS,  pursuant to the  Underwriting  Agreement,  the Underwriters
propose to purchase the Certificates  issued by each Trust in the aggregate face
amount set forth  opposite  the name of such Trust on  Schedule I thereto on the
terms and subject to the conditions set forth therein;

           WHEREAS, the Liquidity Provider proposes to enter into three separate
revolving   credit   agreements   (each,  a  "Liquidity   Facility")   with  the
Subordination Agent, as agent for the Trustee of each Trust,  respectively,  for
the benefit of the Certificateholders of such Trust; and

           WHEREAS,  it is a  condition  precedent  to  the  obligations  of the
Underwriters under the Underwriting  Agreement that the Subordination Agent, the
Trustees and the  Liquidity  Provider  agree to the terms of  subordination  set
forth in this  Agreement  in  respect  of each  Class of  Certificates,  and the
Subordination  Agent, the Trustees and the Liquidity Provider,  by entering into
this Agreement,  hereby acknowledge and agree to such terms of subordination and
the other provisions of this Agreement.



           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 1.1. DEFINITIONS.  For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:

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

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

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

           (4) the term "including" shall mean "including without limitation".

           "ACCELERATION"  means, with respect to the amounts payable in respect
of the  Equipment  Notes  issued  under any  Indenture,  such  amounts  becoming
immediately   due  and  payable  by  declaration  or  otherwise.   "ACCELERATE",
"ACCELERATED" and "ACCELERATING" have meanings correlative to the foregoing.

           "ADJUSTED  EXPECTED   DISTRIBUTIONS"   means,  with  respect  to  the
Certificates  of any  Trust on any  Current  Distribution  Date,  the sum of (x)
accrued and unpaid  interest on such  Certificates  (after  giving effect to any
Escrowed Funds  Interest  Distribution  to be made on such Current  Distribution
Date with respect to such Certificates) and (y) the greater of:

           (A) the difference  between (x) the Pool Balance of such Certificates
      as of the  immediately  preceding  Distribution  Date (or,  if the Current
      Distribution Date is the first  Distribution  Date, the original aggregate
      face amount of the  Certificates  of such Trust) less (if  applicable) the
      aggregate  amount of Escrowed Funds (as defined in the Trust Agreement for
      such  Trust)  for  such  Class  of  Certificates  as of  such  immediately
      preceding  Distribution Date (or, if the Current  Distribution Date is the
      first Distribution  Date, as of the Issuance Date) thereafter  distributed
      to the Certificateholders of such Class in accordance with Section 2.02(b)
      of the Trust Agreement for such Trust (excluding the interest component of
      any such distribution) and (y) the Pool Balance of such Certificates as of
      the  Current  Distribution  Date  calculated  on the  basis  that  (i) the



      principal  of the  Non-Performing  Equipment  Notes held in such Trust has
      been paid in full and such payments have been  distributed  to the holders
      of such Certificates, (ii) the principal of the Performing Equipment Notes
      held in such Trust has been paid when due (but  without  giving  effect to
      any  Acceleration  of Performing  Equipment  Notes) and such payments have
      been  distributed  to the  holders  of such  Certificates  and  (iii)  the
      principal of any  Equipment  Notes  formerly  held in such Trust that have
      been  sold  pursuant  to the terms  hereof  has been paid in full and such
      payments have been distributed to the holders of such Certificates, and

           (B) the amount of the excess,  if any, of (i) the amount described in
      sub-clause (A)(x) above, over (ii) the Aggregate LTV Collateral Amount for
      such Class of Certificates for the Current Distribution Date;

PROVIDED that,  until the date of the initial LTV  Appraisals,  clause (B) shall
not apply.

           For purposes of  calculating  Adjusted  Expected  Distributions  with
respect to the  Certificates  of any Trust,  any premium  paid on the  Equipment
Notes held in such Trust that has not been distributed to the Certificateholders
of such  Trust  (other  than such  premium or a portion  thereof  applied to the
payment of interest on the  Certificates  of such Trust or the  reduction of the
Pool  Balance of such Trust)  shall be added to the amount of Adjusted  Expected
Distributions.

           "Advance", with respect to any Liquidity Facility, means any Advances
as defined in such Liquidity Facility.

           "AFFILIATE"  means,  with  respect to any  Person,  any other  Person
directly or indirectly  controlling,  controlled by or under common control with
such Person.  For the purposes of this  definition,  "control"  means the power,
directly or  indirectly,  to direct or cause the direction of the management and
policies of such Person whether through the ownership of voting securities or by
contract  or  otherwise;  and the  terms  "controlling"  and  "controlled"  have
meanings correlative to the foregoing.

           "AGGREGATE LTV COLLATERAL  AMOUNT" for any Class of Certificates  for
any Distribution Date means the sum of the applicable LTV Collateral Amounts for
each Aircraft,  minus the Pool Balance for each Class of  Certificates,  if any,
senior to such Class,  after giving effect to any  distribution  of principal on
such Distribution Date with respect to such senior Class or Classes.

           "AIRCRAFT"  means,  with respect to each  Indenture,  the  "Aircraft"
referred to therein.

           "APPRAISAL"  means a fair  market  value  appraisal  (which  may be a
"desktop"  appraisal)  performed  by  any  Appraiser  or  any  other  nationally
recognized  appraiser  on the basis of an  arm's-length  transaction  between an
informed and willing  purchaser  under no  compulsion to buy and an informed and
willing  seller  under no  compulsion  to sell and both having  knowledge of all
relevant facts.



           "APPRAISED  CURRENT  MARKET VALUE" of any Aircraft means the lower of
the average and the median of the three most recent Appraisals of such Aircraft.

           "APPRAISERS"   means   Aircraft   Information   Services,   Inc.,  BK
Associates, Inc. and Morten Beyer and Agnew, Inc.

           "AVAILABLE  AMOUNT" means, with respect to any Liquidity  Facility on
any drawing  date,  subject to the proviso  contained  in the first  sentence of
Section  3.6(g)  hereof,  an  amount  equal  to (a) the  Stated  Amount  of such
Liquidity  Facility at such time, LESS (b) the aggregate amount of each Interest
Drawing  honored by the Liquidity  Provider under such Liquidity  Facility on or
prior to such date which has not been  reimbursed or reinstated as of such date;
PROVIDED that, following a Downgrade Drawing, a Non-Extension Drawing or a Final
Drawing under such Liquidity  Facility,  the Available  Amount of such Liquidity
Facility shall be zero.

           "BASIC  AGREEMENT" means the Pass Through Trust Agreement dated as of
September 25, 1997 between Continental and WTC, not in its individual  capacity,
except as otherwise expressly provided therein, but solely as trustee.

           "BUSINESS DAY" means any day other than a Saturday or 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 is outstanding,  the city and
state  in which  any  Trustee,  the  Subordination  Agent  or any  Loan  Trustee
maintains its Corporate Trust Office or receives and disburses  funds, and that,
solely with respect to draws under any Liquidity  Facility,  also is a "Business
Day" as defined in such Liquidity Facility.

           "CASH COLLATERAL  ACCOUNT" means the Class A Cash Collateral Account,
the Class B Cash Collateral Account or the Class C Cash Collateral  Account,  as
applicable.  "Certificate" means a Class A Certificate, a Class B Certificate or
a Class C Certificate, as applicable.

           "CERTIFICATEHOLDER"  means any  holder  of one or more  Certificates.
"Class" has the meaning  assigned to such term in the preliminary  statements to
this  Agreement.  "Class A Cash  Collateral  Account" means an Eligible  Deposit
Account  in the  name  of the  Subordination  Agent  maintained  at an  Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all amounts drawn under the Class A Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.

           "CLASS A CERTIFICATEHOLDER"  means, at any time, any holder of one or
more Class A Certificates.

           "CLASS A CERTIFICATES"  means the certificates  issued by the Class A
Trust,  substantially  in the form of Exhibit A to the Class A Trust  Agreement,
and  authenticated  by the Class A Trustee,  representing  fractional  undivided
interests in the Class A Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class A Trust Agreement.



           "CLASS A LIQUIDITY FACILITY" means,  initially,  the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class A Trustee, and the initial Class A Liquidity Provider,
and, from and after the  replacement  of such  agreement  pursuant  hereto,  the
Replacement  Liquidity  Facility  therefor,  if any,  in each  case as  amended,
supplemented  or otherwise  modified  from time to time in  accordance  with its
terms. "Class A Liquidity Provider" means WestLB,  together with any Replacement
Liquidity Provider which has issued a Replacement  Liquidity Facility to replace
any Class A Liquidity Facility pursuant to Section 3.6(e).

           "CLASS A TRUST" means the  Continental  Airlines  Pass Through  Trust
1998-2A created and administered pursuant to the Class A Trust Agreement.

           "CLASS A TRUST AGREEMENT" means the Basic Agreement,  as supplemented
by the  Trust  Supplement  No.  1998-2A  thereto  dated as of the  date  hereof,
governing  the creation and  administration  of the  Continental  Airlines  Pass
Through Trust 1998-2A and the issuance of the Class A Certificates,  as the same
may be  amended,  supplemented  or  otherwise  modified  from  time  to  time in
accordance with its terms.

           "CLASS A TRUSTEE" means WTC, not in its individual capacity except as
expressly set forth in the Class A Trust Agreement,  but solely as trustee under
the Class A Trust  Agreement,  together  with any  successor  trustee  appointed
pursuant thereto.

           "CLASS B CASH COLLATERAL  ACCOUNT" means an Eligible  Deposit Account
in the name of the  Subordination  Agent maintained at an Eligible  Institution,
which shall be the  Subordination  Agent if it shall so qualify,  into which all
amounts drawn under the Class B Liquidity  Facility  pursuant to Section 3.6(c),
3.6(d) or 3.6(i) shall be deposited.

           "CLASS B CERTIFICATEHOLDER"  means, at any time, any holder of one or
more Class B Certificates.

           "CLASS B CERTIFICATES"  means the certificates  issued by the Class B
Trust,  substantially  in the form of Exhibit A to the Class B Trust  Agreement,
and  authenticated  by the Class B Trustee,  representing  fractional  undivided
interests in the Class B Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class B Trust Agreement.

           "CLASS B LIQUIDITY FACILITY" means,  initially,  the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class B Trustee, and the initial Class B Liquidity Provider,
and, from and after the  replacement  of such  Agreement  pursuant  hereto,  the
Replacement  Liquidity  Facility  therefor,  if any,  in each  case as  amended,
supplemented  or otherwise  modified  from time to time in  accordance  with its
terms.

           "CLASS  B  LIQUIDITY  PROVIDER"  means  WestLB,   together  with  any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class B Liquidity Facility pursuant to Section 3.6(e).



           "CLASS B TRUST" means the  Continental  Airlines  Pass Through  Trust
1998-2B created and administered pursuant to the Class B Trust Agreement.

           "CLASS B TRUST AGREEMENT" means the Basic Agreement,  as supplemented
by the  Trust  Supplement  No.  1998-2B  thereto  dated as of the  date  hereof,
governing  the creation and  administration  of the  Continental  Airlines  Pass
Through Trust 1998-2B and the issuance of the Class B Certificates,  as the same
may be  amended,  supplemented  or  otherwise  modified  from  time  to  time in
accordance with its terms.

           "CLASS B TRUSTEE" means WTC, not in its individual capacity except as
expressly set forth in the Class B Trust Agreement,  but solely as trustee under
the Class B Trust  Agreement,  together  with any  successor  trustee  appointed
pursuant thereto.

           "CLASS C CASH COLLATERAL  ACCOUNT" means an Eligible  Deposit Account
in  the  name  of  the  Subordination   Agent  and  maintained  at  an  Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all amounts drawn under the Class C Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.

           "CLASS C CERTIFICATEHOLDER"  means, at any time, any holder of one or
more Class C Certificates.

           "CLASS C CERTIFICATES"  means the certificates  issued by the Class C
Trust,  substantially  in the form of Exhibit A to the Class C Trust  Agreement,
and  authenticated  by the Class C Trustee,  representing  fractional  undivided
interests in the Class C Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class C Trust Agreement.

           "CLASS C LIQUIDITY FACILITY" means,  initially,  the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class C Trustee, and the initial Class C Liquidity Provider,
and, from and after the  replacement  of such  Agreement  pursuant  hereto,  the
Replacement  Liquidity  Facility  therefor,  if any,  in each  case as  amended,
supplemented  or otherwise  modified  from time to time in  accordance  with its
terms.

           "CLASS  C  LIQUIDITY  PROVIDER"  means  WestLB,   together  with  any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class C Liquidity Facility pursuant to Section 3.6(e).

           "CLASS C TRUST" means the  Continental  Airlines  Pass Through  Trust
1998-2C created and administered pursuant to the Class C Trust Agreement.

           "CLASS C TRUST AGREEMENT" means the Basic Agreement,  as supplemented
by the  Trust  Supplement  No.  1998-2C  thereto  dated as of the  date  hereof,
governing  the creation and  administration  of the  Continental  Airlines  Pass
Through Trust 1998-2C and the issuance of the Class C Certificates,  as the same
may be  amended,  supplemented  or  otherwise  modified  from  time  to  time in
accordance with its terms.



           "CLASS C TRUSTEE" means WTC, not in its individual capacity except as
expressly set forth in the Class C Trust Agreement,  but solely as trustee under
the Class C Trust  Agreement,  together  with any  successor  trustee  appointed
pursuant thereto.

           "CLOSING DATE" means April 21, 1998.

           "CODE" means the Internal  Revenue Code of 1986, as amended from time
to time, and the Treasury Regulations promulgated thereunder.

           "COLLECTION  ACCOUNT" means the Eligible Deposit Account  established
by the Subordination Agent pursuant to Section 2.2 which the Subordination Agent
shall make deposits in and withdrawals from in accordance with this Agreement.

           "CONTINENTAL"   means   Continental   Airlines,   Inc.,   a  Delaware
corporation, and its successors and assigns.

           "CONTINENTAL  BANKRUPTCY EVENT" means the occurrence and continuation
of any of the following:

           (a) Continental  shall consent to the appointment of or the taking of
      possession  by a  receiver,  trustee  or  liquidator  of  itself  or  of a
      substantial  part of its property,  or Continental  shall admit in writing
      its inability to pay its debts generally as they come due, or does not pay
      its debts generally as they become due or shall make a general  assignment
      for the  benefit of  creditors,  or  Continental  shall  file a  voluntary
      petition  in  bankruptcy  or a  voluntary  petition  or an answer  seeking
      reorganization, liquidation or other relief in a case under any bankruptcy
      laws or other  insolvency  laws (as in effect  at such  time) or an answer
      admitting the material allegations of a petition filed against Continental
      in any such case, or Continental shall seek relief by voluntary  petition,
      answer or consent,  under the provisions of any other  bankruptcy or other
      similar law providing for the reorganization or winding-up of corporations
      (as in  effect  at such  time) or  Continental  shall  seek an  agreement,
      composition,  extension or adjustment  with its creditors under such laws,
      or Continental's  board of directors shall adopt a resolution  authorizing
      corporate action in furtherance of any of the foregoing; or

           (b) an order,  judgment  or decree  shall be  entered by any court of
      competent jurisdiction appointing,  without the consent of Continental,  a
      receiver,  trustee or liquidator of Continental or of any substantial part
      of its property,  or any  substantial  part of the property of Continental
      shall  be  sequestered,  or  granting  any  other  relief  in  respect  of
      Continental as a debtor under any bankruptcy laws or other insolvency laws
      (as in effect at such  time),  and any such  order,  judgment or decree of
      appointment or sequestration  shall remain in force undismissed,  unstayed
      and unvacated for a period of 60 days after the date of entry thereof; or

           (c) a petition  against  Continental  in a case under any  bankruptcy
      laws or other insolvency laws (as in effect at such time) is filed and not
      withdrawn  or  dismissed  within  60 days  thereafter,  or if,  under  the



      provisions  of any law  providing  for  reorganization  or  winding-up  of
      corporations  which  may  apply to  Continental,  any  court of  competent
      jurisdiction assumes jurisdiction, custody or control of Continental or of
      any  substantial  part of its property and such  jurisdiction,  custody or
      control remains in force  unrelinquished,  unstayed and unterminated for a
      period of 60 days.

           "CONTINENTAL PROVISIONS" has the meaning specified in Section 9.1(a).

           "CONTROLLING PARTY" means the Person entitled to act as such pursuant
to the terms of Section 2.6.

           "CORPORATE  TRUST  OFFICE"  means,  with respect to any Trustee,  the
Subordination  Agent or any Loan Trustee,  the office of such Person in the city
at  which,  at any  particular  time,  its  corporate  trust  business  shall be
principally administered.

           "CURRENT  DISTRIBUTION DATE" means a Distribution Date specified as a
reference  date for  calculating  the  Expected  Distributions  or the  Adjusted
Expected  Distributions with respect to the Certificates of any Trust as of such
Distribution Date.

           "DESIGNATED    REPRESENTATIVES"   means   the   Subordination   Agent
Representatives,   the  Trustee   Representatives  and  the  LP  Representatives
identified under Section 2.5.  "Distribution Date" means a Regular  Distribution
Date or a Special Distribution Date.

           "DOLLARS" or "$" means United States dollars.

           "DOWNGRADE  DRAWING" has the meaning assigned to such term in Section
3.6(c).

           "DOWNGRADED  FACILITY"  has the  meaning  assigned  to  such  term in
Section 3.6(c).

           "DRAWING" means an Interest Drawing, a Final Drawing, a Non-Extension
Drawing or a Downgrade Drawing, as the case may be.

           "ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with
an Eligible  Institution  or (b) a segregated  trust  account with the corporate
trust  department of a depository  institution  organized  under the laws of the
United  States of America or any one of the states  thereof or the  District  of
Columbia (or any U.S. branch of a foreign bank),  having  corporate trust powers
and acting as trustee for funds deposited in such account, so long as any of the
securities of such depository  institution has a long-term unsecured debt rating
from each Rating Agency of at least A-3 or its equivalent.  An Eligible  Deposit
Account may be maintained  with a Liquidity  Provider so long as such  Liquidity
Provider is an Eligible Institution; PROVIDED that such Liquidity Provider shall
have waived all rights of set-off and counterclaim with respect to such account;
and PROVIDED  FURTHER that no Cash  Collateral  Account may be maintained with a
Liquidity  Provider  at any time  Continental  holds  any  participation  in the
related Liquidity Facility unless written  confirmation shall have been received
from each Rating  Agency prior to such time to the effect that such  maintenance
of the Cash Collateral  Account with the Liquidity Provider will not result in a
withdrawal or downgrading of the ratings of the Certificates.



           "ELIGIBLE  INSTITUTION"  means (a) the corporate trust  department of
the  Subordination  Agent or any  Trustee,  as  applicable,  or (b) a depository
institution  organized under the laws of the United States of America or any one
of the states  thereof or the  District  of  Columbia  (or any U.S.  branch of a
foreign  bank),  which has a  long-term  unsecured  debt rating from each Rating
Agency of at least A-3 or its  equivalent;  PROVIDED  that a Liquidity  Provider
shall not qualify as an Eligible  Institution at any time Continental  holds any
participation  in the related  Liquidity  Facility  unless written  confirmation
shall  have been  received  from each  Rating  Agency  to the  effect  that such
Liquidity  Provider's  status as an  Eligible  Institution  will not result in a
withdrawal or downgrading of the ratings of the Certificates.

           "ELIGIBLE  INVESTMENTS"  means (a)  investments in obligations of, or
guaranteed by, the United States  Government  having maturities no later than 90
days  following  the date of such  investment,  (b)  investments  in open market
commercial  paper of any corporation  incorporated  under the laws of the United
States of America or any state thereof with a short-term  unsecured  debt rating
issued by Moody's and  Standard & Poor's of at least A-1 and P-1,  respectively,
having maturities no later than 90 days following the date of such investment or
(c) investments in negotiable  certificates of deposit, time deposits,  banker's
acceptances,  commercial  paper or other direct  obligations  of, or obligations
guaranteed by, commercial banks organized under the laws of the United States or
of any political subdivision thereof (or any U.S. branch of a foreign bank) with
issuer ratings of at least B/C by Thomson Bankwatch,  having maturities no later
than 90 days following the date of such investment;  PROVIDED, HOWEVER, that (x)
all Eligible  Investments that are bank obligations shall be denominated in U.S.
dollars;  and (y) the aggregate  amount of Eligible  Investments at any one time
that are bank obligations issued by any one bank shall not be in excess of 5% of
such bank's  capital  surplus;  PROVIDED  FURTHER that (1) any investment of the
types  described  in  clauses  (a),  (b) and (c)  above  may be made  through  a
repurchase  agreement  in  commercially  reasonable  form  with a bank or  other
financial  institution  qualifying  as an Eligible  Institution  so long as such
investment  is held by a third party  custodian  also  qualifying as an Eligible
Institution,  and (2) all such  investments  set forth in clause (a), (b) or (c)
above  mature no later than the  Business  Day  immediately  preceding  the next
Regular  Distribution Date; PROVIDED FURTHER,  HOWEVER,  that in the case of any
Eligible  Investment  issued by a domestic  branch of a foreign bank, the income
from such investment shall be from sources within the United States for purposes
of the Code. Notwithstanding the foregoing, no investment of the types described
in clause (b) or (c) above which is issued or guaranteed by a Liquidity Provider
or Continental or any of their respective  Affiliates,  and no investment in the
obligations  of any one bank in  excess  of  $10,000,000,  shall be an  Eligible
Investment  at any time  Continental  holds  any  participation  in the  related
Liquidity  Facility  unless written  confirmation  shall have been received from
each  Rating  Agency  that the  making of such  investment  will not result in a
withdrawal or downgrading of the ratings of the Certificates.

           "EQUIPMENT  NOTES" means, at any time, the Series A Equipment  Notes,
the Series B Equipment Notes and the Series C Equipment Notes, collectively, and
in each case,  any Equipment  Notes issued in exchange  therefor or  replacement
thereof pursuant to the terms of the Indentures.



           "ESCROWED  FUNDS INTEREST  DISTRIBUTION"  means,  with respect to the
Certificates  of any Class,  the interest  component of any  distribution to the
Certificateholders  of such  Class  pursuant  to  Section  2.02(b)  of the Trust
Agreement for such Class of Certificates.

           "EXPECTED  DISTRIBUTIONS"  means, with respect to the Certificates of
any Trust on any Current  Distribution  Date,  the sum of (x) accrued and unpaid
interest  on such  Certificates  (after  giving  effect  to any  Escrowed  Funds
Interest  Distribution to be made on such Current Distribution Date with respect
to such  Certificates)  and (y) the  difference  between (A) the Pool Balance of
such Certificates as of the immediately preceding  Distribution Date (or, if the
Current Distribution Date is the first Distribution Date, the original aggregate
face  amount  of the  Certificates  of such  Trust)  less  (if  applicable)  the
aggregate  amount of Escrowed Funds (as defined in the Trust  Agreement for such
Trust)  for  such  Class  of  Certificates  as  of  such  immediately  preceding
Distribution   Date  (or,  if  the  Current   Distribution  Date  is  the  first
Distribution  Date,  as of the  Issuance  Date)  thereafter  distributed  to the
holders of such  Certificates  (excluding  the  interest  component  of any such
distribution) in accordance with Section 2.02(b) of the Trust Agreement for such
Trust  and  (B)  the  Pool  Balance  of  such  Certificates  as of  the  Current
Distribution  Date  calculated  on the  basis  that  (i)  the  principal  of the
Equipment  Notes  held in such Trust has been paid when due  (whether  at stated
maturity or upon redemption,  prepayment, purchase or Acceleration or otherwise)
and such payments have been distributed to the holders of such  Certificates and
(ii) the principal of any Equipment  Notes formerly held in such Trust that have
been sold  pursuant to the terms hereof has been paid in full and such  payments
have been  distributed  to the  holders of such  Certificates.  For  purposes of
calculating  Expected  Distributions  with  respect to the  Certificates  of any
Trust,  any premium paid on the Equipment Notes held in such Trust which has not
been  distributed  to the  Certificateholders  of such  Trust  (other  than such
premium  or a  portion  thereof  applied  to  the  payment  of  interest  on the
Certificates  of such Trust or the  reduction of the Pool Balance of such Trust)
shall be added to the amount of such Expected Distributions.

           "EXPIRY DATE" with respect to any Liquidity Facility,  shall have the
meaning set forth in such Liquidity Facility.

           "FEE LETTER" means the Fee Letter dated April 21, 1998 between WestLB
and the Subordination Agent with respect to the initial Liquidity Facilities and
any fee letter entered into between the Subordination  Agent and any Replacement
Liquidity Provider.

           "FINAL  DISTRIBUTIONS" means, with respect to the Certificates of any
Trust on any  Distribution  Date,  the sum of (x) the  aggregate  amount  of all
accrued and unpaid  interest on such  Certificates  and (y) the Pool  Balance of
such  Certificates  as of  the  immediately  preceding  Distribution  Date.  For
purposes of calculating Final  Distributions with respect to the Certificates of
any Trust,  any premium paid on the Equipment Notes held in such Trust which has
not been  distributed to the  Certificateholders  of such Trust (other than such
premium  or a  portion  thereof  applied  to  the  payment  of  interest  on the
Certificates  of such Trust or the  reduction of the Pool Balance of such Trust)
shall be added to the amount of such Final Distributions.

           "FINAL  DRAWING"  has the  meaning  assigned  to such term in Section
3.6(i).



           "FINAL LEGAL DISTRIBUTION DATE" means (i) with respect to the Class A
Certificates,  October 15, 2008,  (ii) with respect to the Class B Certificates,
April 15, 2006,  and (iii) with respect to the Class C  Certificates,  April 15,
2004.

           "INDENTURE"  means each of the Trust  Indentures  entered into by the
Loan Trustee,  and the Owner  Trustee,  in each case as the same may be amended,
supplemented  or otherwise  modified  from time to time in  accordance  with its
terms.

           "INDENTURE  DEFAULT" means, with respect to any Indenture,  any Event
of Default (as such term is defined in such Indenture) thereunder.

           "INTEREST  DRAWING" has the meaning  assigned to such term in Section
3.6(a).

           "INTEREST   PAYMENT  DATE"  means,  with  respect  to  any  Liquidity
Facility,  each date on which  interest is due and payable under such  Liquidity
Facility  on  a  Downgrade  Drawing,  Non-Extension  Drawing  or  Final  Drawing
thereunder,  other than any such date on which interest is due and payable under
such  Liquidity  Facility only on an Applied  Provider  Advance (as such term is
defined in such Liquidity Facility).

           "INVESTMENT  EARNINGS" means investment  earnings on funds on deposit
in the Trust Accounts net of losses and investment expenses of the Subordination
Agent in making such investments.

           "LEASE" means,  with respect to each Indenture,  the "Lease" referred
to therein.

           "LENDING OFFICE" means, with respect to any Liquidity  Facility,  the
lending office of such Liquidity Provider  thereunder,  presently located at New
York,  New York, or such other lending  office as such  Liquidity  Provider from
time to time shall notify the applicable Trustee as its lending office under any
such Liquidity Facility;  PROVIDED that such Liquidity Provider shall not change
its Lending  Office to a Lending  Office  outside  the United  States of America
except in  accordance  with  Section  3.01,  3.02 or 3.03 of any such  Liquidity
Facility.

           "LIEN" means any mortgage,  pledge, lien, charge, claim,  disposition
of title, encumbrance, lease, sublease, sub-sublease or security interest of any
kind, including,  without limitation,  any thereof arising under any conditional
sales or other title retention agreement.

           "LIQUIDITY EVENT OF DEFAULT" with respect to any Liquidity  Facility,
has the meaning assigned to such term in such Liquidity Facility.

           "LIQUIDITY  EXPENSES" means all Liquidity  Obligations other than (i)
the principal amount of any Drawings under the Liquidity Facilities and (ii) any
interest accrued on any Liquidity Obligations.

           "LIQUIDITY  FACILITY"  means,  at any  time,  the  Class A  Liquidity
Facility, the Class B Liquidity Facility or the Class C Liquidity Facility.



           "LIQUIDITY OBLIGATIONS" means all principal, interest, fees and other
amounts owing to the Liquidity Providers under the Liquidity Facilities, Section
9 of the Participation Agreements or the Fee Letter.

           "LIQUIDITY  PROVIDER"  means,  at any  time,  any  Class A  Liquidity
Provider,  any Class B Liquidity Provider or any Class C Liquidity Provider,  as
applicable.

           "LOAN TRUSTEE"  means,  with respect to any Indenture,  the indenture
trustee thereunder.

           "LP INCUMBENCY  CERTIFICATE" has the meaning assigned to such term in
Section 2.5(b).

           "LP REPRESENTATIVES" has the meaning assigned to such term in Section
2.5(b).

           "LTV  APPRAISALS"  has the  meaning  assigned to such term in Section
4.1(a).

           "LTV COLLATERAL AMOUNT" of any Aircraft for any Class of Certificates
means,  as of any  Distribution  Date,  the lesser of (i) the LTV Ratio for such
Class of Certificates  multiplied by the Appraised  Current Market Value of such
Aircraft  (or with respect to any such  Aircraft  which has suffered an Event of
Loss under and as defined in the  relevant  Lease,  the amount of the  insurance
proceeds paid to the related Loan Trustee in respect  thereof to the extent then
held by such Loan Trustee (and/or on deposit in the Special Payments Account) or
payable  to such Loan  Trustee  in  respect  thereof)  and (ii) the  outstanding
principal  amount of the Equipment  Notes secured by such Aircraft  after giving
effect to any  principal  payments  of such  Equipment  Notes on or before  such
Distribution Date.

           "LTV RATIO" means for the Class A Certificates 38.0%, for the Class B
Certificates 52.0% and for the Class C Certificates 67.2%.

           "MINIMUM  SALE  PRICE"  means,  with  respect to any  Aircraft or the
Equipment  Notes issued in respect of such Aircraft,  at any time, the lesser of
(a) 75% of the  Appraised  Current  Market  Value of such  Aircraft  and (b) the
aggregate outstanding principal amount of such Equipment Notes, plus accrued and
unpaid interest thereon.

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

           "NON-CONTROLLING  PARTY" means, at any time, any Trustee or Liquidity
Provider which is not the Controlling Party at such time.

           "NON-EXTENDED  FACILITY"  has the  meaning  assigned  to such term in
Section 3.6(d).

           "NON-EXTENSION  DRAWING"  has the  meaning  assigned  to such term in
Section 3.6(d).

           "NON-PERFORMING  EQUIPMENT  NOTE"  means  an  Equipment  Note  issued
pursuant to an Indenture that is not a Performing Equipment Note.



           "OFFICER'S CERTIFICATE" of any Person means a certification signed by
a Responsible Officer of such Person.

           "OPERATIVE   AGREEMENTS"   means  this   Agreement,   the   Liquidity
Facilities,  the Indentures,  the Trust Agreements,  the Underwriting Agreement,
the Participation  Agreements,  the Leases,  the Fee Letter, the Equipment Notes
and the Certificates, together with all exhibits and schedules included with any
of the foregoing.

           "OUTSTANDING"  means,  when  used  with  respect  to  each  Class  of
Certificates,  as of the date of  determination,  all Certificates of such Class
theretofore  authenticated  and  delivered  under the related  Trust  Agreement,
except:

           (i) Certificates of such Class theretofore  canceled by the Registrar
      (as  defined  in  such  Trust  Agreement)  or  delivered  to  the  Trustee
      thereunder or such Registrar for cancellation;

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

           (iii)  Certificates of such Class in exchange for or in lieu of which
      other  Certificates have been authenticated and delivered pursuant to such
      Trust Agreement;

PROVIDED,  HOWEVER,  that in  determining  whether the holders of the  requisite
Outstanding  amount  of  such  Certificates  have  given  any  request,  demand,
authorization,  direction, notice, consent or waiver hereunder, any Certificates
owned by Continental or any of its  Affiliates  shall be disregarded  and deemed
not to be Outstanding, except that, in determining whether such Trustee shall be
protected in relying upon any such request,  demand,  authorization,  direction,
notice,  consent or waiver,  only  Certificates that such Trustee knows to be so
owned shall be so  disregarded.  Certificates so owned that have been pledged in
good faith may be regarded as  Outstanding  if the  pledgee  establishes  to the
satisfaction  of the  applicable  Trustee  the  pledgee's  right  so to act with
respect to such  Certificates  and that the pledgee is not Continental or any of
its Affiliates.

           "OVERDUE  SCHEDULED PAYMENT" means any Scheduled Payment which is not
in fact received by the Subordination Agent within five days after the Scheduled
Payment Date relating thereto.

           "OWNER  TRUSTEE"  means,  with  respect to any  Indenture,  the Owner
Trustee  (as  defined  therein)  not in its  individual  capacity  but solely as
trustee  under the related  owner trust  agreement,  together with any successor
trustee appointed pursuant to such owner trust agreement.



           "PARTICIPATION  AGREEMENT" means, with respect to each Indenture, the
"Participation Agreement" referred to therein.

           "PAYEE" has the meaning assigned to such term in Section 2.4(e).

           "PERFORMING  EQUIPMENT  NOTE" means an Equipment Note issued pursuant
to an  Indenture  with  respect to which no payment  default has occurred and is
continuing  (without  giving effect to any  Acceleration);  provided that in the
event of a bankruptcy  proceeding  involving  Continental  under Title 11 of the
United States Code (the  "Bankruptcy  Code"),  (i) any payment default  existing
during the 60-day period under Section  1110(a)(1)(A) of the Bankruptcy Code (or
such longer period as may apply under Section  1110(b) of the  Bankruptcy  Code)
(the "Section 1110 Period") shall not be taken into consideration, unless during
the Section 1110 Period the trustee in such proceeding or Continental refuses to
assume or agree to  perform  its  obligations  under the Lease  related  to such
Equipment  Note and (ii) any  payment  default  occurring  after the date of the
order of relief in such proceeding shall not be taken into consideration if such
payment  default is cured under Section  1110(a)(1)(B)  of the  Bankruptcy  Code
before the later of 30 days after the date of such default or the  expiration of
the Section 1110 Period.

           "PERFORMING NOTE DEFICIENCY" means any time that less than 65% of the
then  aggregate   outstanding  principal  amount  of  all  Equipment  Notes  are
Performing Equipment Notes.

           "PERSON"  means  any  individual,  corporation,   partnership,  joint
venture,  association,  limited liability company,  joint-stock company,  trust,
trustee,  unincorporated  organization  or government or any agency or political
subdivision thereof.

           "POOL BALANCE" means,  with respect to each Trust or the Certificates
issued by any Trust,  as of any date, (i) the original  aggregate face amount of
the  Certificates  of such Trust less (ii) 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 or for the
Certificates  issued by any Trust as of any Distribution  Date shall be computed
after  giving  effect to the  payment of  principal  of the  Equipment  Notes or
payment  with  respect  to  other  Trust  Property  held in such  Trust  and the
distribution thereof to be made on that date.

           "PROCEEDING"  means  any  suit  in  equity,  action  at law or  other
judicial or administrative proceeding.

           "PTC EVENT OF DEFAULT" means,  with respect to each Trust  Agreement,
the  failure to pay within 10  Business  Days of the due date  thereof:  (i) the
outstanding  Pool Balance of the applicable  Class of  Certificates on the Final
Legal Distribution Date for such Class or (ii) interest due on such Certificates
on any  Distribution  Date  (unless the  Subordination  Agent shall have made an
Interest Drawing, or a withdrawal from the Cash Collateral Account, with respect
thereto in an aggregate  amount  sufficient  to pay such interest and shall have
distributed such amount to the Trustee entitled thereto).



           "RATING AGENCIES" means,  collectively,  at any time, each nationally
recognized   rating  agency  which  shall  have  been   requested  to  rate  the
Certificates and which shall then be rating the Certificates. The initial Rating
Agencies will be Moody's and Standard & Poor's.

           "RATINGS  CONFIRMATION" means, with respect to any action proposed to
be taken,  a written  confirmation  from each of the Rating  Agencies  that such
action  would  not  result in (i) a  reduction  of the  rating  for any Class of
Certificates  below the then current  rating for such Class of  Certificates  or
(ii) a withdrawal or suspension of the rating of any Class of Certificates.

           "REGULAR  DISTRIBUTION  DATES"  means each April 15 and  October  15,
commencing on October 15, 1998; provided,  however,  that, if any such day shall
not be a  Business  Day,  the  related  distribution  shall  be made on the next
succeeding Business Day without additional interest.

           "REPLACEMENT  LIQUIDITY  FACILITY" means, for any Liquidity Facility,
one or more irrevocable  revolving credit agreement or agreements  issued by one
or more Persons in substantially the form of the initial Liquidity  Facility for
the related Trust,  including  reinstatement  provisions,  or in such other form
(which may  include a letter of credit) as shall  permit the Rating  Agencies to
confirm in  writing  their  respective  ratings  then in effect for the  related
Certificates  (before  downgrading  of such ratings,  if any, as a result of the
downgrading of the applicable  Liquidity  Provider),  in a face amount (or in an
aggregate  face  amount)  equal  to  the  amount  of  interest  payable  on  the
Certificates  of such Trust (at the Stated  Interest  Rate for such  Trust,  and
without  regard to expected  future  principal  payments)  on the three  Regular
Distribution  Dates following the date of replacement of such Liquidity Facility
and issued by a Person (or Persons)  having  unsecured  short-term  debt ratings
issued by both Rating  Agencies  which are equal to or higher than the Threshold
Rating.  Without  limitation of the form that a Replacement  Liquidity  Facility
otherwise may have pursuant to the preceding sentence,  a Replacement  Liquidity
Facility for any Class of Certificates may have a stated expiration date earlier
than  15 days  after  the  Final  Legal  Distribution  Date  of  such  Class  of
Certificates  so long as such  Replacement  Liquidity  Facility  provides  for a
Non-Extension Drawing as contemplated by Section 3.6(d) hereof.

           "REPLACEMENT   LIQUIDITY  PROVIDER"  means  a  Person  who  issues  a
Replacement Liquidity Facility.

           "REQUIRED AMOUNT" means, with respect to each Liquidity Facility,  or
the  Cash  Collateral  Account,  for  any  Class,  for any  day,  the sum of the
aggregate  amount of  interest,  calculated  at the rate per annum  equal to the
Stated  Interest  Rate for the  related  Class of  Certificates,  that  would be
payable on such Class of  Certificates on each of the three  successive  Regular
Distribution  Dates immediately  following such day or, if such day is a Regular
Distribution  Date,  on such day and the  succeeding  two  Regular  Distribution
Dates, in each case calculated on the basis of the Pool Balance of such Class of
Certificates  on such date and  without  regard to expected  future  payments of
principal on such Class of Certificates.

           "RESPONSIBLE  OFFICER"  means (i) with  respect to the  Subordination
Agent  and  each  of  the  Trustees,   any  officer  in  the   corporate   trust



administration  department  of the  Subordination  Agent or such  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, and (ii) with respect to each Liquidity Provider, any
authorized officer of such Liquidity Provider.

           "SCHEDULED  PAYMENT"  means,  with respect to any Equipment Note, (i)
any  payment of  principal  or interest  on such  Equipment  Note (other than an
Overdue  Scheduled  Payment) due from the obligor thereon or (ii) any payment of
interest on the  corresponding  Class of Certificates with funds drawn under any
Liquidity Facility, which payment represents the installment of principal at the
stated  maturity of such  installment of principal on such  Equipment  Note, the
payment of regularly  scheduled  interest accrued on the unpaid principal amount
of such  Equipment  Note,  or both;  provided  that any payment of principal of,
premium,  if any, or interest  resulting  from the redemption or purchase of any
Equipment Note shall not constitute a Scheduled Payment.

           "SCHEDULED  PAYMENT  DATE"  means,  with  respect  to  any  Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.

           "SERIES A EQUIPMENT  NOTES" means the 6.410% Series A Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee and authenticated
by the Loan Trustee thereunder,  and any such Equipment Notes issued in exchange
therefor or replacement thereof pursuant to the terms of such Indenture.

           "SERIES B EQUIPMENT  NOTES" means the 6.465% Series B Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee and authenticated
by the Loan Trustee thereunder,  and any such Equipment Notes issued in exchange
therefor or replacement thereof pursuant to the terms of such Indenture.

           "SERIES C EQUIPMENT  NOTES" means the 6.331% Series C Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee and authenticated
by the Loan Trustee thereunder,  and any such Equipment Notes issued in exchange
therefor or replacement thereof pursuant to the terms of such Indenture.

           "SPECIAL  DISTRIBUTION  DATE"  means,  with  respect  to any  Special
Payment,  the date chosen by the Subordination  Agent pursuant to Section 2.4(a)
for the distribution of such Special Payment in accordance with this Agreement.

           "SPECIAL PAYMENT" means any payment (other than a Scheduled  Payment)
in respect of, or any proceeds of, any Equipment Note or Trust Indenture  Estate
(as defined in each Indenture).

           "SPECIAL PAYMENTS ACCOUNT" means the Eligible Deposit Account created
pursuant to Section 2.2 as a sub-account to the Collection Account.



           "STANDARD  & POOR'S"  means  Standard & Poor's  Ratings  Services,  a
division of The McGraw-Hill Companies, Inc.

           "STATED  AMOUNT" with respect to any  Liquidity  Facility,  means the
Maximum  Commitment  (as defined in such  Liquidity  Facility) of the applicable
Liquidity Provider thereunder.

           "STATED EXPIRATION DATE" has the meaning specified in Section 3.6(d).

           "STATED  INTEREST  RATE"  means  (i)  with  respect  to the  Class  A
Certificates,  6.410% per annum,  (ii) with respect to the Class B Certificates,
6.465% per annum, and (iii) with respect to the Class C Certificates, 6.331% per
annum.

           "SUBORDINATION   AGENT"  has  the  meaning  assigned  to  it  in  the
preliminary statements to this Agreement.

           "SUBORDINATION AGENT INCUMBENCY CERTIFICATE" has the meaning assigned
to such term in Section 2.5(a).

           "SUBORDINATION  AGENT  REPRESENTATIVES"  has the meaning  assigned to
such term in Section 2.5(a).

           "TAX" and  "TAXES"  mean any and all  taxes,  fees,  levies,  duties,
tariffs,  imposts,  and other  charges  of any kind  (together  with any and all
interest,  penalties,  loss, damage,  liability,  expense,  additions to tax and
additional amounts or costs incurred or imposed with respect thereto) imposed or
otherwise  assessed  by the United  States of America or by any state,  local or
foreign  government  (or any  subdivision  or agency  thereof)  or other  taxing
authority,  including,  without  limitation:  taxes or other  charges on or with
respect  to income,  franchises,  windfall  or other  profits,  gross  receipts,
property,  sales,  use,  capital stock,  payroll,  employment,  social security,
workers'  compensation,  unemployment  compensation,  or net worth  and  similar
charges;  taxes or other  charges  in the  nature  of  excise,  withholding,  ad
valorem, stamp, transfer, value added, taxes on goods and services, gains taxes,
license,  registration and  documentation  fees,  customs duties,  tariffs,  and
similar charges.

           "TAX  LETTER"  means,  collectively,  each of the three Tax  Letters,
dated as of April 21, 1998,  between  Continental and WestLB with respect to the
Liquidity  Facilities and all tax letters  entered into between  Continental and
any Replacement Liquidity Provider.

           "TERMINATION  NOTICE" with respect to any Liquidity  Facility has the
meaning assigned to such term in such Liquidity Facility.

           "THRESHOLD RATING" means the short-term  unsecured debt rating of P-1
by Moody's and A-1+ by  Standard & Poor's,  in the case of the Class A Liquidity
Provider and the Class B Liquidity Provider,  and the short-term  unsecured debt
rating of P-1 by Moody's and A-1 by Standard & Poor's,  in the case of the Class
C Liquidity Provider.



           "TREASURY  REGULATIONS"  means  regulations,  including  proposed  or
temporary regulations, promulgated under the Code. References herein to specific
provisions  of  proposed  or  temporary   regulations  shall  include  analogous
provisions  of  final   Treasury   Regulations  or  other   successor   Treasury
Regulations.

           "TRIGGERING  EVENT" means (x) the occurrence of an Indenture  Default
under all of the Indentures  resulting in a PTC Event of Default with respect to
the most senior Class of Certificates then Outstanding,  (y) the Acceleration of
all of the  outstanding  Equipment  Notes or (z) the occurrence of a Continental
Bankruptcy Event.

           "TRUST"  means  any of the  Class A Trust,  the  Class B Trust or the
Class C Trust.

           "TRUST  ACCOUNTS"  has the  meaning  assigned to such term in Section
2.2(a).

           "TRUST AGREEMENT" means any of the Class A Trust Agreement, the Class
B Trust Agreement or the Class C Trust Agreement.

           "TRUST PROPERTY" with respect to any Trust, has the meaning set forth
in the Trust Agreement for such Trust.

           "TRUSTEE"  means any of the Class A  Trustee,  the Class B Trustee or
the Class C Trustee.

           "TRUSTEE  INCUMBENCY  CERTIFICATE"  has the meaning  assigned to such
term in Section 2.5(a).

           "TRUSTEE  REPRESENTATIVES"  has the meaning  assigned to such term in
Section 2.5(a).

           "UNDERWRITERS"  means Chase  Securities  Inc.,  Morgan  Stanley & Co.
Incorporated and Credit Suisse First Boston Corporation.

           "UNDERWRITING AGREEMENT" means the Underwriting Agreement dated April
15, 1998 among the Underwriters and Continental, relating to the purchase of the
Certificates by the  Underwriters,  as the same may be amended,  supplemented or
otherwise modified from time to time in accordance with its terms.

           "WESTLB" has the meaning  assigned to such term in the recital of the
parties to this Agreement.

           "WRITTEN NOTICE" means, from the Subordination  Agent, any Trustee or
Liquidity   Provider,   a  written   instrument   executed  by  the   Designated
Representative  of such Person.  An invoice  delivered  by a Liquidity  Provider
pursuant to Section 3.1 in accordance with its normal invoicing procedures shall
constitute Written Notice under such Section.

           "WTC" has the meaning assigned to such term in the recital of parties
to this Agreement.



                                   ARTICLE II

                       TRUST ACCOUNTS; CONTROLLING PARTY

           SECTION  2.1.  AGREEMENT  TO TERMS OF  SUBORDINATION;  PAYMENTS  FROM
MONIES  RECEIVED ONLY. (a) Each Trustee  hereby  acknowledges  and agrees to the
terms of  subordination  set forth in this Agreement in respect of each Class of
Certificates  and agrees to enforce  such  provisions  and cause all payments in
respect of the  Equipment  Notes and the  Liquidity  Facilities to be applied in
accordance  with the terms of this Agreement.  In addition,  each Trustee hereby
agrees  to cause  the  Equipment  Notes  purchased  by the  related  Trust to be
registered in the name of the Subordination  Agent or its nominee,  as agent and
trustee for such Trustee,  to be held in trust by the Subordination Agent solely
for the purpose of facilitating the enforcement of the  subordination  and other
provisions of this Agreement.

           (b) Except as  otherwise  expressly  provided in the next  succeeding
sentence of this Section 2.1, all payments to be made by the Subordination Agent
hereunder  shall  be made  only  from  amounts  received  by it that  constitute
Scheduled  Payments,  Special  Payments  or  payments  under  Section  9 of  the
Participation  Agreements,  and only to the extent that the Subordination  Agent
shall have received sufficient income or proceeds therefrom to enable it to make
such payments in accordance with the terms hereof.  Each of the Trustees and the
Subordination Agent hereby agrees and, as provided in each Trust Agreement, each
Certificateholder,  by its  acceptance  of a  Certificate,  and  each  Liquidity
Provider,  by entering into the Liquidity  Facility to which it is a party,  has
agreed to look solely to such amounts to the extent  available for  distribution
to it as  provided  in this  Agreement  and  that  none of the  Trustees,  Owner
Trustees,  Loan Trustees,  Owner  Participants  nor the  Subordination  Agent is
personally  liable to any of them for any amounts payable or any liability under
this Agreement, any Trust Agreement, any Liquidity Facility or such Certificate,
except (in the case of the Subordination  Agent) as expressly provided herein or
(in the case of the Trustees) as expressly  provided in each Trust  Agreement or
(in the case of the Owner Trustees and the Loan Trustees) as expressly  provided
in any Operative Agreement.

           SECTION  2.2.  TRUST  ACCOUNTS.   (a)  Upon  the  execution  of  this
Agreement,  the Subordination Agent shall establish and maintain in its name (i)
the Collection  Account as an Eligible  Deposit  Account,  bearing a designation
clearly  indicating that the funds  deposited  therein are held in trust for the
benefit of the Trustees, the Certificateholders and the Liquidity Providers, and
(ii) as a sub-account in the Collection Account, the Special Payments Account as
an Eligible Deposit Account,  bearing a designation  clearly indicating that the
funds deposited  therein are held in trust for the benefit of the Trustees,  the
Certificateholders  and the Liquidity  Providers.  The Subordination Agent shall
establish and maintain the Cash  Collateral  Accounts  pursuant to and under the
circumstances  set forth in Section 3.6(f) hereof.  Upon such  establishment and
maintenance  under Section 3.6(f) hereof,  the Cash  Collateral  Accounts shall,
together with the Collection Account, constitute the "TRUST ACCOUNTS" hereunder.

           (b) Funds on  deposit in the Trust  Accounts  shall be  invested  and
reinvested by the Subordination  Agent in Eligible  Investments  selected by the



Subordination  Agent  if such  investments  are  reasonably  available  and have
maturities  no later than the earlier of (i) 90 days  following the date of such
investment  and  (ii)  the  Business  Day  immediately   preceding  the  Regular
Distribution  Date or the date of the related  distribution  pursuant to Section
2.4 hereof,  as the case may be, next following the date of such investment (or,
in the case of any amount on deposit in the Cash Collateral Account with respect
to any  Liquidity  Facility  (with  respect  to  such  Liquidity  Facility,  the
"Relevant Amount"), (A) in the case of a portion of the Relevant Amount equal to
the amount  scheduled to be paid to the Liquidity  Provider with respect to such
Liquidity  Facility on the Regular  Distribution Date next following the date of
such  investment in accordance  with clause (iv), (v) or (vi) of Section 3.6(f),
the Business Day immediately preceding such Regular Distribution Date, or (B) in
the case of a portion of the Relevant  Amount equal to the Relevant Amount minus
the amount described in clause (A) above, the Business Day immediately preceding
the scheduled Interest Payment Date with respect to such Liquidity Facility next
following the date of such investment);  PROVIDED,  HOWEVER,  that following the
making of a Downgrade  Drawing or a  Non-Extension  Drawing  under any Liquidity
Facility,  the  Subordination  Agent shall invest and  reinvest  such amounts in
Eligible  Investments at the direction of Continental  (or, if and to the extent
so  specified  to the  Subordination  Agent by  Continental  with respect to any
Liquidity  Facility,  the  Liquidity  Provider  with  respect to such  Liquidity
Facility);  PROVIDED further,  HOWEVER, that following the making of a Downgrade
Drawing or Non-Extension  Drawing under any initial Liquidity Facility,  (i) the
Subordination Agent shall invest and reinvest the amounts in the Cash Collateral
Account with respect to such Liquidity Facility in Eligible Investments pursuant
to the written  instructions  of the  Liquidity  Provider  funding such Drawing,
which  instructions shall be reasonably  acceptable to Continental,  and (ii) if
the  Subordination  Agent shall be investing such amounts in the Cash Collateral
Account in Eligible  Investments  in accordance  with the  instructions  of such
Liquidity  Provider pursuant to clause (i) above, such Liquidity  Provider shall
use reasonable  efforts to cause the amounts in the Cash Collateral Account with
respect to such Liquidity Facility to be invested in Eligible  Investments which
yield at least an amount equal to the interest  (excluding the Applicable Margin
(as  defined  in the  relevant  Liquidity  Facility))  that is  payable  to such
Liquidity Provider in respect of such Downgrade Drawing or Non-Extension Drawing
pursuant to Section 3.07 of such Liquidity Facility (it being understood that it
may not be feasible to obtain such a yield);  PROVIDED  FURTHER,  HOWEVER,  that
upon the  occurrence  and during the  continuation  of a Triggering  Event,  the
Subordination  Agent shall invest and reinvest such amounts in  accordance  with
the written  instructions of the Controlling Party.  Unless otherwise  expressly
provided in this  Agreement  (including,  without  limitation,  with  respect to
Investment Earnings on deposit in the Cash Collateral  Accounts,  Section 3.6(f)
hereof),  any Investment  Earnings shall be deposited in the Collection  Account
when  received  by  the  Subordination   Agent  and  shall  be  applied  by  the
Subordination  Agent in the same  manner as the other  amounts on deposit in the
Collection Account are to be applied and any losses shall be charged against the
principal  amount  invested,  in  each  case  net of the  Subordination  Agent's
reasonable fees and expenses in making such investments. The Subordination Agent
shall not be liable for any loss resulting from any investment,  reinvestment or
liquidation required to be made under this Agreement other than by reason of its
willful  misconduct  or gross  negligence.  Eligible  Investments  and any other
investment  required  to be made  hereunder  shall be held to  their  maturities
except that any such  investment may be sold (without regard to its maturity) by
the Subordination Agent without instructions  whenever such sale is necessary to



make a  distribution  required  under  this  Agreement.  Uninvested  funds  held
hereunder shall not earn or accrue interest.

           (c) The  Subordination  Agent  shall  possess  all  right,  title and
interest in all funds on deposit from time to time in the Trust  Accounts and in
all  proceeds  thereof  (including  all  income  thereon,  except  as  otherwise
expressly  provided  herein  with  respect to  Investment  Earnings).  The Trust
Accounts  shall be held in  trust  by the  Subordination  Agent  under  the sole
dominion and control of the Subordination Agent for the benefit of the Trustees,
the Certificateholders  and the Liquidity Providers,  as the case may be. If, at
any time, any of the Trust Accounts  ceases to be an Eligible  Deposit  Account,
the  Subordination  Agent shall within 10 Business Days (or such longer  period,
not to exceed 30  calendar  days,  to which  each  Rating  Agency  may  consent)
establish a new Collection Account,  Special Payments Account or Cash Collateral
Account,  as the case may be, as an Eligible  Deposit Account and shall transfer
any cash and/or any investments to such new Collection Account, Special Payments
Account  or Cash  Collateral  Account,  as the case may be. So long as WTC is an
Eligible Institution, the Trust Accounts shall be maintained with it as Eligible
Deposit Accounts.

           SECTION 2.3. DEPOSITS TO THE COLLECTION  ACCOUNT AND SPECIAL PAYMENTS
ACCOUNT. (a) The Subordination Agent shall, upon receipt thereof, deposit in the
Collection Account all Scheduled Payments received by it.

           (b) The  Subordination  Agent  shall,  on each  date when one or more
Special Payments are made to the Subordination  Agent as holder of the Equipment
Notes,  deposit in the Special  Payments  Account the  aggregate  amount of such
Special Payments.

           SECTION 2.4.  DISTRIBUTIONS OF SPECIAL PAYMENTS (a) Notice of Special
Payment.  Except as  provided  in  Section  2.4(e)  below,  upon  receipt by the
Subordination  Agent, as registered holder of the Equipment Notes, of any notice
of a Special Payment (or, in the absence of any such notice, upon receipt by the
Subordination  Agent  of a  Special  Payment),  the  Subordination  Agent  shall
promptly give notice  thereof to each Trustee and the Liquidity  Providers.  The
Subordination  Agent shall  promptly  calculate the amount of the  redemption or
purchase of Equipment Notes or the amount of any Overdue Scheduled  Payment,  as
the case may be, comprising such Special Payment under the applicable  Indenture
or Indentures  and shall  promptly send to each Trustee a Written Notice of such
amount and the amount  allocable to each Trust.  Such Written  Notice shall also
set the  distribution  date for such  Special  Payment (a "SPECIAL  DISTRIBUTION
DATE"),  which shall be the Business Day which immediately  follows the later to
occur of (x) the 15th day after the date of such Written  Notice or (y) the date
the Subordination Agent has received or expects to receive such Special Payment.
Amounts on deposit in the  Special  Payments  Account  shall be  distributed  in
accordance with Sections 2.4(b) and 2.4(c) hereof, as applicable.

           (b) REDEMPTIONS AND PURCHASES OF EQUIPMENT  NOTES.  (i) So long as no
Triggering  Event  shall  have  occurred   (whether  or  not  continuing),   the
Subordination Agent shall make distributions  pursuant to this Section 2.4(b) of
amounts on deposit in the Special Payments Account on account of the redemption,



purchase (including, without limitation, a purchase resulting from a sale of the
Equipment  Notes  permitted  by Article IV hereof) or  prepayment  of all of the
Equipment Notes issued pursuant to an Indenture on the Special Distribution Date
for such Special Payment in the following order of priority:

           FIRST, such amount as shall be required to pay (A) all accrued and
      unpaid Liquidity  Expenses then in arrears plus (B) the product of (x) the
      aggregate  amount of all  accrued  and unpaid  Liquidity  Expenses  not in
      arrears to such Special  Payment Date  MULTIPLIED  by (y) a fraction,  the
      numerator  of which  is the  aggregate  outstanding  principal  amount  of
      Equipment  Notes  being  redeemed,  purchased  or prepaid on such  Special
      Payment Date and the  denominator  of which is the  aggregate  outstanding
      principal  amount of all  Equipment  Notes,  shall be  distributed  to the
      Liquidity  Providers  pari passu on the basis of the  amount of  Liquidity
      Expenses owed to each Liquidity Provider;

           SECOND,  such  amount as shall be required to pay (A) all accrued and
      unpaid  interest then in arrears on all Liquidity  Obligations  (including
      interest  accrued  and  unpaid  on any  Interest  Drawing  or any  Applied
      Provider  Advance (as  defined in any  Liquidity  Facility))  plus (B) the
      product of (x) the aggregate  amount of all accrued and unpaid interest on
      all Liquidity  Obligations not in arrears to such Special Payment Date (at
      the rate provided in the applicable  Liquidity Facility) MULTIPLIED BY (y)
      a fraction,  the numerator of which is the aggregate outstanding principal
      amount of  Equipment  Notes being  redeemed,  purchased or prepaid on such
      Special  Payment  Date  and the  denominator  of  which  is the  aggregate
      outstanding  principal amount of all Equipment Notes, shall be distributed
      to the Liquidity  Providers  pari passu on the basis of the amount of such
      Liquidity Obligations owed to each Liquidity Provider;

           THIRD,  such amount as shall be required  (A) if any Cash  Collateral
      Account had been previously  funded as provided in Section 3.6(f), to fund
      such Cash Collateral  Account up to its Required Amount shall be deposited
      in such Cash  Collateral  Account,  (B) if any  Liquidity  Facility  shall
      become a  Downgraded  Facility or a  Non-Extended  Facility at a time when
      unreimbursed  Interest Drawings under such Liquidity Facility have reduced
      the Available Amount  thereunder to zero, to deposit into the related Cash
      Collateral  Account  an  amount  equal to such Cash  Collateral  Account's
      Required  Amount shall be deposited in such Cash Collateral  Account,  and
      (C)  if,  with  respect  to any  particular  Liquidity  Facility,  neither
      subclause (A) nor subclause (B) of this clause "THIRD" are applicable,  to
      pay or  reimburse  the  Liquidity  Provider  in respect of such  Liquidity
      Facility  in an amount  equal to the amount of any  unreimbursed  Interest
      Drawings  under  such  Liquidity  Facility  shall be  distributed  to such
      Liquidity  Provider,  pari  passu on the basis of the  amounts of all such
      deficiencies and/or unreimbursed Interest Drawings;

           FOURTH, if, with respect to any particular  Liquidity  Facility,  any
      amounts are to be distributed  pursuant to either  subclause (A) or (B) of
      clause  "THIRD"  above,  then the Liquidity  Provider with respect to such
      Liquidity  Facility  shall  be  paid  the  excess  of  (x)  the  aggregate
      outstanding  amount of  unreimbursed  Advances  (whether  or not then due)
      under  such  Liquidity  Facility  over  (y) the  Required  Amount  for the
      relevant Class, pari passu on the basis of such amounts in respect of each
      Liquidity Provider;



           FIFTH,  such  amount  as shall be  required  to pay in full  Expected
      Distributions  to the  holders  of Class A  Certificates  on such  Special
      Distribution Date shall be distributed to the Class A Trustee;

           SIXTH,  such  amount  as shall be  required  to pay in full  Expected
      Distributions  to the  holders  of Class B  Certificates  on such  Special
      Distribution Date shall be distributed to the Class B Trustee;

           SEVENTH,  such amount as shall be  required  to pay in full  Expected
      Distributions  to the  holders  of Class C  Certificates  on such  Special
      Distribution Date shall be distributed to the Class C Trustee; and

           EIGHTH,  the  balance,  if any,  of such  Special  Payment  shall  be
      transferred to the Collection  Account for distribution in accordance with
      Section 3.2 hereof.

For the  purposes of this Section  2.4(b)(i),  clause (x) of the  definition  of
"Expected  Distributions" shall be deemed to read as follows:  "(x) accrued, due
and unpaid  interest on such  Certificates  (after giving effect to any Escrowed
Funds Interest  Distribution to be made on such Current  Distribution  Date with
respect to such Certificates)  together with (without  duplication)  accrued and
unpaid  interest  on a portion  of such  Certificates  equal to the  outstanding
principal  amount of  Equipment  Notes  being  redeemed,  purchased  or  prepaid
(immediately prior to such redemption, purchase or prepayment)".

           (ii)  Upon the  occurrence  of a  Triggering  Event  (whether  or not
continuing),  the Subordination Agent shall make distributions  pursuant to this
Section 2.4(b) of amounts on deposit in the Special  Payments Account on account
of the redemption or purchase of all of the Equipment  Notes issued  pursuant to
an  Indenture  on the  Special  Distribution  Date for such  Special  Payment in
accordance with Section 3.3 hereof.

           (c) OTHER SPECIAL  PAYMENTS.  Except as provided in clause (e) below,
any amounts on deposit in the Special  Payments Account other than in respect of
amounts to be distributed pursuant to Section 2.4(b) shall be distributed on the
Special Distribution Date therefor in accordance with Article III hereof.

           (d) INVESTMENT OF AMOUNTS IN SPECIAL PAYMENTS ACCOUNT. Any amounts on
deposit  in the  Special  Payments  Account  prior to the  distribution  thereof
pursuant to Section  2.4(b) or (c) shall be invested in accordance  with Section
2.2(b).  Investment  Earnings  on  such  investments  shall  be  distributed  in
accordance with Section 2.4(b) or (c), as the case may be.

           (e)  CERTAIN  PAYMENTS.   The  Subordination  Agent  will  distribute
promptly upon receipt thereof (i) any indemnity  payment received by it from the
Owner Participant, the Owner Trustee or Continental in respect of any Trustee or
any Liquidity  Provider  (collectively,  the "PAYEES") and (ii) any compensation
(including, without limitation, any fees payable to any Liquidity Provider under
Section  2.03  of  any  Liquidity  Facility)  received  by  it  from  the  Owner
Participant,  the Owner Trustee or Continental under any Operative  Agreement in
respect of any Payee, directly to the Payee entitled thereto.



           SECTION  2.5.  DESIGNATED  REPRESENTATIVES.  (a) With the delivery of
this Agreement, the Subordination Agent shall furnish to each Liquidity Provider
and each Trustee, and from time to time thereafter may furnish to each Liquidity
Provider and each Trustee, at the Subordination Agent's discretion,  or upon any
Liquidity  Provider's or Trustee's request (which request shall not be made more
than one time in any 12-month  period),  a certificate (a  "SUBORDINATION  AGENT
INCUMBENCY  CERTIFICATE") of a Responsible  Officer of the  Subordination  Agent
certifying as to the incumbency  and specimen  signatures of the officers of the
Subordination  Agent and the  attorney-in-fact  and agents of the  Subordination
Agent (the  "SUBORDINATION  AGENT  REPRESENTATIVES")  authorized to give Written
Notices on behalf of the  Subordination  Agent  hereunder.  Until each Liquidity
Provider  and  Trustee  receives a  subsequent  Subordination  Agent  Incumbency
Certificate,  it  shall be  entitled  to rely on the  last  Subordination  Agent
Incumbency Certificate delivered to it hereunder.

           (b) With the delivery of this  Agreement,  each Trustee shall furnish
to the Subordination  Agent, and from time to time thereafter may furnish to the
Subordination  Agent, at such Trustee's  discretion,  or upon the  Subordination
Agent's  request  (which  request  shall  not be made  more than one time in any
12-month  period),  a  certificate  (a "TRUSTEE  INCUMBENCY  Certificate")  of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the  attorney-in-fact  and agents
of such  Trustee  (the  "TRUSTEE  REPRESENTATIVES")  authorized  to give Written
Notices  on behalf of such  Trustee  hereunder.  Until the  Subordination  Agent
receives a subsequent  Trustee Incumbency  Certificate,  it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.

           (c) With the  delivery of this  Agreement,  each  Liquidity  Provider
shall furnish to the  Subordination  Agent, and from time to time thereafter may
furnish to the Subordination Agent, at such Liquidity Provider's discretion,  or
upon the  Subordination  Agent's  request  (which request shall not be made more
than  one  time in any  12-month  period),  a  certificate  (an  "LP  INCUMBENCY
CERTIFICATE") of any Responsible  Officer of such Liquidity Provider  certifying
as to the incumbency and specimen  signatures of any officer,  attorney-in-fact,
agent or other  designated  representative  of such Liquidity  Provider (the "LP
REPRESENTATIVES"  and, together with the Subordination Agent Representatives and
the Trustee  Representatives,  the "DESIGNATED  REPRESENTATIVES")  authorized to
give Written Notices on behalf of such Liquidity Provider  hereunder.  Until the
Subordination Agent receives a subsequent LP Incumbency Certificate, it shall be
entitled  to  rely  on  the  last  LP  Incumbency  Certificate  delivered  to it
hereunder.

           SECTION 2.6.  CONTROLLING  PARTY.  (a) The Trustees and the Liquidity
Providers  hereby agree that,  with respect to any  Indenture at any given time,
the Loan Trustee  thereunder will be directed (i) in taking,  or refraining from
taking,  any action under such Indenture or with respect to the Equipment  Notes
issued  thereunder,  so  long  as no  Indenture  Default  has  occurred  and  is
continuing thereunder,  by the holders of at least a majority of the outstanding
principal  amount of such  Equipment  Notes  (provided  that, for so long as the
Subordination  Agent  is the  registered  holder  of the  Equipment  Notes,  the
Subordination Agent shall act with respect to this clause (i) in accordance with
the  directions of the Trustees (in the case of each such Trustee,  with respect



to the Equipment Notes issued under such Indenture and held as Trust Property of
such Trust)  constituting,  in the  aggregate,  directions  with respect to such
principal amount of Equipment  Notes),  and (ii) after the occurrence and during
the continuance of an Indenture Default  thereunder (which has not been cured by
the applicable Owner Trustee or the applicable Owner Participant, if applicable,
pursuant to Section  4.03 of such  Indenture),  in taking,  or  refraining  from
taking, any action under such Indenture or with respect to such Equipment Notes,
including exercising remedies thereunder  (including  Accelerating the Equipment
Notes issued  thereunder or foreclosing  the Lien on the Aircraft  securing such
Equipment Notes), by the Controlling Party.

           (b) The Person who shall be the  "CONTROLLING  PARTY" with respect to
any  Indenture  shall be:  (x) the Class A  Trustee;  (y) upon  payment of Final
Distributions to the holders of Class A Certificates,  the Class B Trustee;  and
(z) upon payment of Final  Distributions to the holders of Class B Certificates,
the Class C  Trustee.  For  purposes  of giving  effect  to the  foregoing,  the
Trustees  (other  than  the  Controlling   Party)  irrevocably  agree  (and  the
Certificateholders  (other  than  the  Certificateholders   represented  by  the
Controlling  Party)  shall be deemed to agree by  virtue  of their  purchase  of
Certificates)  that the  Subordination  Agent, as record holder of the Equipment
Notes,  shall  exercise its voting rights in respect of the  Equipment  Notes as
directed by the  Controlling  Party and any vote so  exercised  shall be binding
upon the Trustees and all Certificateholders.

           The Subordination Agent shall give written notice to all of the other
parties  to  this  Agreement  promptly  upon a  change  in the  identity  of the
Controlling  Party. Each of the parties hereto agrees that it shall not exercise
any of the  rights  of the  Controlling  Party  at  such  time  as it is not the
Controlling Party hereunder;  PROVIDED,  HOWEVER,  that nothing herein contained
shall prevent or prohibit any Non-Controlling  Party from exercising such rights
as shall be  specifically  granted to such  Non-Controlling  Party hereunder and
under the other Operative Agreements.

           (c) Notwithstanding  the foregoing,  at any time after 18 months from
the earlier to occur of (i) the date on which the entire  Available Amount under
any  Liquidity  Facility  shall have been  drawn  (for any  reason  other than a
Downgrade Drawing or a Non-Extension Drawing) and remain unreimbursed,  (ii) the
date on which  the  entire  amount of any  Downgrade  Drawing  or  Non-Extension
Drawing  under any  Liquidity  Facility  shall have  become and remain  "Applied
Downgrade  Advances" or "Applied  Non-Extension  Advances",  as the case may be,
under and as defined in such Liquidity  Facility and (iii) the date on which all
Equipment Notes shall have been Accelerated, the Liquidity Provider or Liquidity
Providers  holding  more  than  50%  of  the  outstanding  amount  of  Liquidity
Obligations   shall  have  the  right  to  elect,   by  Written  Notice  to  the
Subordination  Agent and each of the Trustees,  to become the Controlling  Party
hereunder  with respect to any Indenture at any time from and including the last
day of such 18-month period.

           (d) The  exercise  of remedies  by the  Controlling  Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.

           (e) The  Controlling  Party  shall  not be  entitled  to  require  or
obligate any  Non-Controlling  Party to provide funds  necessary to exercise any
right or remedy hereunder.



                                   ARTICLE III

                      RECEIPT, DISTRIBUTION AND APPLICATION
                               OF AMOUNTS RECEIVED

           SECTION 3.1. WRITTEN NOTICE OF  DISTRIBUTION.  (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each Regular
Distribution  Date (or Special  Distribution Date for purposes of Section 2.4(b)
hereof,  as the case may be), each of the following Persons shall deliver to the
Subordination Agent a Written Notice setting forth the following  information as
at the close of business on such Business Day:

                (i)  With  respect  to the  Class A  Certificates,  the  Class A
      Trustee  shall  separately  set forth the amounts to be paid in accordance
      with clause "FIFTH" of Section 3.2 or 2.4(b), as the case may be, hereof;

                (ii)  With  respect  to the  Class B  Certificates,  the Class B
      Trustee  shall  separately  set forth the amounts to be paid in accordance
      with clause "SIXTH" of Section 3.2 or 2.4(b), as the case may be, hereof;

                (iii)  With  respect  to the Class C  Certificates,  the Class C
      Trustee  shall  separately  set forth the amounts to be paid in accordance
      with  clause  "SEVENTH"  of  Section  3.2 or  2.4(b),  as the case may be,
      hereof;

                (iv) With  respect to each  Liquidity  Facility,  the  Liquidity
      Provider  thereunder  shall separately set forth the amounts to be paid in
      accordance with clauses "FIRST", "SECOND", "THIRD" and "FOURTH" of Section
      3.2 or 2.4(b), as the case may be, hereof; and

                (v) Each  Trustee  shall  set forth  the  amounts  to be paid in
      accordance with clause "EIGHTH" of Section 3.2 hereof.

The notices  required under this Section 3.1(a) may be in the form of a schedule
or  similar  document  provided  to  the  Subordination  Agent  by  the  parties
referenced therein or by any one of them, which schedule or similar document may
state  that,  unless  there  has been a  prepayment  of the  Certificates,  such
schedule or similar document is to remain in effect until any substitute  notice
or amendment  shall be given to the  Subordination  Agent by the party providing
such notice.

           (b) Following the occurrence of a Triggering Event, the Subordination
Agent shall request the following  information from the following  Persons,  and
each of the  following  Persons  shall,  upon the  request of the  Subordination
Agent,  deliver a Written  Notice to the  Subordination  Agent setting forth for
such Person the following information:

                (i)  With  respect  to the  Class A  Certificates,  the  Class A
      Trustee  shall  separately  set forth the amounts to be paid in accordance



      with  clauses  "FIRST"  (to  reimburse   payments  made  by  the  Class  A
      Certificateholders  pursuant  to  subclause  (iii) of  clause  "FIRST"  of
      Section 3.3 hereof) and "SEVENTH" of Section 3.3 hereof;

                (ii)  With  respect  to the  Class B  Certificates,  the Class B
      Trustee  shall  separately  set forth the amounts to be paid in accordance
      with  clauses  "FIRST"  (to  reimburse   payments  made  by  the  Class  B
      Certificateholders  pursuant  to  subclause  (iii) of  clause  "FIRST"  of
      Section 3.3 hereof) and "EIGHTH" of Section 3.3 hereof;

                (iii)  With  respect  to the Class C  Certificates,  the Class C
      Trustee  shall  separately  set forth the amounts to be paid in accordance
      with  clauses  "FIRST"  (to  reimburse   payments  made  by  the  Class  C
      Certificateholders  pursuant  to  subclause  (iii) of  clause  "FIRST"  of
      Section 3.3 hereof) and "NINTH" of Section 3.3 hereof;

                (iv) With  respect to each  Liquidity  Facility,  the  Liquidity
      Provider  thereunder  shall separately set forth the amounts to be paid to
      it in accordance  with  subclause  (iii) of clause  "FIRST" of Section 3.3
      hereof and clauses "SECOND",  "THIRD", "FOURTH" and "FIFTH" of Section 3.3
      hereof; and

                (v) Each  Trustee  shall  set forth  the  amounts  to be paid in
      accordance with clause "SIXTH" of Section 3.3 hereof.

           (c) At such time as a Trustee  or a  Liquidity  Provider  shall  have
received  all  amounts  owing  to  it  (and,  in  the  case  of a  Trustee,  the
Certificateholders  for which it is acting)  pursuant to Section 2.4, 3.2 or 3.3
hereof, as applicable,  and, in the case of a Liquidity Provider, its commitment
under the related  Liquidity  Facility  shall have  terminated or expired,  such
Person shall, by a Written Notice,  so inform the  Subordination  Agent and each
other party to this Agreement.

           (d) As provided in Section 6.5 hereof, the Subordination  Agent shall
be fully  protected in relying on any of the  information set forth in a Written
Notice provided by any Trustee or any Liquidity  Provider pursuant to paragraphs
(a)  through  (c) above and shall  have no  independent  obligation  to  verify,
calculate or recalculate any amount set forth in any Written Notice delivered in
accordance with such paragraphs.

           (e)  Any  Written  Notice  delivered  by a  Trustee  or  a  Liquidity
Provider, as applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if
made prior to 10:00 A.M.  (New York City time)  shall be  effective  on the date
delivered  (or if delivered  later shall be  effective  as of the next  Business
Day). Subject to the terms of this Agreement,  the Subordination  Agent shall as
promptly as practicable  comply with any such instructions;  PROVIDED,  HOWEVER,
that any transfer of funds pursuant to any instruction received after 10:00 A.M.
(New  York City  time) on any  Business  Day may be made on the next  succeeding
Business Day.

           (f) In the event the  Subordination  Agent shall not receive from any
Person any information set forth in paragraph (a) or (b) above which is required
to enable the Subordination Agent to make a distribution to such Person pursuant
to Section  3.2 or 3.3  hereof,  the  Subordination  Agent  shall  request  such



information  and,  failing to receive any such  information,  the  Subordination
Agent shall not make such  distribution(s)  to such Person.  In such event,  the
Subordination Agent shall make distributions pursuant to clauses "FIRST" through
"NINTH" of Section 3.2 and clauses "FIRST" through "NINTH" of Section 3.3 to the
extent  it  shall  have  sufficient  information  to  enable  it  to  make  such
distributions, and shall continue to hold any funds remaining, after making such
distributions,  until  the  Subordination  Agent  shall  receive  all  necessary
information to enable it to distribute any funds so withheld.

           (g) On such  dates  (but not more  frequently  than  monthly)  as any
Liquidity Provider or any Trustee shall request,  but in any event automatically
at the end of each calendar quarter,  the Subordination Agent shall send to such
party  a  written   statement   reflecting  all  amounts  on  deposit  with  the
Subordination Agent pursuant to Section 3.1(f) hereof.

           SECTION  3.2.  DISTRIBUTION  OF AMOUNTS ON DEPOSIT IN THE  COLLECTION
ACCOUNT.  Except as otherwise  provided in Sections  2.4,  3.1(f),  3.3, 3.4 and
3.6(b),  amounts on deposit in the  Collection  Account  (or, in the case of any
amount described in Section 2.4(c),  on deposit in the Special Payments Account)
shall be promptly distributed on each Regular Distribution Date (or, in the case
of any amount  described in Section  2.4(c),  on the Special  Distribution  Date
thereof)  in the  following  order  of  priority  and  in  accordance  with  the
information  provided to the  Subordination  Agent  pursuant  to Section  3.1(a)
hereof:

           FIRST, such amount as shall be required to pay all accrued and unpaid
      Liquidity Expenses owed to each Liquidity Provider shall be distributed to
      the Liquidity Providers pari passu on the basis of the amount of Liquidity
      Expenses owed to each Liquidity Provider;

           SECOND, such amount as shall be required to pay in full the aggregate
      amount of interest  accrued on all Liquidity  Obligations (at the rate, or
      in the amount,  provided in the applicable  Liquidity Facility) and unpaid
      shall be distributed to the Liquidity Providers pari passu on the basis of
      the amount of such Liquidity Obligations owed to each Liquidity Provider;

           THIRD,  such amount as shall be required  (A) if any Cash  Collateral
      Account had been previously  funded as provided in Section 3.6(f), to fund
      such Cash Collateral  Account up to its Required Amount shall be deposited
      in such Cash  Collateral  Account,  (B) if any  Liquidity  Facility  shall
      become a  Downgraded  Facility or a  Non-Extended  Facility at a time when
      unreimbursed  Interest Drawings under such Liquidity Facility have reduced
      the Available Amount  thereunder to zero, to deposit into the related Cash
      Collateral  Account  an  amount  equal to such Cash  Collateral  Account's
      Required  Amount shall be deposited in such Cash Collateral  Account,  and
      (C)  if,  with  respect  to any  particular  Liquidity  Facility,  neither
      subclause (A) nor subclause (B) of this clause "THIRD" is  applicable,  to
      pay or  reimburse  the  Liquidity  Provider  in respect of such  Liquidity
      Facility  in an amount  equal to the amount of all  Liquidity  Obligations
      then due  under  such  Liquidity  Facility  (other  than  amounts  payable
      pursuant  to clause  "FIRST" or  "SECOND"  of this  Section  3.2) shall be
      distributed  to such  Liquidity  Provider,  pari passu on the basis of the
      amounts   of  all  such   deficiencies   and/or   unreimbursed   Liquidity
      Obligations;



           FOURTH, if, with respect to any particular  Liquidity  Facility,  any
      amounts are to be distributed  pursuant to either  subclause (A) or (B) of
      clause  "THIRD"  above,  then the Liquidity  Provider with respect to such
      Liquidity  Facility  shall  be  paid  the  excess  of  (x)  the  aggregate
      outstanding  amount of  unreimbursed  Advances  (whether  or not then due)
      under  such  Liquidity  Facility  over  (y) the  Required  Amount  for the
      relevant Class, pari passu on the basis of such amounts in respect of each
      Liquidity Provider;

           FIFTH,  such  amount  as shall be  required  to pay in full  Expected
      Distributions  to  the  holders  of  the  Class  A  Certificates  on  such
      Distribution Date shall be distributed to the Class A Trustee;

           SIXTH,  such  amount  as shall be  required  to pay in full  Expected
      Distributions  to  the  holders  of  the  Class  B  Certificates  on  such
      Distribution Date shall be distributed to the Class B Trustee;

           SEVENTH,  such amount as shall be  required  to pay in full  Expected
      Distributions  to  the  holders  of  the  Class  C  Certificates  on  such
      Distribution Date shall be distributed to the Class C Trustee;

           EIGHTH, such amount as shall be required to pay in full the aggregate
      unpaid amount of fees and expenses payable as of such Distribution Date to
      the  Subordination  Agent and each  Trustee  pursuant to the terms of this
      Agreement  and  the  Trust  Agreements,  as the  case  may  be,  shall  be
      distributed to the Subordination Agent and such Trustee; and

           NINTH, the balance,  if any, of any such amount remaining  thereafter
      shall  be  held  in the  Collection  Account  for  later  distribution  in
      accordance with this Article III.

           SECTION  3.3.   DISTRIBUTION  OF  AMOUNTS  ON  DEPOSIT   FOLLOWING  A
TRIGGERING EVENT. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b)
hereof,  upon the occurrence of a Triggering Event and at all times  thereafter,
all funds in the  Collection  Account or the Special  Payments  Account shall be
promptly  distributed  by the  Subordination  Agent  in the  following  order of
priority:

           FIRST,  such  amount  as  shall  be  required  to  reimburse  (i) the
      Subordination  Agent for any  out-of-pocket  costs and  expenses  actually
      incurred by it (to the extent not previously reimbursed) in the protection
      of, or the  realization of the value of, the Equipment  Notes or any Trust
      Indenture  Estate,   shall  be  applied  by  the  Subordination  Agent  in
      reimbursement  of such  costs  and  expenses,  (ii) each  Trustee  for any
      amounts of the nature  described in clause (i) above actually  incurred by
      it under the  applicable  Trust  Agreement  (to the extent not  previously
      reimbursed), shall be distributed to such Trustee, and (iii) any Liquidity
      Provider or  Certificateholder  for  payments,  if any,  made by it to the
      Subordination  Agent or any  Trustee in respect  of amounts  described  in
      clause (i) above,  shall be distributed  to such Liquidity  Provider or to
      the applicable Trustee for the account of such Certificateholder,  in each
      such case, pari passu on the basis of all amounts described in clauses (i)
      through (iii) above;



           SECOND, such amount remaining as shall be required to pay all accrued
      and unpaid  Liquidity  Expenses  shall be  distributed  to each  Liquidity
      Provider pari passu on the basis of the amount of Liquidity  Expenses owed
      to each Liquidity Provider;

           THIRD,  such amount remaining as shall be required to pay accrued and
      unpaid interest on the Liquidity  Obligations as provided in the Liquidity
      Facilities  shall be distributed to each Liquidity  Provider pari passu on
      the basis of the amount of such accrued and unpaid  interest  owed to each
      Liquidity Provider;

           FOURTH,  such amount  remaining  as shall be required (A) if any Cash
      Collateral  Account  had been  previously  funded as  provided  in Section
      3.6(f),  unless (i) a Performing  Note  Deficiency  exists and a Liquidity
      Event of Default shall have occurred and be continuing with respect to the
      relevant  Liquidity  Facility or (ii) a Final  Drawing shall have occurred
      with  respect to such  Liquidity  Facility,  to fund such Cash  Collateral
      Account up to its Required  Amount (less the amount of any  repayments  of
      Interest  Drawings under such Liquidity  Facility while  subclause  (A)(i)
      above is applicable)  shall be deposited in such Cash Collateral  Account,
      (B) if any  Liquidity  Facility  shall become a  Downgraded  Facility or a
      Non-Extended  Facility at a time when unreimbursed Interest Drawings under
      such Liquidity  Facility have reduced the Available  Amount  thereunder to
      zero, unless (i) a Performing Note Deficiency exists and a Liquidity Event
      of Default  shall have  occurred  and be  continuing  with  respect to the
      relevant  Liquidity  Facility or (ii) a Final  Drawing shall have occurred
      with respect to such Liquidity Facility,  to deposit into the related Cash
      Collateral  Account  an  amount  equal to such Cash  Collateral  Account's
      Required  Amount (less the amount of any  repayments of Interest  Drawings
      under such Liquidity  Facility while subclause (B)(i) above is applicable)
      shall be  deposited  in such Cash  Collateral  Account,  and (C) if,  with
      respect to any particular  Liquidity  Facility,  neither subclause (A) nor
      subclause (B) of this clause "fourth" are  applicable,  to pay in full the
      outstanding  amount  of all  Liquidity  Obligations  then due  under  such
      Liquidity Facility (other than amounts payable pursuant to clause "SECOND"
      or "THIRD" of this Section  3.3) shall be  distributed  to such  Liquidity
      Provider,  pari passu on the basis of the amounts of all such deficiencies
      and/or unreimbursed Liquidity Obligations;

           FIFTH,  if, with respect to any particular  Liquidity  Facility,  any
      amounts are to be distributed  pursuant to either  subclause (A) or (B) of
      clause  "FOURTH" above,  then the Liquidity  Provider with respect to such
      Liquidity  Facility  shall  be  paid  the  excess  of  (x)  the  aggregate
      outstanding  amount of  unreimbursed  Advances  (whether  or not then due)
      under  such  Liquidity  Facility  over  (y) the  Required  Amount  for the
      relevant  Class (less the amount of any  repayments  of Interest  Drawings
      under such Liquidity  Facility while  subclause  (A)(i) or (B)(i),  as the
      case may be, of clause  "FOURTH" above is  applicable),  pari passu on the
      basis of such amounts in respect of each Liquidity Provider;

           SIXTH,  such amount as shall be required to  reimburse or pay (i) the
      Subordination  Agent for any Tax (other than Taxes imposed on compensation
      paid  hereunder),  expense,  fee,  charge or other loss incurred by or any
      other amount  payable to the  Subordination  Agent in connection  with the



      transactions   contemplated   hereby  (to  the   extent   not   previously
      reimbursed),  shall be applied by the Subordination Agent in reimbursement
      of such amount, (ii) each Trustee for any Tax (other than Taxes imposed on
      compensation  paid under the applicable Trust  Agreement),  expense,  fee,
      charge,  loss or any  other  amount  payable  to such  Trustee  under  the
      applicable  Trust  Agreements (to the extent not  previously  reimbursed),
      shall be distributed to such Trustee, and (iii) each Certificateholder for
      payments,  if any, made by it pursuant to Section 5.2 hereof in respect of
      amounts  described  in  clause  (i)  above,  shall be  distributed  to the
      applicable Trustee for the account of such Certificateholder, in each such
      case,  pari passu on the basis of all  amounts  described  in clauses  (i)
      through (iii) above;

           SEVENTH,  such amount  remaining  as shall be required to pay in full
      Adjusted  Expected  Distributions  on the  Class A  Certificates  shall be
      distributed to the Class A Trustee;

           EIGHTH,  such  amount  remaining  as shall be required to pay in full
      Adjusted  Expected  Distributions  on the  Class B  Certificates  shall be
      distributed to the Class B Trustee; and

           NINTH,  such  amount  remaining  as shall be  required to pay in full
      Adjusted  Expected  Distributions  on the  Class C  Certificates  shall be
      distributed to the Class C Trustee.

           SECTION  3.4.  OTHER  PAYMENTS.  (a)  Any  payments  received  by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement  shall be distributed  by the  Subordination  Agent (i) in the
order of  priority  specified  in  Section  3.3  hereof  and (ii) to the  extent
received or realized at any time after the Final Distributions for each Class of
Certificates have been made, in the manner provided in clause "first" of Section
3.3 hereof.

           (b) On any Interest Payment Date under each Liquidity  Facility which
is not a Distribution  Date, the Subordination  Agent shall pay to the Liquidity
Provider  under such  Liquidity  Facility from, and to the extent of, amounts on
deposit in the  Collection  Account,  an amount  equal to the amount of interest
then due and payable to such Liquidity Provider under such Liquidity Facility.

           (c) Except as  otherwise  provided  in  Section  3.3  hereof,  if the
Subordination  Agent receives any Scheduled  Payment after the Scheduled Payment
Date relating  thereto,  but prior to such payment becoming an Overdue Scheduled
Payment,  then the  Subordination  Agent shall deposit such Scheduled Payment in
the  Collection  Account  and  promptly  distribute  such  Scheduled  Payment in
accordance with the priority of  distributions  set forth in Section 3.2 hereof;
provided that,  for the purposes of this Section 3.4(c) only,  each reference in
clause  "eighth" of Section 3.2 to  "Distribution  Date" shall be deemed to mean
the actual  date of payment of such  Scheduled  Payment  and each  reference  in
clause "fifth", "sixth" or "seventh" of Section 3.2 to "Distribution Date" shall
be deemed to refer to such Scheduled Payment Date.



           SECTION 3.5.  PAYMENTS TO THE TRUSTEES AND THE  LIQUIDITY  PROVIDERS.
Any amounts  distributed  hereunder to any Liquidity  Provider  shall be paid to
such Liquidity  Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent shall
provide  a Written  Notice  of any such  transfer  to the  applicable  Liquidity
Provider,  as the  case  may  be,  at the  time of such  transfer.  Any  amounts
distributed  hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire  transfer  funds  at the  address  such  Trustee  shall  provide  to the
Subordination Agent.

           SECTION 3.6. LIQUIDITY  FACILITIES.  (a) INTEREST DRAWINGS. If on any
Distribution  Date, after giving effect to the subordination  provisions of this
Agreement,  the  Subordination  Agent  shall not have  sufficient  funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
A  Certificates,  the Class B Certificates  or the Class C Certificates  (at the
Stated Interest Rate for such Class of Certificates),  then, prior to 12:00 noon
(New York City time) on the Business Day following such  Distribution  Date, the
Subordination  Agent shall request a drawing  (each such  drawing,  an "INTEREST
DRAWING")   under  the  Liquidity   Facility  with  respect  to  such  Class  of
Certificates in an amount equal to the lesser of (i) an amount sufficient to pay
the amount of such accrued  interest (at the Stated Interest Rate for such Class
of Certificates)  and (ii) the Available  Amount under such Liquidity  Facility,
and  shall  pay  such  amount  to the  Trustee  with  respect  to such  Class of
Certificates in payment of such accrued interest.

           (b) APPLICATION OF INTEREST DRAWINGS. Notwithstanding anything to the
contrary  contained  in  this  Agreement,  (i)  all  payments  received  by  the
Subordination  Agent  in  respect  of an  Interest  Drawing  under  the  Class A
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class  A Cash  Collateral  Account,  and  payable  in each  case to the  Class A
Certificateholders,  shall be promptly distributed to the Class A Trustee,  (ii)
all  payments  received  by the  Subordination  Agent in respect of an  Interest
Drawing  under the Class B Liquidity  Facility and all amounts  withdrawn by the
Subordination  Agent from the Class B Cash  Collateral  Account,  and payable in
each case to the Class B  Certificateholders,  shall be promptly  distributed to
the Class B Trustee and (iii) all payments received by the  Subordination  Agent
in respect of an Interest  Drawing under the Class C Liquidity  Facility and all
amounts  withdrawn by the  Subordination  Agent from the Class C Cash Collateral
Account,  and payable in each case to the Class C  Certificateholders,  shall be
promptly distributed to the Class C Trustee.

           (c) DOWNGRADE DRAWINGS.  If at any time the short-term unsecured debt
rating of any  Liquidity  Provider  issued by either Rating Agency is lower than
the applicable  Threshold Rating,  within 10 days after receiving notice of such
downgrading  (but not later than the expiration  date of the Liquidity  Facility
issued by the downgraded Liquidity Provider (the "DOWNGRADED  FACILITY")),  such
Liquidity  Provider  or  Continental  may arrange  for a  Replacement  Liquidity
Provider  to  issue  and  deliver  a  Replacement   Liquidity  Facility  to  the
Subordination  Agent.  If  a  Downgraded  Facility  has  not  been  replaced  in
accordance with the terms of this paragraph,  the Subordination  Agent shall, on
such 10th day (or if such 10th day is not a Business Day, on the next succeeding
Business Day) (or, if earlier, the expiration date of such Downgraded Facility),



request  a  drawing  in  accordance  with and to the  extent  permitted  by such
Downgraded  Facility (such drawing, a "DOWNGRADE  DRAWING") of all available and
undrawn amounts thereunder.  Amounts drawn pursuant to a Downgrade Drawing shall
be maintained and invested as provided in Section  3.6(f) hereof.  The Liquidity
Provider  may also  arrange for a  Replacement  Liquidity  Provider to issue and
deliver a  Replacement  Liquidity  Facility  at any time  after  such  Downgrade
Drawing so long as such Downgrade Drawing has not been reimbursed in full to the
Liquidity Provider.

           (d) NON-EXTENSION DRAWINGS. If any Liquidity Facility with respect to
any  Class of  Certificates  is  scheduled  to  expire  on a date  (the  "STATED
EXPIRATION  DATE")  prior to the date  that is 15 days  after  the  Final  Legal
Distribution Date for such Class of Certificates, then, no earlier than the 60th
day and no later than the 40th day prior to the then Stated Expiration Date, the
Subordination Agent shall request that such Liquidity Provider extend the Stated
Expiration  Date for a period  of 364 days  after  the  Stated  Expiration  Date
(unless  the  obligations  of such  Liquidity  Provider  thereunder  are earlier
terminated in accordance with such Liquidity  Facility).  The Liquidity Provider
shall  advise the  Borrower,  no earlier  than 40 days and no later than 25 days
prior to such Stated Expiration Date, whether, in its sole discretion, it agrees
to so extend the Stated  Expiration  Date.  If, on or before such 25th day, such
Liquidity  Facility  shall not have been so extended  or replaced in  accordance
with  Section  3.6(e),  or if  the  Liquidity  Provider  fails  irrevocably  and
unconditionally  to advise the  Borrower  on or before the 25th day prior to the
Stated  Expiration Date then in effect that such Stated Expiration Date shall be
so extended,  the  Subordination  Agent  shall,  on such 25th day (or as soon as
possible  thereafter),  in  accordance  with and to the extent  permitted by the
terms of the expiring Liquidity Facility (a "NON-EXTENDED FACILITY"),  request a
drawing under such expiring  Liquidity  Facility (such drawing, a "NON-EXTENSION
DRAWING")  of all  available  and  undrawn  amounts  thereunder.  Amounts  drawn
pursuant  to a  Non-Extension  Drawing  shall  be  maintained  and  invested  in
accordance with Section 3.6(f) hereof.

           (e)  ISSUANCE OF  REPLACEMENT  LIQUIDITY  FACILITY.  (i) At any time,
Continental  may,  at its  option,  with cause or without  cause,  arrange for a
Replacement  Liquidity  Facility to replace any Liquidity Facility for any Class
of Certificates  (including any Replacement Liquidity Facility provided pursuant
to Section  3.6(e)(ii)  hereof);  PROVIDED,  HOWEVER,  that WestLB  shall not be
replaced by  Continental  as a Liquidity  Provider  with respect to any Class of
Certificates  (x) prior to the fifth  anniversary of the Closing Date unless (A)
there shall have become due to WestLB,  or WestLB shall have  demanded,  amounts
pursuant to Section 3.01, 3.02 or 3.03 of any Liquidity  Facility or pursuant to
the Tax Letter and the  replacement  of WestLB  would  reduce or  eliminate  the
obligation  to pay such  amounts or  Continental  determines  in good faith that
there is a substantial  likelihood  that WestLB will have the right to claim any
such amounts (unless WestLB waives,  in writing,  any right it may have to claim
such amounts), which determination shall be set forth in a certificate delivered
by  Continental  to WestLB  setting forth the basis for such  determination  and
accompanied  by an  opinion of  outside  counsel  selected  by  Continental  and
reasonably acceptable to WestLB verifying the legal conclusions, if any, of such
certificate  relating to such basis,  PROVIDED  that,  in the case of any likely
claim for such  amounts  based upon any  proposed,  or proposed  change in, law,
rule,   regulation,   interpretation,   directive,   requirement,   request   or
administrative practice, such opinion may assume the adoption or promulgation of
such proposed matter,  (B) it shall become unlawful or impossible for WestLB (or



its  Lending  Office) to maintain or fund its LIBOR  Advances  as  described  in
Section 3.10 of any Liquidity Facility, (C) the short-term unsecured debt rating
of WestLB is  downgraded  by  Standard & Poor's  from A-1+ to A-1 and there is a
resulting  downgrade  in the  rating  by any  Rating  Agency  of  any  Class  of
Certificates,  (D) any  Liquidity  Facility of WestLB  shall become a Downgraded
Facility or a Non-Extended  Facility or a Downgrade  Drawing or a  Non-Extension
Drawing shall have occurred under any Liquidity Facility of WestLB or (E) WestLB
shall have breached any of its payment (including, without limitation,  funding)
obligations under any Liquidity  Facility and (y) after the fifth anniversary of
the  Closing  Date  unless (A) WestLB is replaced  as  Liquidity  Provider  with
respect to all Classes of  Certificates  or (B) the Liquidity  Facility for such
Class  of  Certificates  shall  become a  Downgraded  Facility  or  Non-Extended
Facility or a Downgrade  Drawing or a Non-Extension  Drawing shall have occurred
under  such  Liquidity  Facility.  If such  Replacement  Liquidity  Facility  is
provided at any time after a Downgrade Drawing or Non-Extension Drawing has been
made,  all funds on deposit in the  relevant  Cash  Collateral  Account  will be
returned to the Liquidity Provider being replaced.

                (ii) If any Liquidity Provider shall determine not to extend any
      of its Liquidity  Facility in accordance  with Section  3.6(d),  then such
      Liquidity Provider may, at its option, arrange for a Replacement Liquidity
      Facility to replace such Liquidity  Facility  during the period no earlier
      than 40 days and no later than 25 days prior to the then effective  Stated
      Expiration Date of such Liquidity Facility.

                (iii) No Replacement  Liquidity Facility arranged by Continental
      or a  Liquidity  Provider in  accordance  with clause (i) or (ii) above or
      pursuant to Section 3.6(c),  respectively,  shall become  effective and no
      such Replacement Liquidity Facility shall be deemed a "Liquidity Facility"
      under  the  Operative  Agreements,  unless  and  until  (A)  each  of  the
      conditions  referred  to in  sub-clauses  (iv)(x) and (z) below shall have
      been  satisfied,   (B)  if  such  Replacement   Liquidity  Facility  shall
      materially adversely affect the rights, remedies, interests or obligations
      of the Class A  Certificateholders,  the Class B Certificateholders or the
      Class C  Certificateholders  under any of the  Operative  Agreements,  the
      applicable Trustee shall have consented,  in writing, to the execution and
      issuance of such Replacement  Liquidity  Facility and (C) in the case of a
      Replacement  Liquidity  Facility  arranged by a Liquidity  Provider  under
      Section  3.6(e)(ii)  or  pursuant  to  Section  3.6(c),  such  Replacement
      Liquidity Facility is acceptable to Continental.

                (iv)  In  connection  with  the  issuance  of  each  Replacement
      Liquidity  Facility,  the  Subordination  Agent  shall  (x)  prior  to the
      issuance  of  such   Replacement   Liquidity   Facility,   obtain  written
      confirmation  from each  Rating  Agency  that such  Replacement  Liquidity
      Facility  will not cause a reduction  of any rating then in effect for any
      Class  of  Certificates  by such  Rating  Agency  (without  regard  to any
      downgrading  of  any  rating  of any  Liquidity  Provider  being  replaced
      pursuant to Section 3.6(c) hereof), (y) pay all Liquidity Obligations then
      owing to the replaced  Liquidity  Provider  (which  payment  shall be made
      first from available funds in the Cash Collateral  Account as described in
      clause  (vii) of Section  3.6(f)  hereof,  and  thereafter  from any other
      available  source,  including,  without  limitation,  a drawing  under the



      Replacement   Liquidity   Facility)  and  (z)  cause  the  issuer  of  the
      Replacement  Liquidity  Facility  to  deliver  the  Replacement  Liquidity
      Facility to the Subordination Agent, together with a legal opinion opining
      that such Replacement  Liquidity Facility is an enforceable  obligation of
      such Replacement Liquidity Provider.

                (v) Upon  satisfaction  of the  conditions  set forth in clauses
      (iii) and (iv) of this Section 3.6(e), (w) the replaced Liquidity Facility
      shall terminate,  (x) the Subordination  Agent shall, if and to the extent
      so requested by  Continental  or the Liquidity  Provider  being  replaced,
      execute and deliver any certificate or other instrument  required in order
      to terminate the replaced Liquidity Facility, shall surrender the replaced
      Liquidity  Facility to the  Liquidity  Provider  being  replaced and shall
      execute and deliver the Replacement  Liquidity Facility and any associated
      Fee Letter, (y) each of the parties hereto shall enter into any amendments
      to this Agreement  necessary to give effect to (1) the  replacement of the
      applicable  Liquidity Provider with the applicable  Replacement  Liquidity
      Provider and (2) the replacement of the applicable Liquidity Facility with
      the  applicable  Replacement  Liquidity  Facility  and (z) the  applicable
      Replacement  Liquidity Provider shall be deemed to be a Liquidity Provider
      with the rights and  obligations  of a Liquidity  Provider  hereunder  and
      under  the  other  Operative  Agreements  and such  Replacement  Liquidity
      Facility  shall be deemed to be a Liquidity  Facility  hereunder and under
      the other Operative Agreements.

           (f) CASH COLLATERAL ACCOUNTS; WITHDRAWALS;  INVESTMENTS. In the event
the  Subordination  Agent  shall draw all  available  amounts  under the Class A
Liquidity  Facility,  the Class B  Liquidity  Facility  or the Class C Liquidity
Facility  pursuant to Section 3.6(c),  3.6(d) or 3.6(i) hereof,  or in the event
amounts are to be deposited in the Cash Collateral Account pursuant to subclause
(B) of clause  "THIRD" of Section  2.4(b),  subclause  (B) of clause  "THIRD" of
Section 3.2 or subclause (B) of clause "FOURTH" of Section 3.3, amounts so drawn
or to be deposited,  as the case may be, shall be deposited by the Subordination
Agent  in the  Class A Cash  Collateral  Account,  the  Class B Cash  Collateral
Account or the Class C Cash  Collateral  Account,  respectively.  All amounts on
deposit in each Cash  Collateral  Account  shall be invested and  reinvested  in
Eligible  Investments  in  accordance  with Section  2.2(b)  hereof.  Investment
Earnings on amounts on deposit in the Cash  Collateral  Account  with respect to
each Liquidity  Facility  shall be deposited in the  Collection  Account on each
Interest Payment Date under such Liquidity Facility and applied on such Interest
Payment Date in  accordance  with Section 3.2, 3.3 or 3.4 (as  applicable).  The
Subordination  Agent shall deliver a written  statement to  Continental  and the
Liquidity Provider one day prior to each Interest Payment Date setting forth the
aggregate amount of Investment  Earnings held in the Cash Collateral Accounts as
of such date. In addition,  from and after the date funds are so deposited,  the
Subordination Agent shall make withdrawals from such account as follows:

                (i) on each Distribution Date, the Subordination Agent shall, to
      the  extent it shall not have  received  funds to pay  accrued  and unpaid
      interest due and owing on the Class A Certificates (at the Stated Interest
      Rate for the Class A  Certificates)  from any other source,  withdraw from



      the Class A Cash Collateral  Account,  and pay to the Class A Trustee,  an
      amount  equal to the lesser of (x) an amount  necessary to pay accrued and
      unpaid interest (at the Stated Interest Rate for the Class A Certificates)
      on such Class A Certificates  and (y) the amount on deposit in the Class A
      Cash Collateral Account;

                (ii) on each Distribution  Date, the Subordination  Agent shall,
      to the extent it shall not have  received  funds to pay accrued and unpaid
      interest due and owing on the Class B Certificates (at the Stated Interest
      Rate for the Class B  Certificates)  from any other source,  withdraw from
      the Class B Cash Collateral  Account,  and pay to the Class B Trustee,  an
      amount  equal to the lesser of (x) an amount  necessary to pay accrued and
      unpaid interest (at the Stated Interest Rate for the Class B Certificates)
      on such Class B Certificates  and (y) the amount on deposit in the Class B
      Cash Collateral Account;

                (iii) on each Distribution Date, the Subordination  Agent shall,
      to the extent it shall not have  received  funds to pay accrued and unpaid
      interest due and owing on the Class C Certificates (at the Stated Interest
      Rate for the Class C  Certificates)  from any other source,  withdraw from
      the Class C Cash Collateral  Account,  and pay to the Class C Trustee,  an
      amount  equal to the lesser of (x) an amount  necessary to pay accrued and
      unpaid interest (at the Stated Interest Rate for the Class C Certificates)
      on such Class C Certificates  and (y) the amount on deposit in the Class C
      Cash Collateral Account;

                (iv) on each date on which the Pool Balance of the Class A Trust
      shall have been reduced by payments made to the Class A Certificateholders
      pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination  Agent shall
      withdraw  from the  Class A Cash  Collateral  Account  such  amount  as is
      necessary  so that,  after  giving  effect  to the  reduction  of the Pool
      Balance on such date (including any such reduction  resulting from a prior
      withdrawal of amounts on deposit in the Class A Cash Collateral Account on
      such  date)  and any  transfer  of  Investment  Earnings  from  such  Cash
      Collateral Account to the Collection Account on such date, an amount equal
      to the sum of the Required  Amount (with  respect to the Class A Liquidity
      Facility)  plus  Investment  Earnings  on deposit in such Cash  Collateral
      Account  will be on deposit  in the Class A Cash  Collateral  Account  and
      shall first,  pay such amount to the relevant  Class A Liquidity  Provider
      until the Liquidity Obligations (with respect to the Class A Certificates)
      owing to such Liquidity Provider shall have been paid in full, and second,
      deposit any remaining amount in the Collection Account;

                (v) on each date on which the Pool  Balance of the Class B Trust
      shall have been reduced by payments made to the Class B Certificateholders
      pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination  Agent shall
      withdraw  from the  Class B Cash  Collateral  Account  such  amount  as is
      necessary  so that,  after  giving  effect  to the  reduction  of the Pool
      Balance on such date (including any such reduction  resulting from a prior
      withdrawal of amounts on deposit in the Class B Cash Collateral Account on
      such  date)  and any  transfer  of  Investment  Earnings  from  such  Cash
      Collateral Account to the Collection Account on such date, an amount equal
      to the sum of the Required  Amount (with  respect to the Class B Liquidity
      Facility)  plus  Investment  Earnings  on deposit in such Cash  Collateral
      Account  will be on deposit  in the Class B Cash  Collateral  Account  and



      shall first,  pay such amount to the relevant  Class B Liquidity  Provider
      until the Liquidity Obligations (with respect to the Class B Certificates)
      owing to such Liquidity Provider shall have been paid in full, and second,
      deposit any remaining amount in the Collection Account;

                (vi) on each date on which the Pool Balance of the Class C Trust
      shall have been reduced by payments made to the Class C Certificateholders
      pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination  Agent shall
      withdraw  from the  Class C Cash  Collateral  Account  such  amount  as is
      necessary  so that,  after  giving  effect  to the  reduction  of the Pool
      Balance on such date (including any such reduction  resulting from a prior
      withdrawal of amounts on deposit in the Class C Cash Collateral Account on
      such  date)  and any  transfer  of  Investment  Earnings  from  such  Cash
      Collateral Account to the Collection Account on such date, an amount equal
      to the sum of the Required  Amount (with  respect to the Class C Liquidity
      Facility)  plus  Investment  Earnings  on deposit in such Cash  Collateral
      Account  will be on deposit  in the Class C Cash  Collateral  Account  and
      shall first,  pay such amount to the relevant  Class C Liquidity  Provider
      until the Liquidity Obligations (with respect to the Class C Certificates)
      owing to such Liquidity Provider shall have been paid in full, and second,
      deposit any remaining amount in the Collection Account;

                (vii)  if a  Replacement  Liquidity  Facility  for any  Class of
      Certificates  shall be delivered to the Subordination  Agent following the
      date on which funds have been deposited into the Cash  Collateral  Account
      for such Class of Certificates, the Subordination Agent shall withdraw all
      amounts  on  deposit in such Cash  Collateral  Account  and shall pay such
      amounts to the replaced Liquidity Provider until all Liquidity Obligations
      owed to such Person  shall have been paid in full,  and shall  deposit any
      remaining amount in the Collection Account; and

                (viii) following the payment of Final Distributions with respect
      to any Class of Certificates, on the date on which the Subordination Agent
      shall  have been  notified  by the  Liquidity  Provider  for such Class of
      Certificates  that  the  Liquidity  Obligations  owed  to  such  Liquidity
      Provider have been paid in full,  the  Subordination  Agent shall withdraw
      all amounts on deposit in the Cash  Collateral  Account in respect of such
      Class of  Certificates  and shall  deposit  such amount in the  Collection
      Account.

           (g)  REINSTATEMENT.  With respect to any Interest  Drawing  under the
Liquidity  Facility  for any Trust,  upon the  reimbursement  of the  applicable
Liquidity  Provider for all or any part of the amount of such Interest  Drawing,
together  with any  accrued  interest  thereon,  the  Available  Amount  of such
Liquidity  Facility shall be reinstated by an amount equal to the amount of such
Interest Drawing so reimbursed to the applicable  Liquidity  Provider but not to
exceed the Stated Amount for such Liquidity Facility;  PROVIDED,  HOWEVER,  that
such  Liquidity  Facility  shall not be so  reinstated in part or in full at any
time if (x) both a Performing  Note  Deficiency  exists and a Liquidity Event of
Default  shall have  occurred  and be  continuing  with  respect to the relevant



Liquidity  Facility or (y) a Final  Drawing  shall have occurred with respect to
such  Liquidity  Facility.  In the event that,  with  respect to any  particular
Liquidity  Facility,  (i) funds are withdrawn from any Cash  Collateral  Account
pursuant  to clause  (i),  (ii) or (iii) of Section  3.6(f)  hereof or (ii) such
Liquidity Facility shall become a Downgraded Facility or a Non-Extended Facility
at a time when unreimbursed Interest Drawings under such Liquidity Facility have
reduced the  Available  Amount  thereunder to zero,  then funds  received by the
Subordination  Agent at any time other than (x) any time when a Liquidity  Event
of Default shall have occurred and be continuing  with respect to such Liquidity
Facility and a Performing Note  Deficiency  exists or (y) any time after a Final
Drawing  shall have occurred with respect to such  Liquidity  Facility  shall be
deposited  in such Cash  Collateral  Account  as and to the extent  provided  in
clause  "THIRD"  of Section  2.4(b),  clause  "THIRD"  of Section  3.2 or clause
"FOURTH" of Section 3.3, as applicable,  and applied in accordance  with Section
3.6(f) hereof.

           (h)  REIMBURSEMENT.  The amount of each drawing  under the  Liquidity
Facilities  shall be due and payable,  together  with interest  thereon,  on the
dates and at the rates, respectively, provided in the Liquidity Facilities.

           (i) FINAL  DRAWING.  Upon  receipt  from a  Liquidity  Provider  of a
Termination  Notice with respect to any Liquidity  Facility,  the  Subordination
Agent shall,  not later than the date specified in such Termination  Notice,  in
accordance  with and to the  extent  permitted  by the  terms of such  Liquidity
Facility,  request a drawing under such Liquidity  Facility of all available and
undrawn  amounts  thereunder (a "FINAL  DRAWING").  Amounts drawn  pursuant to a
Final Drawing shall be maintained and invested in accordance with Section 3.6(f)
hereof.

           (j) REDUCTION OF STATED AMOUNT. Promptly following each date on which
the Required  Amount of the Liquidity  Facility for a Class of  Certificates  is
reduced as a result of a  reduction  in the Pool  Balance  with  respect to such
Certificates,  the  Subordination  Agent shall,  if any such Liquidity  Facility
provides for reductions of the Stated Amount of such  Liquidity  Facility and if
such  reductions  are not automatic,  request such  Liquidity  Provider for such
Class of  Certificates  to reduce such Stated  Amount to an amount  equal to the
Required  Amount with respect to such  Liquidity  Facility (as calculated by the
Subordination  Agent after  giving  effect to such  payment).  Each such request
shall be made in  accordance  with the  provisions of the  applicable  Liquidity
Facility.

           (k) RELATION TO SUBORDINATION PROVISIONS. Interest Drawings under the
Liquidity Facilities and withdrawals from the Cash Collateral Accounts,  in each
case,  in  respect  of  interest  on the  Certificates  of any  Class,  will  be
distributed  to the  Trustee  for such  Class of  Certificates,  notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.

           (l) ASSIGNMENT OF LIQUIDITY FACILITY.  The Subordination Agent agrees
not to consent to the assignment by any Liquidity  Provider of any of its rights
or obligations under any Liquidity Facility or any interest therein,  unless (i)
Continental  shall have  consented  to such  assignment,  such consent not to be
unreasonably withheld, and (ii) each Rating Agency shall have provided a Ratings
Confirmation in respect of such assignment.



                                   ARTICLE IV

                              EXERCISE OF REMEDIES

           SECTION 4.1. DIRECTIONS FROM THE CONTROLLING PARTY. (a) (i) Following
the occurrence  and during the  continuation  of an Indenture  Default under any
Indenture,  the Controlling Party shall direct the Subordination Agent, which in
turn shall  direct the Loan  Trustee  under such  Indenture,  in the exercise of
remedies available to the holders of the Equipment Notes issued pursuant to such
Indenture, including, without limitation, the ability to vote all such Equipment
Notes in favor of  Accelerating  such  Equipment  Notes in  accordance  with the
provisions  of such  Indenture.  Subject  to the Owner  Trustees'  and the Owner
Participants' rights, if any, to purchase the Equipment Notes and the provisions
of the next  paragraph,  if the Equipment Notes issued pursuant to any Indenture
have been Accelerated  following an Indenture Default with respect thereto,  the
Controlling Party may sell, assign, contract to sell or otherwise dispose of and
deliver  all (but not less than all) of such  Equipment  Notes to any  Person at
public or private sale, at any location at the option of the Controlling  Party,
all upon such  terms and  conditions  as it may  reasonably  deem  advisable  in
accordance with applicable law.

           (ii)  Subject  to the Owner  Trustees'  and the  Owner  Participants'
      rights, if any, to purchase the Equipment Notes, and  notwithstanding  the
      foregoing,  so long \as any Certificates  remain  Outstanding,  during the
      period  ending on the date which is nine  months  after the earlier of (x)
      the  Acceleration  of the Equipment Notes issued pursuant to any Indenture
      or (y) the  occurrence  of a  Continental  Bankruptcy  Event,  without the
      consent  of each  Trustee,  (A) no  Aircraft  subject  to the Lien of such
      Indenture or such  Equipment  Notes may be sold if the net  proceeds  from
      such sale would be less than the Minimum  Sale Price for such  Aircraft or
      such  Equipment  Notes,  and (B) the amount and  payment  dates of rentals
      payable  by  Continental  under  the Lease  for such  Aircraft  may not be
      adjusted, if, as a result of such adjustment, the discounted present value
      of all such rentals would be less than 75% of the discounted present value
      of the  rentals  payable by  Continental  under such Lease  before  giving
      effect  to such  adjustment,  in each  case,  using the  weighted  average
      interest rate of the Equipment  Notes issued pursuant to such Indenture as
      the discount rate.

           (iii) At the  request of the  Controlling  Party,  the  Subordination
      Agent may from time to time during the continuance of an Indenture Default
      (and  before  the  occurrence  of  a  Triggering   Event)  commission  LTV
      Appraisals with respect to the Aircraft subject to such Indenture.

           (iv) After a Triggering Event occurs and any Equipment Note becomes a
      Non-Performing  Equipment  Note,  the  Subordination  Agent  shall  obtain
      Appraisals  with respect to all of the Aircraft (the "LTV  APPRAISALS") as
      soon as  practicable  and  additional  LTV  Appraisals on or prior to each
      anniversary of the date of such initial LTV  Appraisals;  provided that if
      the  Controlling  Party  reasonably  objects to the appraised value of the
      Aircraft shown in such LTV Appraisals,  the  Controlling  Party shall have



      the right to  obtain or cause to be  obtained  substitute  LTV  Appraisals
      (including  any LTV  Appraisals  based  upon  physical  inspection  of the
      Aircraft).

           (b)  The  Controlling  Party  shall  take  such  actions  as  it  may
reasonably deem most effectual to complete the sale or other disposition of such
Aircraft or  Equipment  Notes.  In  addition,  in lieu of any sale,  assignment,
contract  to sell or other  disposition,  the  Controlling  Party  may  maintain
possession  of such  Equipment  Notes and continue to apply  monies  received in
respect of such  Equipment  Notes in  accordance  with  Article III  hereof.  In
addition,  in  lieu  of  such  sale,  assignment,  contract  to  sell  or  other
disposition, or in lieu of such maintenance of possession, the Controlling Party
may, subject to the terms and conditions of the related Indenture,  instruct the
Loan  Trustee  under such  Indenture  to  foreclose  on the Lien on the  related
Aircraft.

           SECTION 4.2.  REMEDIES  CUMULATIVE.  Each and every right,  power and
remedy given to the Trustees, the Liquidity Providers,  the Controlling Party or
the  Subordination  Agent  specifically  or otherwise in this Agreement shall be
cumulative  and shall be in  addition  to every  other  right,  power and remedy
herein  specifically  given or now or hereafter existing at law, in equity or by
statute,  and each and every right, power and remedy whether specifically herein
given or otherwise  existing  may,  subject  always to the terms and  conditions
hereof,  be exercised from time to time and as often and in such order as may be
deemed expedient by any Trustee,  any Liquidity Provider,  the Controlling Party
or the Subordination Agent, as appropriate, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the
right to  exercise  at the same time or  thereafter  any other  right,  power or
remedy.  No delay or  omission  by any  Trustee,  any  Liquidity  Provider,  the
Controlling  Party or the  Subordination  Agent in the  exercise  of any  right,
remedy or power or in the  pursuit of any remedy  shall  impair any such  right,
power or  remedy  or be  construed  to be a waiver  of any  default  or to be an
acquiescence therein.

           SECTION 4.3. DISCONTINUANCE OF PROCEEDINGS. In case any party to this
Agreement  (including  the  Controlling  Party  in  such  capacity)  shall  have
instituted  any  Proceeding  to enforce  any right,  power or remedy  under this
Agreement by foreclosure,  entry or otherwise,  and such  Proceeding  shall have
been  discontinued  or  abandoned  for any reason or shall have been  determined
adversely to the Person instituting such Proceeding, then and in every such case
each such party  shall,  subject to any  determination  in such  Proceeding,  be
restored to its former position and rights hereunder,  and all rights,  remedies
and  powers of such  party  shall  continue  as if no such  Proceeding  had been
instituted.

           SECTION 4.4. RIGHT OF  CERTIFICATEHOLDERS  TO RECEIVE PAYMENTS NOT TO
BE IMPAIRED.  Anything in this  Agreement to the  contrary  notwithstanding  but
subject  to each  Trust  Agreement,  the right of any  Certificateholder  or any
Liquidity  Provider,  respectively,  to receive  payments  hereunder  (including
without  limitation  pursuant to Section 2.4, 3.2 or 3.3 hereof) when due, or to
institute  suit  for  the  enforcement  of any  such  payment  on or  after  the
applicable  Distribution  Date,  shall not be impaired  or affected  without the
consent of such Certificateholder or such Liquidity Provider, respectively.



           SECTION  4.5.  UNDERTAKING  FOR  COSTS.  In any  Proceeding  for  the
enforcement  of any right or remedy under this  Agreement  or in any  Proceeding
against any Controlling Party or the Subordination Agent for any action taken or
omitted by it as Controlling Party or Subordination Agent, as the case may be, a
court in its discretion may require the filing by any party litigant in the suit
of an  undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs,  including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party  litigant.  The  provisions of
this Section do not apply to a suit  instituted by the  Subordination  Agent,  a
Liquidity  Provider or a Trustee or a suit by  Certificateholders  holding  more
than 10% of the original principal amount of any Class of Certificates.


                                    ARTICLE V

                       DUTIES OF THE SUBORDINATION AGENT;
                          AGREEMENTS OF TRUSTEES, ETC.

           SECTION 5.1. NOTICE OF INDENTURE  DEFAULT OR TRIGGERING EVENT. (a) In
the event the Subordination  Agent shall have actual knowledge of the occurrence
of an Indenture Default or a Triggering  Event, as promptly as practicable,  and
in any event within 10 days after obtaining knowledge thereof, the Subordination
Agent shall  transmit by mail or courier to the Rating  Agencies,  the Liquidity
Providers and the Trustees notice of such Indenture Default or Triggering Event,
unless  such  Indenture  Default or  Triggering  Event  shall have been cured or
waived.  For all purposes of this Agreement,  in the absence of actual knowledge
on the part of a  Responsible  Officer,  the  Subordination  Agent  shall not be
deemed to have  knowledge of any Indenture  Default or  Triggering  Event unless
notified in writing by one or more Trustees,  one or more Liquidity Providers or
one or more Certificateholders.

           (b) OTHER  NOTICES.  The  Subordination  Agent  will  furnish to each
Liquidity  Provider and Trustee,  promptly upon receipt  thereof,  duplicates or
copies of all  reports,  notices,  requests,  demands,  certificates,  financial
statements  and  other  instruments  furnished  to the  Subordination  Agent  as
registered  holder  of the  Equipment  Notes or  otherwise  in its  capacity  as
Subordination  Agent to the  extent  the same  shall  not  have  been  otherwise
directly  distributed  to such  Liquidity  Provider or Trustee,  as  applicable,
pursuant to the express provision of any other Operative Agreement.

           SECTION 5.2.  INDEMNIFICATION.  The Subordination  Agent shall not be
required to take any action or refrain from taking any action under  Section 5.1
(other  than the  first  sentence  thereof)  or  Article  IV hereof  unless  the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability,  cost
or expense  (including  counsel  fees and  expenses)  which may be  incurred  in
connection therewith.  The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing  contained in this Agreement
shall  require  the  Subordination  Agent to  expend  or risk  its own  funds or
otherwise incur any financial  liability in the performance of any of its duties
hereunder  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 or liability is not  reasonably  assured to it. The
Subordination  Agent shall not be required to take any action under  Section 5.1
(other  than the first  sentence  thereof)  or Article IV hereof,  nor shall any
other   provision  of  this  Agreement  be  deemed  to  impose  a  duty  on  the
Subordination  Agent to take any action, if the  Subordination  Agent shall have
been  advised by counsel  that such action is contrary to the terms hereof or is
otherwise contrary to law.

           SECTION  5.3.  NO  DUTIES   EXCEPT  AS  SPECIFIED  IN   INTERCREDITOR
AGREEMENT. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection  with, this Agreement,
except as  expressly  provided  by the terms of this  Agreement;  and no implied
duties  or  obligations   shall  be  read  into  this   Agreement   against  the
Subordination  Agent.  The  Subordination  Agent  agrees  that it  will,  in its
individual  capacity  and at its own cost and expense  (but without any right of
indemnity  in respect of any such cost or expense  under  Section  7.1  hereof),
promptly take such action as may be necessary to duly discharge all Liens on any
of the Trust Accounts or any monies  deposited  therein which result from claims
against it in its individual capacity not related to its activities hereunder or
any other Operative Agreement.

           SECTION 5.4. Notice from the Liquidity Providers and Trustees. If any
Liquidity Provider or Trustee has notice of an Indenture Default or a Triggering
Event,  such Person shall  promptly give notice  thereof to all other  Liquidity
Providers and Trustees and to the Subordination Agent,  PROVIDED,  HOWEVER, that
no such Person shall have any liability  hereunder as a result of its failure to
deliver any such notice.


                                   ARTICLE VI

                            THE SUBORDINATION AGENT

           SECTION 6.1. AUTHORIZATION;  ACCEPTANCE OF TRUSTS AND DUTIES. Each of
the  Class A  Trustee,  the  Class B  Trustee  and the  Class C  Trustee  hereby
designates and appoints the Subordination Agent as the agent and trustee of such
Trustee under the applicable Liquidity Facility and authorizes the Subordination
Agent to enter into the applicable  Liquidity  Facility as agent and trustee for
such Trustee. Each of the Liquidity Providers and the Trustees hereby designates
and  appoints  the  Subordination  Agent as the  Subordination  Agent under this
Agreement.  WTC hereby accepts the duties hereby created and applicable to it as
the  Subordination  Agent and agrees to perform the same but only upon the terms
of this  Agreement and agrees to receive and disburse all monies  received by it
in  accordance  with the terms  hereof.  The  Subordination  Agent  shall not be
answerable  or  accountable  under  any  circumstances,  except  (a) for its own
willful  misconduct or gross negligence (or ordinary  negligence in the handling
of funds),  (b) as provided in Section 2.2 hereof and (c) for  liabilities  that
may result from the material inaccuracy of any representation or warranty of the
Subordination Agent made in its individual capacity in any Operative  Agreement.
The  Subordination  Agent shall not be liable for any error of judgment  made in
good faith by a Responsible  Officer of the  Subordination  Agent,  unless it is
proved that the Subordination  Agent was negligent in ascertaining the pertinent
facts.



           SECTION 6.2. ABSENCE OF DUTIES. The Subordination Agent shall have no
duty to see to any recording or filing of this Agreement or any other  document,
or to see to the maintenance of any such recording or filing.

           SECTION 6.3. NO  REPRESENTATIONS  OR WARRANTIES AS TO DOCUMENTS.  The
Subordination Agent in its individual capacity does not make nor shall be deemed
to have made any  representation  or  warranty as to the  validity,  legality or
enforceability  of this Agreement or any other Operative  Agreement or as to the
correctness  of  any  statement  contained  in  any  thereof,   except  for  the
representations  and  warranties  of  the  Subordination   Agent,  made  in  its
individual  capacity,  under any Operative Agreement to which it is a party. The
Certificateholders,   the  Trustees  and  the   Liquidity   Providers   make  no
representation or warranty hereunder whatsoever.

           SECTION 6.4. NO SEGREGATION OF MONIES;  NO INTEREST.  Any monies paid
to or retained by the  Subordination  Agent pursuant to any provision hereof and
not then required to be distributed to any Trustee or any Liquidity  Provider as
provided  in  Articles  II and III  hereof or  deposited  into one or more Trust
Accounts need not be  segregated in any manner except to the extent  required by
such  Articles  II and III and by law,  and the  Subordination  Agent  shall not
(except as otherwise  provided in Section 2.2 hereof) be liable for any interest
thereon;  PROVIDED,  HOWEVER, that any payments received or applied hereunder by
the  Subordination  Agent shall be accounted for by the  Subordination  Agent so
that any portion  thereof paid or applied  pursuant hereto shall be identifiable
as to the source thereof.

           SECTION 6.5. RELIANCE;  AGENTS;  ADVICE OF COUNSEL. The Subordination
Agent  shall  not incur  liability  to  anyone  in  acting  upon any  signature,
instrument,  notice, resolution,  request, consent, order, certificate,  report,
opinion,  bond or other  document  or paper  believed  by it to be  genuine  and
believed  by it to be  signed by the  proper  party or  parties.  As to the Pool
Balance  of any  Trust  as of any  date,  the  Subordination  Agent  may for all
purposes hereof rely on a certificate  signed by any Responsible  Officer of the
applicable Trustee, and such certificate shall constitute full protection to the
Subordination  Agent for any  action  taken or omitted to be taken by it in good
faith in reliance  thereon.  As to any fact or matter  relating to the Liquidity
Providers  or  the  Trustees  the  manner  of  ascertainment  of  which  is  not
specifically  described  herein,  the  Subordination  Agent may for all purposes
hereof  rely  on a  certificate,  signed  by  any  Responsible  Officer  of  the
applicable Liquidity Provider or Trustee, as the case may be, as to such fact or
matter,   and  such   certificate   shall  constitute  full  protection  to  the
Subordination  Agent for any  action  taken or omitted to be taken by it in good
faith in reliance thereon.  The Subordination  Agent shall assume,  and shall be
fully  protected in assuming,  that each of the Liquidity  Providers and each of
the Trustees are  authorized to enter into this Agreement and to take all action
to be taken by them  pursuant to the  provisions  hereof,  and shall not inquire
into  the  authorization  of each of the  Liquidity  Providers  and  each of the
Trustees with respect thereto.  In the  administration  of the trusts hereunder,
the  Subordination  Agent may  execute  any of the  trusts or powers  hereof and
perform its powers and duties hereunder  directly or through agents or attorneys



and may  consult  with  counsel,  accountants  and other  skilled  persons to be
selected and retained by it, and the Subordination Agent shall not be liable for
the acts or omissions of any agent appointed with due care or for anything done,
suffered or omitted in good faith by it in accordance with the advice or written
opinion of any such counsel, accountants or other skilled persons.

           SECTION 6.6. CAPACITY IN WHICH ACTING.  The Subordination  Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.

           SECTION 6.7. COMPENSATION.  The Subordination Agent shall be entitled
to  reasonable  compensation,  including  expenses  and  disbursements,  for all
services  rendered  hereunder and shall have a priority  claim to the extent set
forth in Article III hereof on all monies collected hereunder for the payment of
such  compensation,  to the extent that such  compensation  shall not be paid by
others.  The Subordination  Agent agrees that it shall have no right against any
Trustee or Liquidity  Provider for any fee as  compensation  for its services as
agent under this Agreement. The provisions of this Section 6.7 shall survive the
termination of this Agreement.

           SECTION 6.8. MAY BECOME CERTIFICATEHOLDER.  The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and  benefits  of a  Certificateholder  to the same extent as if it were not the
institution acting as the Subordination Agent.

           SECTION 6.9. SUBORDINATION AGENT REQUIRED;  ELIGIBILITY.  There shall
at all times be a  Subordination  Agent  hereunder  which shall be a corporation
organized and doing  business  under the laws of the United States of America or
of any State or the District of Columbia  having a combined  capital and surplus
of at least $100,000,000 (or 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 of America, any
State  thereof or of the District of Columbia and having a combined  capital and
surplus of at least  $100,000,000),  if there is such an institution willing and
able to perform the duties of the Subordination  Agent hereunder upon reasonable
or customary terms. Such corporation shall be a citizen of the United States and
shall be authorized  under the laws of the United States or any State thereof or
of the  District of Columbia to  exercise  corporate  trust  powers and shall be
subject to supervision or examination by federal,  state or District of Columbia
authorities.  If such  corporation  publishes  reports  of  condition  at  least
annually,  pursuant  to  law  or to the  requirements  of  any of the  aforesaid
supervising  or examining  authorities,  then,  for the purposes of this Section
6.9, 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
condition so published.

           In case  at any  time  the  Subordination  Agent  shall  cease  to be
eligible in accordance  with the provisions of this Section,  the  Subordination
Agent shall resign  immediately  in the manner and with the effect  specified in
Section 8.1.

           SECTION 6.10. MONEY TO BE HELD IN TRUST. All Equipment Notes,  monies
and other property deposited with or held by the Subordination Agent pursuant to
this Agreement shall be held in trust for the benefit of the parties entitled to
such Equipment  Notes,  monies and other  property.  All such  Equipment  Notes,
monies  or  other  property  shall  be  held  in  the  Trust  Department  of the
institution acting as Subordination Agent hereunder.



                                   ARTICLE VII

                     INDEMNIFICATION OF SUBORDINATION AGENT

           SECTION 7.1. SCOPE OF INDEMNIFICATION.  The Subordination Agent shall
be indemnified  hereunder to the extent and in the manner described in Section 9
of the Participation  Agreements.  The indemnities contained in such Sections of
such agreements shall survive the termination of this Agreement.


                                  ARTICLE VIII

                         SUCCESSOR SUBORDINATION AGENT

           SECTION 8.1.  REPLACEMENT  OF  SUBORDINATION  AGENT;  APPOINTMENT  OF
      SUCCESSOR.  The Subordination Agent may resign at any time by so notifying
      the Trustees and the Liquidity Providers. The Controlling Party may remove
      the Subordination  Agent for cause by so notifying the Subordination Agent
      and may appoint a successor  Subordination  Agent.  The Controlling  Party
      shall remove the Subordination Agent if:

           (1) the Subordination Agent fails to comply with Section 6.9 hereof;

           (2) the Subordination Agent is adjudged bankrupt or insolvent;

           (3)  a  receiver  or  other  public   officer  takes  charge  of  the
      Subordination Agent or its property; or

           (4) the Subordination Agent otherwise becomes incapable of acting.

           If the  Subordination  Agent  resigns  or is  removed or if a vacancy
exists in the office of  Subordination  Agent for any reason (the  Subordination
Agent in such  event  being  referred  to herein as the  retiring  Subordination
Agent),  the Controlling Party shall promptly appoint a successor  Subordination
Agent.

           A  successor   Subordination   Agent  shall  deliver  (x)  a  written
acceptance of its appointment as  Subordination  Agent hereunder to the retiring
Subordination  Agent and (y) a written  assumption of its obligations  hereunder
and  under  each  Liquidity  Facility  to each  party  hereto,  upon  which  the
resignation  or  removal  of  the  retiring  Subordination  Agent  shall  become
effective,  and the  successor  Subordination  Agent  shall have all the rights,
powers and duties of the Subordination Agent under this Agreement. The successor
Subordination  Agent  shall  mail a notice of its  succession  to the  Liquidity
Providers  and the Trustees.  The retiring  Subordination  Agent shall  promptly
transfer  its  rights  under  each of the  Liquidity  Facilities  and all of the
property held by it as Subordination Agent to the successor Subordination Agent.

           If a successor  Subordination  Agent does not take  office  within 60
days after the retiring  Subordination Agent resigns or is removed, the retiring



Subordination  Agent or one or more of the  Trustees  may  petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.

           If the  Subordination  Agent fails to comply with  Section 6.9 hereof
(to the extent  applicable),  one or more of the  Trustees or one or more of the
Liquidity  Providers  may petition any court of competent  jurisdiction  for the
removal  of  the  Subordination   Agent  and  the  appointment  of  a  successor
Subordination Agent.

           Notwithstanding  the  foregoing,  no  resignation  or  removal of the
Subordination  Agent shall be  effective  unless and until a successor  has been
appointed.  No appointment of a successor Subordination Agent shall be effective
unless  and  until  the  Rating   Agencies   shall  have   delivered  a  Ratings
Confirmation.


                                   ARTICLE IX

                           SUPPLEMENTS AND AMENDMENTS

           SECTION 9.1. AMENDMENTS,  WAIVERS, ETC. (a) This Agreement may not be
supplemented,  amended or modified  without the consent of each Trustee (acting,
except in the case of any amendment pursuant to Section  3.6(e)(v)(y) hereof and
the last  sentence  of this  Section  9.1(a),  with the  consent  of  holders of
Certificates  of the related  Class  evidencing  interests in the related  Trust
aggregating  not less than a majority in interest in such Trust or as  otherwise
authorized  pursuant to the relevant Trust Agreement),  the Subordination  Agent
and each  Liquidity  Provider;  PROVIDED,  HOWEVER,  that this  Agreement may be
supplemented,  amended or  modified  without  the consent of any Trustee if such
supplement,  amendment or modification  cures an ambiguity or  inconsistency  or
does not materially  adversely affect such Trustee or the holders of the related
Class of  Certificates;  PROVIDED  FURTHER,  HOWEVER,  that, if such supplement,
amendment or modification  would (x) directly or indirectly modify or supersede,
or otherwise conflict with, Section 2.2(b), Section 3.6(e), Section 3.6(f)(other
than the last  sentence  thereof),  Section  3.6(l),  the last  sentence of this
Section   9.1(a),   the  second   sentence  of  Section  10.6  or  this  proviso
(collectively,  the "CONTINENTAL  Provisions") or (y) otherwise adversely affect
the interests of a potential  Replacement  Liquidity  Provider or of Continental
with respect to its ability to replace any Liquidity Facility or with respect to
its payment  obligations  under any Operative  Agreement,  then such supplement,
amendment or modification  shall not be effective without the additional written
consent of Continental.  Notwithstanding  the foregoing,  without the consent of
each Certificateholder and each Liquidity Provider, no supplement,  amendment or
modification  of this Agreement may (i) reduce the percentage of the interest in
any Trust  evidenced  by the  Certificates  issued by such  Trust  necessary  to
consent  to  modify  or  amend  any  provision  of this  Agreement  or to  waive
compliance therewith or (ii) modify Section 2.4, 3.2 or 3.3 hereof,  relating to
the  distribution of monies received by the  Subordination  Agent hereunder from
the Equipment Notes or pursuant to the Liquidity  Facilities.  Nothing contained
in this Section shall require the consent of a Trustee at any time following the
payment  of  Final   Distributions   with  respect  to  the  related   Class  of
Certificates.  If the Replacement  Liquidity Facility for any Liquidity Facility
in  accordance  with Section  3.6(e)  hereof is to be comprised of more than one



instrument as contemplated by the definition of the term "Replacement  Liquidity
Facility",  then each of the parties  hereto  agrees to amend this  Agreement to
incorporate  appropriate  mechanics  for multiple  Liquidity  Facilities  for an
individual Trust.

           (b) In the event  that the  Subordination  Agent,  as the  registered
holder of any  Equipment  Notes,  receives  a  request  for its  consent  to any
amendment,  modification,  consent or waiver  under such  Equipment  Notes,  the
Indenture  pursuant to which such  Equipment  Notes were issued,  or the related
Lease,  Participation  Agreement or other related document,  (i) if no Indenture
Default shall have occurred and be  continuing  with respect to such  Indenture,
the Subordination  Agent shall request directions with respect to each Series of
such  Equipment  Notes from the Trustee of the Trust which holds such  Equipment
Notes and shall  vote or  consent  in  accordance  with the  directions  of such
Trustee  and (ii) if any  Indenture  Default  (which  has not been  cured by the
applicable  Owner Trustee or the applicable  Owner  Participant,  if applicable,
pursuant  to  Section  4.03  of  such  Indenture)  shall  have  occurred  and be
continuing with respect to such Indenture, the Subordination Agent will exercise
its voting rights as directed by the Controlling Party,  subject to Sections 4.1
and 4.4 hereof;  provided that no such amendment,  modification or waiver shall,
without  the  consent  of each  Liquidity  Provider,  reduce the amount of rent,
supplemental  rent or stipulated  loss values payable by  Continental  under any
Lease.

           SECTION 9.2.  SUBORDINATION  AGENT  PROTECTED.  If, in the reasonable
opinion of the institution  acting as the  Subordination  Agent  hereunder,  any
document  required to be  executed  pursuant to the terms of Section 9.1 affects
any right,  duty,  immunity or indemnity with respect to it under this Agreement
or any Liquidity Facility, the Subordination Agent may in its discretion decline
to execute such document.

           SECTION 9.3. EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of
any amendment,  consent or supplement hereto pursuant to the provisions  hereof,
this Agreement shall be and be deemed to be and shall be modified and amended in
accordance   therewith  and  the  respective  rights,   limitations  of  rights,
obligations,  duties and  immunities  under this Agreement of the parties hereto
and beneficiaries hereof shall thereafter be determined,  exercised and enforced
hereunder subject in all respects to such modifications and amendments,  and all
the terms and  conditions  of any such  supplemental  agreement  shall be and be
deemed to be and shall be part of the terms and conditions of this Agreement for
any and all  purposes.  In  executing or accepting  any  supplemental  agreement
permitted  by this  Article  IX, the  Subordination  Agent  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  9.4.  NOTICE  TO RATING  AGENCIES.  Promptly  following  its
receipt  of  each  amendment,  consent,   modification,   supplement  or  waiver
contemplated  by this  Article  IX, the  Subordination  Agent  shall send a copy
thereof to each Rating Agency.



                                    ARTICLE X

                                 MISCELLANEOUS

           SECTION  10.1.  TERMINATION  OF  INTERCREDITOR  AGREEMENT.  Following
payment of Final  Distributions  with respect to each Class of Certificates  and
the payment in full of all Liquidity  Obligations to the Liquidity Providers and
PROVIDED   that   there   shall   then   be  no   other   amounts   due  to  the
Certificateholders,  the Trustees, the Liquidity Providers and the Subordination
Agent  hereunder or under the Trust  Agreements,  and that the commitment of the
Liquidity  Providers under the Liquidity  Facilities  shall have expired or been
terminated,  this Agreement and the trusts  created  hereby shall  terminate and
this  Agreement  shall be of no further force or effect.  Except as aforesaid or
otherwise provided,  this Agreement and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.

           SECTION  10.2.  INTERCREDITOR  AGREEMENT  FOR  BENEFIT  OF  TRUSTEES,
LIQUIDITY  PROVIDERS  AND  SUBORDINATION   AGENT  SECTION  10.2.   Intercreditor
Agreement for Benefit of Trustees,  Liquidity Providers and Subordination Agent.
Subject to the second  sentence of Section  10.6 and the  provisions  of Section
4.4, nothing in this Agreement,  whether express or implied,  shall be construed
to give to any Person other than the Trustees,  the Liquidity  Providers and the
Subordination  Agent any legal or equitable  right,  remedy or claim under or in
respect of this Agreement.

           SECTION  10.3.  NOTICES.  Unless  otherwise  expressly  specified  or
permitted by the terms hereof, all notices, requests,  demands,  authorizations,
directions,  consents,  waivers  or  documents  provided  or  permitted  by this
Agreement to be made, given,  furnished or filed shall be in writing,  mailed by
certified mail, postage prepaid, or by confirmed telecopy and

           (i)    if to the Subordination Agent, addressed to at its office at:

                  WILMINGTON TRUST COMPANY
                  One Rodney Square
                  1100 N. Market Street
                  Wilmington, DE  19890-0001

                  Attention:  Corporate Trust Trustee
                                Administration
                  Telecopy:  (302) 651-8882

           (ii)   if to any Trustee, addressed to it at its office at:

                  WILMINGTON TRUST COMPANY
                  One Rodney Square
                  1100 N. Market Street
                  Wilmington, DE  19890-0001

                  Attention:  Corporate Trust Trustee
                                Administration



                  Telecopy:  (302) 651-8882

           (iii)  if to WestLB as Liquidity Provider, addressed to it at its 
                  office at:

                  Westdeutsche Landesbank Girozentrale
                  Global Structured Finance
                  1211 Avenue of the Americas
                  New York, NY 10036

                  Attention: Alfred Heynen
                  Telephone: (212) 852-6115
                  Telecopy: (212) 869-7634

                  with a copy to:

                  Westdeutsche Landesbank Girozentrale
                  Loan Administration
                  1211 Avenue of the Americas
                  New York, NY 10036

                  Attention: Cheryl Wilson
                  Telephone: (212) 852-6152
                  Telecopy: (212) 302-7946

Whenever  any  notice in  writing  is  required  to be given by any  Trustee  or
Liquidity Provider or the Subordination  Agent to any of the other of them, such
notice shall be deemed given and such requirement  satisfied when such notice is
received. Any party hereto may change the address to which notices to such party
will be sent by giving  notice  of such  change  to the  other  parties  to this
Agreement.

           SECTION 10.4. SEVERABILITY.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

           SECTION 10.5. NO ORAL MODIFICATIONS OR CONTINUING  WAIVERS.  No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom  enforcement  of the change,  waiver,  discharge or  termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.

           SECTION 10.6. SUCCESSORS AND ASSIGNS67.  All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the  successors and assigns of each, all as herein  provided.



In  addition,   the  Continental  Provisions  shall  inure  to  the  benefit  of
Continental  and its  successors  and assigns,  and (without  limitation  of the
foregoing) Continental is hereby constituted, and agreed to be, an express third
party beneficiary of the Continental Provisions.

           SECTION  10.7.  HEADINGS.  The  headings of the various  Articles and
Sections  herein  and in the table of  contents  hereto are for  convenience  of
reference  only and  shall not  define  or limit any of the terms or  provisions
hereof.

           SECTION 10.8. COUNTERPART FORM. This Agreement may be executed by the
parties  hereto in separate  counterparts,  each of which when so  executed  and
delivered  shall  be an  original,  but all  such  counterparts  shall  together
constitute but one and the same agreement.

           SECTION 10.9. SUBORDINATION.  (a) As between the Liquidity Providers,
on the one hand, and the Trustees and the Certificateholders, on the other hand,
this Agreement shall be a subordination agreement for purposes of Section 510 of
the United States Bankruptcy Code, as amended from time to time.

           (b) Notwithstanding the provisions of this Agreement, if prior to the
payment in full to the Liquidity Providers of all Liquidity Obligations then due
and payable, any party hereto shall have received any payment or distribution in
respect of Equipment  Notes or any other amount  under the  Indentures  or other
Operative  Agreements which, had the subordination  provisions of this Agreement
been properly applied to such payment,  distribution or other amount,  would not
have been distributed to such Person,  then such payment,  distribution or other
amount  shall be  received  and held in trust by such  Person  and paid  over or
delivered to the Subordination Agent for application as provided herein.

           (c) If any Trustee, any Liquidity Provider or the Subordination Agent
receives any payment in respect of any  obligations  owing hereunder (or, in the
case of the Liquidity Providers, in respect of the Liquidity Obligations), which
is subsequently invalidated, declared preferential, set aside and/or required to
be repaid to a trustee,  receiver or other  party,  then,  to the extent of such
payment,  such  obligations  (or, in the case of the Liquidity  Providers,  such
Liquidity Obligations) intended to be satisfied shall be revived and continue in
full force and effect as if such payment had not been received.

           (d)  The  Trustees  (on  behalf  of  themselves  and the  holders  of
Certificates),  the Liquidity Providers and the Subordination Agent confirm that
the payment priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all
circumstances,  notwithstanding  the  fact  that  the  obligations  owed  to the
Trustees and the holders of  Certificates  are secured by certain assets and the
Liquidity  Obligations may not be so secured.  The Trustees  expressly agree (on
behalf of themselves  and the holders of  Certificates)  not to assert  priority
over the  holders  of  Liquidity  Obligations  due to their  status  as  secured
creditors in any bankruptcy, insolvency or other legal proceeding.

           (e) Each of the Trustees (on behalf of themselves  and the holders of
Certificates),  the Liquidity Providers and the Subordination Agent may take any
of the following actions without impairing its rights under this Agreement:



                (i) obtain a Lien on any property to secure any amounts owing to
      it  hereunder,  including,  in the case of the  Liquidity  Providers,  the
      Liquidity Obligations,

                (ii) obtain the  primary or  secondary  obligation  of any other
      obligor with respect to any amounts owing to it hereunder,  including,  in
      the case of the Liquidity Providers, any of the Liquidity Obligations,

                (iii)  renew,  extend,  increase,  alter or exchange any amounts
      owing to it hereunder,  including, in the case of the Liquidity Providers,
      any of the Liquidity Obligations,  or release or compromise any obligation
      of any obligor with respect thereto,

                (iv) refrain from  exercising  any right or remedy,  or delay in
      exercising such right or remedy, which it may have, or

                (v) take any other action which might  discharge a  subordinated
      party or a surety under applicable law;

PROVIDED,  HOWEVER,  that the taking of any such actions by any of the Trustees,
the  Liquidity  Providers or the  Subordination  Agent shall not  prejudice  the
rights or  adversely  affect  the  obligations  of any other  party  under  this
Agreement.

           SECTION 10.10. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

           SECTION  10.11.  SUBMISSION  TO  JURISDICTION;  WAIVER OF JURY TRIAL;
WAIVER OF  IMMUNITY.  (a) Each of the  parties  hereto  hereby  irrevocably  and
unconditionally:

                (i) submits for itself and its  property in any legal  action or
      proceeding relating to this Agreement or any other Operative Agreement, or
      for  recognition  and  enforcement  of any  judgment in respect  hereof or
      thereof,  to the  nonexclusive  general  jurisdiction of the courts of the
      State of New York,  the  courts of the United  States of  America  for the
      Southern District of New York, and the appellate courts from any thereof;

                (ii) consents that any such action or proceeding  may be brought
      in such courts, and waives any objection that it may now or hereafter have
      to the venue of any such  action or  proceeding  in any such court or that
      such action or proceeding was brought in an inconvenient  court and agrees
      not to plead or claim the same;

                (iii)  agrees  that  service of  process  in any such  action or
      proceeding  may be effected  by mailing a copy  thereof by  registered  or
      certified  mail (or any  substantially  similar  form and  mail),  postage
      prepaid,  to each party  hereto at its address  set forth in Section  10.3
      hereof,  or at such other  address of which the other  parties  shall have
      been notified pursuant thereto; and



                (iv) agrees that nothing herein shall affect the right to effect
      service of process in any other manner permitted by law or shall limit the
      right to sue in any other jurisdiction.

           (b) EACH OF THE PARTIES  HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS  AGREEMENT  AND THE  RELATIONSHIP  THAT IS  BEING  ESTABLISHED,  including,
without limitation,  contract claims, tort claims, breach of duty claims and all
other  common  law and  statutory  claims.  Each  of the  parties  warrants  and
represents that it has reviewed this waiver with its legal counsel,  and that it
knowingly and voluntarily  waives its jury trial rights  following  consultation
with such legal  counsel.  THIS  WAIVER IS  IRREVOCABLE,  AND CANNOT BE MODIFIED
EITHER  ORALLY OR IN  WRITING,  AND THIS WAIVER  SHALL  APPLY TO ANY  SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

           (c) The  Liquidity  Provider  hereby  waives any immunity it may have
from the  jurisdiction  of the courts of the United  States of America or of any
State and waives any immunity any of its properties located in the United States
of America may have from attachment or execution upon a judgment  entered by any
such court under the United States Foreign  Sovereign  Immunities Act of 1976 or
any similar successor legislation.



           IN WITNESS WHEREOF,  the parties hereto have caused this Agreement to
be duly executed by their respective  officers thereunto duly authorized,  as of
the day and year first above written,  and  acknowledge  that this Agreement has
been made and delivered in the City of New York,  and this  Agreement has become
effective only upon such execution and delivery.


                                   WILMINGTON TRUST COMPANY,
                                      not in its individual capacity but solely
                                      as Trustee for each of the Trusts


                                   By__________________________________________
                                     Name:
                                     Title:


                                   WESTDEUTSCHE LANDESBANK GIROZENTRALE, acting 
                                      through its New York Branch
                                         as Class A Liquidity Provider, Class B 
                                         Liquidity Provider and Class C 
                                         Liquidity Provider


                                   By__________________________________________
                                     Name:
                                     Title:



                                   By__________________________________________
                                     Name:
                                     Title:



                                   WILMINGTON TRUST COMPANY,
                                      not in its individual capacity except as 
                                      expressly set forth herein but solely as 
                                      Subordination Agent and trustee


                                   By__________________________________________
                                     Name:
                                     Title:

          ------------------------------------------------------------
          |  CONFIDENTIAL: Subject to Restrictions on Dissemination  |
          |         Set Forth in Section 8 of this Agreement         |
          ------------------------------------------------------------


================================================================================

                          PARTICIPATION AGREEMENT ____

                           Dated as of April 21, 1998

                                      Among

                           CONTINENTAL AIRLINES, INC.,
                                     Lessee,

                                   CALJET LLC,
                               Owner Participant,

                              FIRST SECURITY BANK,
                              NATIONAL ASSOCIATION,
                         Not in its individual capacity
                      except as expressly provided herein,
                          but solely as Owner Trustee,

                                 Owner Trustee,
                                       and

                            WILMINGTON TRUST COMPANY,
                         Not in its individual capacity
                      except as expressly provided herein,
                  but solely as Mortgagee, Subordination Agent
               under the Intercreditor Agreement and Pass Through
            Trustee under each of the Pass Through Trust Agreements,
                         Mortgagee and Loan Participant


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

       One [McDonnell Douglas Model MD-80][Boeing Model 737-3T0]
                                    Aircraft
                     Bearing Manufacturer's Serial No. _____



================================================================================



                                    CONTENTS

SECTION 1.   DEFINITIONS AND CONSTRUCTION.................................     2
SECTION 2.   PARTICIPATION IN LESSOR'S COST;
             ISSUANCE OF EQUIPMENT NOTES;
             TERMINATION OF OBLIGATION TO
             PARTICIPATE..................................................     2
     2.1     Participation in Lessor's Cost...............................     2
     2.2     Nature of Obligations of Participants........................     2
     2.3     Termination of Obligation to Participate.....................     3
SECTION 3.   SALE OF AIRCRAFT; COMMITMENT TO LEASE
             AIRCRAFT.....................................................     3
     3.1     Sale of Aircraft.............................................     3
             3.1.1     Delivery...........................................     3
             3.1.2     Purchase Price.....................................     3
             3.1.3     Disclaimer.........................................     3
     3.2     Commitment to Lease..........................................     4
SECTION 4.   PROCEDURE FOR PARTICIPATION IN
             PAYMENT OF LESSOR'S COST;
             POSTPONEMENT OF SCHEDULED CLOSING
             DATE.........................................................     4
     4.1     Notices of Scheduled Closing Date............................     4
     4.2     Payment of Lessor's Cost.....................................     5
     4.3     Postponement of Scheduled Closing Date.......................     6
             4.3.1     Postponement.......................................     6
             4.3.2     Return of Funds....................................     6
             4.3.3     Investment of Funds................................     6
     4.4     Closing......................................................     7
SECTION 5.   CONDITIONS PRECEDENT.........................................     7
     5.1     Conditions Precedent to Obligations of
             Participants.................................................     7
             5.1.1     Notice.............................................     7
             5.1.2     Delivery of Documents..............................     7
             5.1.3     Other Commitments..................................    10
             5.1.4     Violation of Law...................................    11
             5.1.5     Tax Law Change.....................................    11
             5.1.6     Representations, Warranties and 
                       Covenants..........................................    11
             5.1.7     No Event of Default................................    12
             5.1.8     No Event of Loss...................................    12
             5.1.9     Title..............................................    12
             5.1.10    Certification......................................    12
             5.1.11    Section 1110.......................................    12
             5.1.12    Filing.............................................    12
             5.1.13    No Proceedings.....................................    13
             5.1.14    Governmental Action................................    13
             5.1.15    Perfected Security Interest........................    13
             5.1.16    No Accidents.......................................    13



     5.2     Conditions Precedent to Obligations of
             Owner Trustee................................................    13
             5.2.1     Notice.............................................    14
             5.2.2     Documents..........................................    14
             5.2.3     Other Conditions Precedent.........................    14
     5.3     Conditions Precedent to Obligations of
             Mortgagee....................................................    14
             5.3.1     Notice.............................................    14
             5.3.2     Documents..........................................    14
             5.3.3     Other Conditions Precedent.........................    14
     5.4     Conditions Precedent to Obligations of
             Lessee.......................................................    15
             5.4.1     Documents..........................................    15
             5.4.2     Sales Tax..........................................    15
             5.4.3     Other Conditions Precedent.........................    15
             5.4.4     Tax Law Change.....................................    15
     5.5     Post-Registration Opinion....................................    16
SECTION 6.   REPRESENTATIONS AND WARRANTIES...............................    16
     6.1     Lessee's Representations and Warranties......................    16
             6.1.1     Organization; Qualification........................    16
             6.1.2     Corporate Authorization............................    16
             6.1.3     No Violation.......................................    16
             6.1.4     Approvals..........................................    17
             6.1.5     Valid and Binding Agreements.......................    17
             6.1.6     Litigation.........................................    17
             6.1.7     Financial Condition................................    18
             6.1.8     Registration and Recordation.......................    18
             6.1.9     Chief Executive Office.............................    19
             6.1.10    No Default.........................................    19
             6.1.11    No Event of Loss...................................    19
             6.1.12    Compliance With Laws...............................    19
             6.1.13    Securities Laws....................................    19
             6.1.14    Broker's Fees......................................    20
             6.1.15    Section 1110.......................................    20
             6.1.16    Title..............................................    20
     6.2     Owner Participant's Representations and
             Warranties...................................................    20
             6.2.1     Organization, Etc..................................    20
             6.2.2     Authorization......................................    20
             6.2.3     No Violation.......................................    20
             6.2.4     Approvals..........................................    21
             6.2.5     Valid and Binding Agreements.......................    21
             6.2.6     Citizenship........................................    21
             6.2.7     No Liens...........................................    22
             6.2.8     Investment by Owner Participant....................    22
             6.2.9     ERISA..............................................    22
             6.2.10    Litigation.........................................    22
             6.2.11    Securities Laws....................................    22
             6.2.12    Broker's Fees......................................    22



     6.3     First Security's Representations and
             Warranties...................................................    23
             6.3.1     Organization, Etc..................................    23
             6.3.2     Corporate Authorization............................    23
             6.3.3     No Violation.......................................    23
             6.3.4     Approvals..........................................    24
             6.3.5     Valid and Binding Agreements.......................    24
             6.3.6     Citizenship........................................    24
             6.3.7     Chief Executive Office.............................    24
             6.3.8     Title..............................................    24
             6.3.9     No Liens; Financing Statements.....................    25
             6.3.10    Litigation.........................................    25
             6.3.11    Securities Laws....................................    25
             6.3.12    Expenses and Taxes.................................    25
     6.4     WTC's Representations and Warranties.........................    26
             6.4.1     Organization, Etc..................................    26
             6.4.2     Corporate Authorization............................    26
             6.4.3     No Violation.......................................    26
             6.4.4     Approvals..........................................    27
             6.4.5     Valid and Binding Agreements.......................    27
             6.4.6     Citizenship........................................    27
             6.4.7     No Liens...........................................    28
             6.4.8     Litigation.........................................    28
             6.4.9     Securities Laws....................................    28
             6.4.10    Investment.........................................    28
             6.4.11    Taxes..............................................    28
             6.4.12    Control............................................    29
             6.4.13    Broker's Fees......................................    29
SECTION 7.   COVENANTS, UNDERTAKINGS AND
             AGREEMENTS...................................................    29
     7.1     Covenants of Lessee..........................................    29
             7.1.1     Corporate Existence; U.S. Air
                       Carrier............................................    29
             7.1.2     Notice of Change of Chief
                       Executive Office...................................    29
             7.1.3     Certain Assurances.................................    30
             7.1.4     Securities Laws....................................    31
     7.2     Covenants of Owner Participant...............................    31
             7.2.1     Liens..............................................    31
             7.2.2     Revocation of Trust Agreement......................    32
             7.2.3     Change of Situs of Owner Trust.....................    32
             7.2.4     Compliance with Lease Provisions...................    33
             7.2.5     LLC Agreement Matters..............................    33
             7.2.6     Regarding the Owner Trustee........................    34
     7.3     Covenants of First Security and Owner
             Trustee......................................................    34
             7.3.1     Liens..............................................    34
             7.3.2     Other Business.....................................    34
             7.3.3     Notice of Change of Chief
                       Executive Office...................................    34



             7.3.4     Securities Act.....................................    35
             7.3.5     Performance of Agreements..........................    35
             7.3.6     Release of Lien of Trust
                       Indenture..........................................    35
             7.3.7     Notices; Documents.................................    35
             7.3.8     Filings............................................    35
             7.3.9     Trust Agreement....................................    36
     7.4     Covenants of WTC.............................................    36
             7.4.1     Liens..............................................    36
             7.4.2     Securities Act.....................................    36
             7.4.3     Performance of Agreements..........................    37
             7.4.4     Withholding Taxes..................................    37
     7.5     Covenants of Note Holders....................................    37
             7.5.1     Withholding Taxes..................................    37
             7.5.2     Transfer; Compliance...............................    37
     7.6     Agreements...................................................    38
             7.6.1     Owner Trustee Is Owner for All
                       Purposes...........................................    38
             7.6.2     Commencement of Bankruptcy
                       Proceedings........................................    39
             7.6.3     Certain Bankruptcy Matters.........................    39
             7.6.4     Quiet Enjoyment; Sale by Owner
                       Trustee Binding....................................    40
             7.6.5     Release of Lien of Trust
                       Indenture..........................................    40
             7.6.6     Non-Recourse.......................................    40
             7.6.7     Other Documents; Amendment.........................    41
             7.6.8     Consents...........................................    42
             7.6.9     Insurance..........................................    42
             7.6.10    Extent of Interest of Note Holders.................    42
             7.6.11    Foreign Registration...............................    42
             7.6.12    [Intentionally Omitted.]...........................    45
             7.6.13    Interest in Certain Engines........................    46
SECTION 8.   CONFIDENTIALITY..............................................    46
SECTION 9.   INDEMNIFICATION AND EXPENSES.................................    47
     9.1     General Indemnity............................................    47
             9.1.1     Indemnity..........................................    47
             9.1.2     Exceptions.........................................    48
             9.1.3     Separate Agreement.................................    51
             9.1.4     Notice.............................................    52
             9.1.5     Notice of Proceedings; Defense of
                       Claims; Limitations................................    52
             9.1.6     Information........................................    53
             9.1.7     Effect of Other Indemnities;
                       Subrogation; Further Assurances....................    53
             9.1.8     Refunds............................................    54
     9.2     Expenses.....................................................    54
             9.2.1     Invoices and Payment...............................    54
             9.2.2     Payment of Other Expenses..........................    54



     9.3     General Tax Indemnity........................................    55
             9.3.1     General............................................    55
             9.3.2     Certain Exceptions.................................    56
             9.3.3     Payment............................................    59
             9.3.4     Contest............................................    61
             9.3.5     Refund.............................................    64
             9.3.6     Tax Filing.........................................    64
             9.3.7     Forms..............................................    65
             9.3.8     Non-Parties........................................    65
             9.3.9     Subrogation........................................    65
             9.3.10    Foreign Tax On Loan Payments.......................    65
     9.4     Payments.....................................................    66
     9.5     Interest.....................................................    66
     9.6     Benefit of Indemnities.......................................    66
SECTION 10.  ASSIGNMENT OR TRANSFER OF INTERESTS..........................    67
     10.1    Participants, Owner Trustee and Note
             Holders......................................................    67
             10.1.1    Owner Participant..................................    67
             10.1.2    Owner Trustee......................................    68
             10.1.3    Note Holders.......................................    68
     10.2    Effect of Transfer...........................................    69
SECTION 11.  REFUNDING AND CERTAIN OTHER MATTERS..........................    69
     11.1    Refunding Generally..........................................    69
             11.1.1    Refunding Certificate..............................    70
             11.1.2    Financing Agreements...............................    70
             11.1.3    Lease Amendments...................................    70
             11.1.4    Security Agreements................................    71
             11.1.5    Expenses...........................................    71
             11.1.6    Make Whole Amount..................................    71
             11.1.7    Return of Equipment Notes..........................    71
     11.2    Limitations on Obligation to Refund..........................    71
     11.3    Execution of Certain Documents...............................    73
     11.4    ERISA........................................................    73
     11.5    Consent to Optional Redemptions..............................    73
SECTION 12.  SECTION 1110.................................................    73
SECTION 13.  CHANGE OF CITIZENSHIP........................................    74
     13.1    Generally....................................................    74
     13.2    Owner Participant............................................    74
     13.3    Owner Trustee................................................    75
     13.4    Mortgagee....................................................    75
SECTION 14.  CONCERNING OWNER TRUSTEE.....................................    75
SECTION 15.  MISCELLANEOUS................................................    76
     15.1    Amendments...................................................    76
     15.2    Severability.................................................    76
     15.3    Survival.....................................................    76
     15.4    Reproduction of Documents....................................    76
     15.5    Counterparts.................................................    77
     15.6    No Waiver....................................................    77
     15.7    Notices......................................................    77



     15.8    GOVERNING LAW; SUBMISSION TO JURISDICTION;
             VENUE........................................................    78
     15.9    Third-Party Beneficiary......................................    79
     15.10   Entire Agreement.............................................    79
     15.11   Further Assurances...........................................    79


ANNEX, SCHEDULES AND EXHIBITS

ANNEX A      -     Definitions

SCHEDULE 1   -     Accounts; Addresses
SCHEDULE 2   -     Commitments
SCHEDULE 3   -     Certain Terms

EXHIBIT A-1  -     Opinion of special counsel to Lessee
EXHIBIT A-2  -     Opinion of special counsel to Lessee
                   regarding Section 1110
EXHIBIT B    -     Opinion of corporate counsel to Lessee
EXHIBIT C    -     Opinion of special counsel to Owner Trustee
EXHIBIT D    -     Opinion of special counsel to Mortgagee and
                        Loan Participant
EXHIBIT E    -     Opinion of special counsel in Oklahoma City,
                        Oklahoma
EXHIBIT F    -     Delivery Receipt



                          PARTICIPATION AGREEMENT ____

     PARTICIPATION   AGREEMENT   ____,   dated  as  of  April  21,   1998  (this
"Agreement"),  among (a)  CONTINENTAL  AIRLINES,  INC.,  a Delaware  corporation
("Lessee"),  (b) CALJET  LLC,  a  Delaware  limited  liability  company  ("Owner
Participant"), (c) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association,  not in its  individual  capacity,  except  as  expressly  provided
herein,  but solely as Owner Trustee (this and all other  capitalized terms used
but not defined herein shall have the respective  meanings  ascribed  thereto in
Section 1) (in its capacity as Owner Trustee,  "Owner  Trustee" or "Lessor," and
in its individual capacity,  "First Security"),  (d) WILMINGTON TRUST COMPANY, a
Delaware  banking  corporation,  not  in  its  individual  capacity,  except  as
expressly  provided  herein,  but  solely  as  Mortgagee  (in  its  capacity  as
Mortgagee,  "Mortgagee" and in its individual  capacity,  "WTC"), (e) WILMINGTON
TRUST COMPANY,  not in its  individual  capacity,  except as expressly  provided
herein,  but solely as Pass Through Trustee under each of the Pass Through Trust
Agreements,  (each, a "Pass Through  Trustee") and (f) WILMINGTON TRUST COMPANY,
not in its individual capacity,  except as expressly provided herein, but solely
as  Subordination  Agent  under  the  Intercreditor  Agreement   ("Subordination
Agent").

                                    RECITALS

     A.  Lessee  is the  owner  of the  Aircraft,  subject  to the  terms of the
Existing Security Agreement.

     B. Lessee  desires to sell the  Aircraft to Owner  Trustee,  Owner  Trustee
desires to purchase the Aircraft from Lessee and Lessee and Owner Trustee desire
that the Aircraft thereupon be leased to Lessee, in each case upon the terms and
subject to the conditions set forth herein.

     C. In order to effectuate the foregoing, the parties hereto intend that (i)
subject,  among other  things,  to Lessee  obtaining the release of the Aircraft
from the Lien of the Existing Security Agreement, the Owner Trustee purchase the
Aircraft  from the Lessee  utilizing  the proceeds of the sale of the  Equipment
Notes to the Pass Through Trustees and the investment by Owner Participant, (ii)
the Aircraft be leased to Lessee and (iii) Owner  Trustee  mortgage,  pledge and
assign to  Mortgagee  all of Owner  Trustee's  right,  title and interest in the
Trust Indenture  Estate to secure the Secured  Obligations,  including,  without
limitation, Owner Trustee's obligations under the Equipment Notes.



     D. The  parties  hereto wish to set forth in this  Agreement  the terms and
conditions  upon  and  subject  to which  the  aforesaid  transactions  shall be
effected.

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

SECTION 1.     DEFINITIONS AND CONSTRUCTION

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

SECTION 2.     PARTICIPATION IN LESSOR'S COST; ISSUANCE OF
               EQUIPMENT NOTES; TERMINATION OF OBLIGATION TO
               PARTICIPATE

     2.1       PARTICIPATION IN LESSOR'S COST

     Subject to the terms and conditions of this Agreement, on the Closing Date,
Owner Participant and each Pass Through Trustee shall participate in the payment
of Lessor's Cost as follows:

     (a)  Owner  Participant  shall  participate in the payment of Lessor's Cost
          for the  Aircraft  by making an equity  investment  in the  beneficial
          ownership  of the  Aircraft  in the amount in  Dollars  equal to Owner
          Participant's Percentage multiplied by Lessor's Cost; and

     (b)  Each Pass Through  Trustee shall make a  non-recourse  secured loan to
          Owner  Trustee to finance,  in part,  the Owner  Trustee's  payment of
          Lessor's  Cost in the  amount in  Dollars  equal to such Pass  Through
          Trustee's PTT Percentage  multiplied by Lessor's Cost, such loan to be
          evidenced  by one or more  Equipment  Notes,  dated the Closing  Date,
          issued to the  Subordination  Agent as the registered holder on behalf
          of each such Pass Through  Trustee for the related Pass Through  Trust
          by Owner  Trustee  in  accordance  with this  Agreement  and the Trust
          Indenture, in an aggregate principal amount equal to the Commitment of
          each such Pass Through Trustee.

     2.2       NATURE OF OBLIGATIONS OF PARTICIPANTS

     The obligations  hereunder of each Participant are several,  and not joint,
and a Participant  shall have no  obligation to make  available to Owner Trustee
any  portion of any  amount not paid  hereunder  by any other  Participant.  The



failure by any Participant to perform its obligations hereunder shall not affect
the  obligations of Lessee toward the other  Participants,  except to the extent
provided in Section 5.4.

     2.3       TERMINATION OF OBLIGATION TO PARTICIPATE

     Notwithstanding any other provision of this Agreement,  if the Closing does
not occur on or before the Commitment  Termination  Date, the Commitment of each
Participant  and its  obligation to  participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; PROVIDED, that the liability
of any Participant that has defaulted in the payment of its Commitment shall not
be released.

SECTION 3.     SALE OF AIRCRAFT; COMMITMENT TO LEASE AIRCRAFT

     3.1       SALE OF AIRCRAFT

     Subject to the terms and conditions hereof, Lessee hereby agrees to sell to
Owner  Trustee  and Owner  Trustee  hereby  agrees to  purchase  from Lessee the
Aircraft and the Aircraft Documents, on the following terms:

               3.1.1     DELIVERY

     The Aircraft shall be delivered by Lessee to Owner Trustee at such place as
may be  designated by Lessee.  Upon  Lessee's  delivery of the Aircraft to Owner
Trustee,  Owner Trustee  shall execute and deliver to Lessee a Delivery  Receipt
therefor in the form annexed  hereto as Exhibit F. This  purchase and sale shall
not  be  effective  as  to  the  Aircraft  unless  and  until  the  Aircraft  is
concurrently  delivered under the Lease. The Aircraft  Documents shall be deemed
transferred  to Owner  Trustee  and  leased  to Lessee  simultaneously  with the
Aircraft.

               3.1.2     PURCHASE PRICE

     The full  purchase  price for the  Aircraft in the amount of Lessor's  Cost
shall be paid to  Lessee  in  immediately  available  funds on  delivery  of the
Aircraft.

               3.1.3     DISCLAIMER

     Lessee  does not make,  has not made and shall not be deemed to have  made,
and expressly disclaims, any representation or warranty,  express or implied, as
to:

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




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

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

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

          (z) THE ABSENCE OF OBLIGATIONS  BASED ON STRICT  LIABILITY IN TORT, OR
     ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,  EXPRESS OR IMPLIED,  WITH
     RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.

     The  foregoing  disclaimer  shall in no way  affect or limit  (i)  Lessee's
obligations under the Operative Agreements, including without limitation Section
9 of this Agreement, or (ii) Lessee's  representations and warranties in Section
6.1  of  this  Agreement,  in the  Aircraft  Bill  of  Sale,  including  without
limitation the warranty of good title,  or any other express  representation  or
warranty in any Operative Agreement.

     3.2       COMMITMENT TO LEASE

     Subject to the terms and conditions of this  Agreement,  concurrently  with
the  issuance of the  Equipment  Notes and the  purchase of the  Aircraft by the
Owner  Trustee on the Closing  Date,  Owner  Trustee shall lease the Aircraft to
Lessee, and Lessee shall lease the Aircraft from Owner Trustee, under the Lease.

SECTION 4.     PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S
               COST; POSTPONEMENT OF SCHEDULED CLOSING DATE

     4.1       NOTICES OF SCHEDULED CLOSING DATE

           Lessee agrees to give Participants,  Owner Trustee,  and Mortgagee at
least one Business  Day's written  notice of the Scheduled  Closing Date,  which
notice  shall  set forth  Lessor's  Cost and the  amount  of each  Participant's
Commitment.  Each  Participant  agrees  that  making  available  its  respective
Commitment shall constitute a waiver of such notice. Owner Trustee and Mortgagee
shall be deemed to have waived such notice if Mortgagee shall have received from
each Participant funds in the full amount of its respective Commitment.




     4.2       PAYMENT OF LESSOR'S COST

     (a) Each  Participant  agrees,  subject to the terms and conditions of this
Agreement,  to make the Dollar amount of its respective Commitment available, by
wire transfer of immediately available funds to WTC's account no. 4478-0 at WTC,
Wilmington,   Delaware  ABA#  031100092   (contact:   Bruce  Bisson,   tel.  no.
302-651-8584),  reference  Continental  Lease ____, at or before 12:00 Noon, New
York City time, on the Scheduled  Closing Date. All such funds made available by
each  Participant to WTC shall,  until payment  thereof to Lessee as provided in
Section  4.2(b)(ii) or return thereof to the respective  Participant as provided
in Section  4.3.2,  be held by WTC in trust for the  benefit  of the  respective
Participant,  as the sole and exclusive  property of the respective  Participant
and not as part of the Trust Estate or the Trust Indenture Estate.

     (b) Subject to the satisfaction,  or waiver by the applicable party, of the
conditions precedent set forth in Section 5, and simultaneously with the receipt
by the  parties  hereto of all  amounts to be paid to them on the  Closing  Date
pursuant to this Section 4.2, Owner Trustee shall:

          (i) purchase, take title to, and accept delivery of, the Aircraft, and
     in connection therewith execute the Delivery Receipt in the form of Exhibit
     F hereto;

          (ii) in  consideration  of the  transfer  of title to the  Aircraft to
     Owner  Trustee,  direct WTC to pay,  from the funds made  available  to WTC
     hereunder  by  the  Participants,   Lessor's  Cost,  by  wire  transfer  of
     immediately  available funds to Lessee's account set forth in Schedule 1 or
     as otherwise directed by Lessee;

          (iii) execute an application for registration of the Aircraft with the
     FAA and Lease Supplement No. 1, in each case with respect to the Aircraft;

          (iv)  execute  the Trust  Indenture  and the initial  Trust  Indenture
     Supplement  and issue the  Equipment  Notes to the  Subordination  Agent in
     accordance with Section 2.1(b);

          (v) lease the Aircraft to Lessee, pursuant to the Lease; and

          (vi) take such  other  action  as may be  required  to be taken by the
     Owner Trustee on the Closing Date by the terms of any Operative Agreement.



     4.3       POSTPONEMENT OF SCHEDULED CLOSING DATE

               4.3.1     POSTPONEMENT

     If  for  any  reason  whatsoever  the  Closing  is not  consummated  on the
Scheduled  Closing  Date,  the  Closing  shall be deemed  adjourned  to the next
Business Day or to such other Business Day prior to the  Commitment  Termination
Date as Lessee  shall  specify  by  written  notice to each  Participant,  Owner
Trustee and Mortgagee,  in which case the Owner  Participant will keep its funds
available,  and the Loan  Participant  shall comply with its  obligations  under
Section 5.01 of each applicable Trust Supplement.

               4.3.2     RETURN OF FUNDS

     WTC shall promptly return to each Participant that makes funds available to
it in  accordance  with Section  4.2(a) such funds,  together  with  interest or
income earned  thereon,  if the Closing fails to occur on the Scheduled  Closing
Date.

               4.3.3     INVESTMENT OF FUNDS

     (a) If the Closing fails to occur on the Scheduled Closing Date, WTC shall,
if so instructed by Lessee,  use  reasonable  efforts to invest,  at the risk of
Lessee, the funds received by it from Participants in Cash Equivalents. Any such
obligations   purchased  by  WTC,  whether  directly  or  through  a  repurchase
agreement,  shall  be held in  trust by WTC for the  benefit  of the  respective
Participants  that provided  such funds,  and not as part of the Trust Estate or
the Trust Indenture Estate.

     (b) If the Closing fails to occur on the Scheduled Closing Date, unless WTC
returns all funds to the  Participants  by 2:00 p.m., New York City time, on the
Scheduled  Closing Date,  Lessee shall, on the Scheduled  Closing Date or on the
date funds are  required  to be  returned  to  Participants  pursuant to Section
4.3.2,  reimburse each  Participant  that has made funds  available  pursuant to
Section 4.2 for the loss of the use of its funds an amount  equal to the excess,
if any,  of (i)  interest  at the Debt Rate on the  amount of such funds for the
period from and  including  the  Scheduled  Closing  Date to but  excluding  the
Closing  Date or, if  earlier,  the day on which  such  Participant's  funds are
returned  if such  return  is made by 2:00  p.m.,  New York City time (or to but
excluding  the next  following  Business  Day if such return is not made by such
time) over (ii) any amount  paid to such  Participant  in respect of interest or
income earned by WTC pursuant to Section 4.3.3(a).



     (c) On the Closing Date or on the date funds are required to be returned to
Participants  pursuant to Section  4.3.2,  Lessee shall  reimburse  WTC, for the
benefit of Participants that provided funds which are invested by WTC hereunder,
for any losses  incurred  on such  investments.  All  income and  profits on the
investment  of  such  funds  shall  be  for  the  respective  accounts  of  such
Participants,  and WTC shall not be liable for  failure to invest  such funds or
for any losses  incurred on such  investments,  except for its own negligence or
willful misconduct.

     4.4       CLOSING

     The Closing  shall occur at the offices of Hughes  Hubbard & Reed LLP,  One
Battery Park Plaza, New York, New York 10004, or such other place as the parties
shall agree.

SECTION 5.     CONDITIONS PRECEDENT

     5.1       CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS

     The  obligation  of each  Participant  to make  the  Dollar  amount  of its
respective  Commitment available for payment as directed by the Owner Trustee on
the Closing Date is subject to satisfaction or waiver by each such  Participant,
at or prior to the Closing, of the conditions  precedent set forth below in this
Section  5.1;  PROVIDED,  that it  shall  not be a  condition  precedent  to the
obligation of any Participant that any document be produced or action taken that
is to be  produced  or taken by such  Participant  or by a  Person  within  such
Participant's control; PROVIDED, FURTHER, that Section 5.1.2(iii) shall not be a
condition  precedent to the  obligation of Loan  Participant  and Section 5.1.15
shall not be a condition precedent to the obligation of Owner Participant.

               5.1.1     NOTICE

     Such  Participant  shall have received the notice  described in Section 4.1
or, in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.

               5.1.2     DELIVERY OF DOCUMENTS

     Such  Participant  shall,  except as noted below,  have  received  executed
counterparts  of  the  following   agreements,   instruments,   certificates  or
documents,  and such counterparts (a) shall have been duly authorized,  executed
and  delivered  by the  respective  party  or  parties  thereto,  (b)  shall  be
reasonably  satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:



          (i) the Lease;  PROVIDED,  that only Mortgagee  shall receive the sole
     executed chattel paper original thereof;

          (ii) Lease  Supplement  No. 1;  PROVIDED,  that only  Mortgagee  shall
     receive the sole executed chattel paper original thereof;

          (iii)  the  Tax  Indemnity  Agreement;   PROVIDED,   that  only  Owner
     Participant and Lessee shall receive copies of the Tax Indemnity Agreement;

          (iv) the Trust Agreement;

          (v) the Trust Indenture;

          (vi) the initial Trust Indenture Supplement;

          (vii) the Equipment Notes dated the Closing Date; PROVIDED,  that only
     the Subordination Agent shall receive the authenticated Equipment Notes;

          (viii) the Bills of Sale;

          (ix) the Existing Security Agreement Release;

          (x) the broker's report and insurance certificates required by Section
     11 of the Lease;

          (xi) (A) a copy of the  Certificate  of  Incorporation  and By-Laws of
     Lessee  and  resolutions  of the board of  directors  of Lessee  and/or the
     executive committee thereof, in each case certified as of the Closing Date,
     by the Secretary or an Assistant  Secretary of Lessee, duly authorizing the
     execution,  delivery  and  performance  by Lessee of the  Lessee  Operative
     Agreements  required to be executed and  delivered by Lessee on or prior to
     the Closing Date in accordance with the provisions hereof and thereof;  (B)
     an incumbency certificate of Lessee, Owner Participant,  First Security and
     WTC as to the  person or persons  authorized  to execute  and  deliver  the
     relevant  Operative  Agreements on behalf of such party;  (C) a copy of the
     Certificate  of Formation and Limited  Liability  Company  Agreement of the
     Owner Participant,  certified by the Manager of the Owner Participant;  and
     (D) a copy of the Certificate of Incorporation or Articles of Incorporation
     and By-Laws and general authorizing  resolutions of the boards of directors
     (or executive  committees) or other satisfactory  evidence of authorization
     of  First  Security  and  WTC,  certified  as of the  Closing  Date  by the
     Secretary or an Assistant or Attesting Secretary of First Security and WTC,
     respectively, which authorize the execution, delivery and performance by



     First Security and WTC,  respectively,  of each of the Operative Agreements
     to which it is a party,  together  with such other  documents  and evidence
     with respect to it as Lessee or any Participant  may reasonably  request in
     order to establish the  consummation  of the  transactions  contemplated by
     this  Agreement and the taking of all corporate  proceedings  in connection
     therewith;

          (xii) an  Officer's  Certificate  of Lessee,  dated as of the  Closing
     Date,  stating that its  representations  and  warranties set forth in this
     Agreement  are true and correct as of the  Closing  Date (or, to the extent
     that any such  representation  and warranty expressly relates to an earlier
     date, true and correct as of such earlier date);

          (xiii) an Officer's  Certificate  of First  Security,  dated as of the
     Closing  Date,  stating that its  representations  and  warranties,  in its
     individual  capacity and as Owner Trustee,  set forth in this Agreement are
     true and  correct as of the  Closing  Date (or, to the extent that any such
     representation  and warranty expressly relates to an earlier date, true and
     correct as of such earlier date);

          (xiv) an Officer's  Certificate of Owner Participant,  dated as of the
     Closing Date, stating that its  representations and warranties set forth in
     this  Agreement  are true and  correct as of the  Closing  Date (or, to the
     extent that any such  representation  and warranty  expressly relates to an
     earlier date, true and correct as of such earlier date);

          (xv) an Officer's  Certificate  of WTC,  dated as of the Closing Date,
     stating that its  representations and warranties in its individual capacity
     or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case
     may be, set forth in this  Agreement are true and correct as of the Closing
     Date (or, to the extent that any such representation and warranty expressly
     relates to an earlier date, true and correct as of such earlier date);

          (xvi) an application for  registration of the Aircraft with the FAA in
     the name of Owner Trustee;  PROVIDED, that only special counsel in Oklahoma
     City, Oklahoma shall receive the sole executed copy thereof for filing with
     the FAA;

          (xvii) the Financing Statements;



          (xviii) the  following  opinions  of  counsel,  in each case dated the
     Closing Date:

               (A) an opinion of Hughes Hubbard & Reed LLP,  special  counsel to
          Lessee,  (x)  substantially  in  the  form  of  Exhibit  A-1  and  (y)
          substantially in the form of Exhibit A-2;

               (B) an opinion of Lessee's Legal Department, substantially in the
          form of Exhibit B;

               (C) an opinion  of Ray,  Quinney &  Nebeker,  special  counsel to
          Owner Trustee, substantially in the form of Exhibit C;

               (D) an opinion of Richards,  Layton & Finger,  special counsel to
          Mortgagee and Loan  Participant,  substantially in the form of Exhibit
          D;

               (E) an  opinion  of Lytle  Soule &  Curlee,  special  counsel  in
          Oklahoma City, Oklahoma, substantially in the form of Exhibit E;

          (xix) a copy of a current, valid Standard Certificate of Airworthiness
     for the Aircraft duly issued by the FAA;

          (xx) a copy of First Security's filing with the Banking  Department of
     New York State in  connection  with First  Security's  qualification  under
     Section 131.3 of the New York State Banking Law;

          (xxi) an appraisal or appraisals from an Appraiser, which appraisal or
     appraisals shall be reasonably  satisfactory in form and substance to Owner
     Participant and Lessee;  provided,  that only Owner  Participant and Lessee
     shall receive copies of such appraisal or appraisals;

          (xxii)  the  Participants  and their  respective  counsel  shall  have
     received  copies of such  documents  and  papers as such  Participants  may
     reasonably  request,  except  in the  case  of  parties  other  than  Owner
     Participant and its special counsel, the Tax Indemnity Agreement.

               5.1.3     OTHER COMMITMENTS

     Each other  Participant  shall have made available the Dollar amount of its
Commitment as directed by Owner Trustee in accordance with Section 4.



               5.1.4     VIOLATION OF LAW

     No change  shall  have  occurred  after the date of this  Agreement  in any
applicable Law that makes it a violation of Law for (a) Lessee, any Participant,
Subordination Agent, Owner Trustee or Mortgagee to execute,  deliver and perform
the Operative  Agreements to which any of them is a party or (b) any Participant
to make the Dollar  amount of its  Commitment  available  or, in the case of any
Loan Participant, to acquire an Equipment Note or to realize the benefits of the
security afforded by the Trust Indenture.

               5.1.5     TAX LAW CHANGE

     In respect of Owner  Participant,  no Adverse  Change in Tax Law shall have
been  enacted,  promulgated  or issued on or prior to the  Closing  Date.  Owner
Participant agrees to consider  promptly,  and to consult with Lessee concerning
any such  Adverse  Change in Tax Law and to advise  Lessee and Loan  Participant
promptly if Owner Participant determines that an Adverse Change in Tax Law which
has been enacted or promulgated or, if proposed, has a substantial likelihood of
becoming  effective,  would cause Owner  Participant  to elect not to close with
respect  to the  Aircraft.  At any time on or before  the  Closing  Date,  Owner
Participant may notify Lessee and Loan Participant that Owner Participant elects
not to close as a result  of the  enactment,  promulgation  or  issuance  of any
Adverse Change in Tax Law on or before the Closing Date, specifying such Adverse
Change in Tax Law; and failure to give such notice on or before the Closing Date
shall preclude Owner  Participant from not closing with respect to such Aircraft
as a result of any Adverse Change in Tax Law.

               5.1.6     REPRESENTATIONS, WARRANTIES AND COVENANTS

     The  representations  and  warranties of each other party to this Agreement
made, in each case, in this  Agreement and in any other  Operative  Agreement to
which it is a party,  shall be true and accurate in all material  respects as of
the Closing Date (unless any such  representation  and warranty  shall have been
made with reference to a specified date, in which case such  representation  and
warranty  shall be true and accurate as of such  specified  date) and each other
party to this  Agreement  shall have  performed  and  observed,  in all material
respects, all of its covenants, obligations and agreements in this Agreement and
in any  other  Operative  Agreement  to which it is a party  to be  observed  or
performed by it as of the Closing Date.



               5.1.7     NO EVENT OF DEFAULT

     On the Closing  Date, no event shall have  occurred and be  continuing,  or
would result from the sale, mortgage or lease of the Aircraft, which constitutes
a Lease Default or Lease Event of Default,  or an Indenture Default or Indenture
Event of Default.

               5.1.8     NO EVENT OF LOSS

     No Event of Loss with  respect to the  Airframe  or any  Engine  shall have
occurred and no circumstance,  condition,  act or event that, with the giving of
notice or lapse of time or both,  would give rise to or  constitute  an Event of
Loss with respect to the Airframe or any Engine shall have occurred.

               5.1.9     TITLE

     Owner Trustee shall have good title  (subject to filing and  recordation of
the FAA Bill of Sale  with the FAA) to the  Aircraft,  free and  clear of Liens,
except (a) the rights of Lessee under the Lease and Lease  Supplement No. 1, (b)
the  Lien  created  by the  Trust  Indenture  and the  initial  Trust  Indenture
Supplement,  (c) the  beneficial  interest of Owner  Participant  created by the
Trust  Agreement,  (d) Liens  permitted  by clause (d) (solely for taxes not yet
due) of Section 6 of the Lease and (e) Liens  permitted by clause (e) of Section
6 of the Lease.

               5.1.10    CERTIFICATION

     The Aircraft  shall have been duly  certificated  by the FAA as to type and
airworthiness.

               5.1.11    SECTION 1110

     Owner  Trustee,  as lessor under the Lease (and  Mortgagee,  as assignee of
Owner Trustee under the Trust  Indenture),  shall be entitled to the benefits of
Section  1110  (as  currently  in  effect)  with  respect  to the  right to take
possession  of the Airframe and Engines as provided in the Lease in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.

               5.1.12    FILING

     On the Closing Date (a) the FAA Filed  Documents shall have been duly filed
for  recordation  (or  shall  be in the  process  of  being  so duly  filed  for
recordation)  with the FAA in  accordance  with  the Act and (b) each  Financing
Statement shall have been duly filed in the appropriate jurisdiction.



               5.1.13    NO PROCEEDINGS

     No action or proceeding shall have been instituted, nor shall any action be
threatened  in  writing,  before  any  Government  Entity,  nor shall any order,
judgment or decree  have been issued or proposed to be issued by any  Government
Entity,  to  set  aside,   restrain,   enjoin  or  prevent  the  completion  and
consummation  of  this  Agreement  or  any  other  Operative  Agreement  or  the
transactions contemplated hereby or thereby.

               5.1.14    GOVERNMENTAL ACTION

     All  appropriate  action  required  to have been taken prior to the Closing
Date by the  FAA,  or any  governmental  or  political  agency,  subdivision  or
instrumentality  of the  United  States,  in  connection  with the  transactions
contemplated by this Agreement shall have been taken,  and all orders,  permits,
waivers,  authorizations,  exemptions and approvals of such entities required to
be  in  effect  on  the  Closing  Date  in  connection  with  the   transactions
contemplated by this Agreement shall have been issued.

               5.1.15    PERFECTED SECURITY INTEREST

     On the Closing  Date,  after  giving  effect to the filing of the FAA Filed
Documents and the  Financing  Statements,  Mortgagee  shall have received a duly
perfected  first priority  security  interest in all of Owner  Trustee's  right,
title and  interest in the  Aircraft  and the Lease,  subject  only to Permitted
Liens.

               5.1.16    NO ACCIDENTS

     On or prior to the Closing  Date,  no accident or incident not disclosed to
the Manager  prior to April 9, 1998 has  occurred  with  respect to the Aircraft
which could  reasonably  be expected to materially  adversely  affect the value,
utility or remaining useful life of the Aircraft.

     5.2       CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE

     The  obligation  of Owner Trustee to direct the  Participants  to apply the
Commitments to pay Lessor's Cost on the Closing Date is subject to  satisfaction
or  waiver  by Owner  Trustee,  at or prior to the  Closing,  of the  conditions
precedent set forth below in this Section 5.2.



               5.2.1     NOTICE

     Owner Trustee  shall have received the notice  described in Section 4.1 or,
in the case of a Delayed  Closing Date,  4.3, when and as required  thereby,  or
shall have waived such notice.

               5.2.2     DOCUMENTS

     Executed  originals  of  the  agreements,   instruments,   certificates  or
documents  described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein,  unless the failure to receive any such
agreement,  instrument,  certificate  or document is the result of any action or
inaction by Owner Trustee.

               5.2.3     OTHER CONDITIONS PRECEDENT

     Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and 5.1.11
shall  have been  satisfied  unless  the  failure  of any such  condition  to be
satisfied is the result of any action or inaction by Owner Trustee.

     5.3       CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE

     The  obligation of Mortgagee to  authenticate  the  Equipment  Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee,  at or prior
to the Closing, of the conditions precedent set forth below in this Section 5.3.

               5.3.1     NOTICE

     Mortgagee  shall have  received the notice  described in Section 4.1 or, in
the case of a Delayed Closing Date, 4.3, when and as required thereby,  or shall
have waived such notice.

               5.3.2     DOCUMENTS

     Executed  originals  of  the  agreements,   instruments,   certificates  or
documents  described  in Section  5.1.2 shall have been  received by  Mortgagee,
except as specifically provided therein,  unless the failure to receive any such
agreement,  instrument,  certificate  or document is the result of any action or
inaction by Mortgagee.

               5.3.3     OTHER CONDITIONS PRECEDENT

     Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and 5.1.11
shall  have been  satisfied  unless  the  failure  of any such  condition  to be
satisfied is the result of any action or inaction by Mortgagee.



     5.4       CONDITIONS PRECEDENT TO OBLIGATIONS OF LESSEE

     The  obligation of Lessee to sell the Aircraft and to lease the Aircraft as
Lessee on the Closing Date is subject to the  satisfaction  or waiver by Lessee,
at or prior to the Closing, of the conditions  precedent set forth below in this
Section 5.4.

               5.4.1     DOCUMENTS

     Executed  originals  of  the  agreements,   instruments,   certificates  or
documents described in Section 5.1.2 shall have been received by Lessee,  except
as specifically  provided therein,  and shall be satisfactory to Lessee,  unless
the failure to receive any such agreement,  instrument,  certificate or document
is the result of any action or inaction by Lessee.

               5.4.2     SALES TAX

     Lessee  shall be  satisfied  that no sales,  use,  value  added,  goods and
services  or like tax,  and no stamp tax duty,  is payable  with  respect to the
delivery  of the  Aircraft  on the  Closing  Date to the extent  that Lessee has
liability therefor under Section 9.3.

               5.4.3     OTHER CONDITIONS PRECEDENT

     Each  of  the   conditions   set  forth  in  Sections   5.1.3  (as  to  all
Participants), 5.1.4, 5.1.5, 5.1.6, 5.1.7 (as to Indenture Defaults or Indenture
Events of Default not  constituting  Lease  Defaults or Lease Events of Default,
respectively),  5.1.8, 5.1.9, 5.1.10,  5.1.11,  5.1.12,  5.1.13 and 5.1.14 shall
have  been  satisfied  or waived  by  Lessee,  unless  the  failure  of any such
condition to be satisfied is the result of any action or inaction by Lessee.

               5.4.4     TAX LAW CHANGE

     No  Adverse  Change in Tax Law  shall  have been  enacted,  promulgated  or
proposed on or prior to the Closing Date.  Lessee  agrees to consider  promptly,
and to consult with Owner Participant concerning, any such Adverse Change in Tax
Law and to advise  Owner  Participant  and Loan  Participant  promptly if Lessee
determines  that an  Adverse  Change  in Tax  Law  which  has  been  enacted  or
promulgated or, if proposed, has a substantial likelihood of becoming effective,
would cause Lessee to elect not to close the  transactions  contemplated  by the
Lease and this Agreement.  At any time on or before the Closing Date, Lessee may
notify Owner  Participant and Loan  Participant  that Lessee elects not to close
the transactions contemplated by the Lease and this Agreement as a result of the



enactment,  promulgation  or  proposal  of any  Adverse  Change in Tax Law on or
before the Closing Date, specifying such Adverse Change in Tax Law.

     5.5       POST-REGISTRATION OPINION

     Promptly upon the  registration  of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Lessee will cause Lytle Soule & Curlee,
special  counsel  in  Oklahoma  City,  Oklahoma,  to  deliver  to  Lessee,  each
Participant,  Owner  Trustee  and  Mortgagee  a  favorable  opinion or  opinions
addressed to each of them with respect to such registration and recordation.

SECTION 6.     REPRESENTATIONS AND WARRANTIES

     6.1       LESSEE'S REPRESENTATIONS AND WARRANTIES

     Lessee  represents and warrants to each Participant,  Subordination  Agent,
Owner Trustee and Mortgagee that:

                6.1.1    ORGANIZATION; QUALIFICATION

     Lessee is a corporation  duly  incorporated,  validly  existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its  properties  and to enter into and perform its  obligations
under the Lessee Operative  Agreements.  Lessee is duly qualified to do business
as a foreign  corporation  in good  standing in each  jurisdiction  in which the
nature and  extent of the  business  conducted  by it, or the  ownership  of its
properties,  requires  such  qualification,  except  where the  failure to be so
qualified would not give rise to a Material Adverse Change to Lessee.

               6.1.2     CORPORATE AUTHORIZATION

     Lessee has taken,  or caused to be taken,  all necessary  corporate  action
(including,  without  limitation,  the  obtaining  of any consent or approval of
stockholders  required  by its  Certificate  of  Incorporation  or  By-Laws)  to
authorize the execution and delivery of each of the Lessee Operative Agreements,
and the performance of its obligations thereunder.

               6.1.3     NO VIOLATION

     The  execution and delivery by Lessee of the Lessee  Operative  Agreements,
the performance by Lessee of its obligations  thereunder and the consummation by
Lessee on the Closing Date of the transactions  contemplated thereby, do not and
will not (a)  violate any  provision  of the  Certificate  of  Incorporation  or



By-Laws of Lessee, (b) violate any Law applicable to or binding on Lessee or (c)
violate or  constitute  any default  under (other than any  violation or default
that would not result in a Material Adverse Change to Lessee),  or result in the
creation of any Lien (other than as permitted under the Lease) upon the Aircraft
under, any indenture,  mortgage,  chattel mortgage,  deed of trust,  conditional
sales contract, lease, loan or other material agreement,  instrument or document
to which Lessee is a party or by which Lessee or any of its properties is bound.

               6.1.4     APPROVALS

     The  execution and delivery by Lessee of the Lessee  Operative  Agreements,
the performance by Lessee of its obligations  thereunder and the consummation by
Lessee on the Closing Date of the transactions  contemplated  thereby do not and
will not require the consent or approval  of, or the giving of notice to, or the
registration  with,  or the  recording or filing of any  documents  with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Lessee  and (b) any  Government  Entity,  other than (x)  obtaining  the
Existing Security  Agreement Release and related Financing  Statements,  (y) the
filing of the FAA Filed Documents and the Financing Statements (and continuation
statements  periodically)  and  (z)  filings,   recordings,   notices  or  other
ministerial actions pursuant to any routine recording, contractual or regulatory
requirements applicable to it.

               6.1.5     VALID AND BINDING AGREEMENTS

     The Lessee  Operative  Agreements have been duly  authorized,  executed and
delivered by Lessee and, assuming the due authorization,  execution and delivery
thereof by the other party or parties thereto,  constitute the legal,  valid and
binding  obligations of Lessee and are enforceable  against Lessee in accordance
with the respective terms thereof,  except as such enforceability may be limited
by bankruptcy, insolvency,  reorganization,  receivership,  moratorium and other
similar Laws affecting the rights of creditors  generally and general principles
of equity,  whether  considered in a proceeding at law or in equity. The sale of
the  Aircraft by Lessee to Owner  Trustee  pursuant to this  Agreement  does not
constitute a fraudulent conveyance or fraudulent transfer by Lessee.

               6.1.6     LITIGATION

     Except as set forth in Lessee's  most recent Annual Report on Form 10-K, as
amended, filed by Lessee with the SEC on or prior to the Closing Date, or in any
Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Lessee with



the SEC  subsequent  to such  Form  10-K and on or prior  to April 1,  1998,  no
action,  claim or  proceeding  is now  pending  or, to the Actual  Knowledge  of
Lessee,  threatened,  against  Lessee,  before  any  court,  governmental  body,
arbitration board, tribunal or administrative agency, which is reasonably likely
to be determined adversely to Lessee and if determined adversely to Lessee would
result in a Material Adverse Change.

               6.1.7     FINANCIAL CONDITION

     The audited  consolidated  balance sheet of Lessee with respect to Lessee's
most recent  fiscal year  included in Lessee's most recent Annual Report on Form
10-K,  as amended,  filed by Lessee with the SEC,  and the related  consolidated
statements  of  operations  and cash flows for the  period  then ended have been
prepared in accordance with GAAP and fairly present in all material respects the
financial condition of Lessee and its consolidated  subsidiaries as of such date
and the results of its operations and cash flows for such period,  and since the
date of such balance  sheet,  there has been no material  adverse change in such
financial condition or operations of Lessee, except for matters disclosed in (a)
the financial  statements referred to above, (b) any subsequent Quarterly Report
on Form 10-Q or  Current  Report on Form 8-K filed by Lessee  with the SEC on or
prior to April 1, 1998, or (c) any prospectus or prospectus  supplement filed by
Lessee  with  the SEC in  connection  with  the  offering  of the  Pass  Through
Certificates.

               6.1.8     REGISTRATION AND RECORDATION

     Except for (a) the  registration  of the Aircraft  with the FAA pursuant to
the Act in the  name of Owner  Trustee,  (b) the  filing  for  recordation  (and
recordation)  of the FAA  Filed  Documents,  (c)  the  filing  of the  Financing
Statements (and continuation statements relating thereto at periodic intervals),
(d) the  taking  of  possession  and  retention  by  Mortgagee  of the  original
counterparts  of the Lease and Lease  Supplement No. 1 and (e) the affixation of
the  placards  referred  to in Section  7.1.3 of the Lease,  no further  action,
including  any filing or  recording  of any document  (including  any  financing
statement in respect  thereof  under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee,  and the
Mortgagee's security interest,  in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdiction in the United
States.




               6.1.9     CHIEF EXECUTIVE OFFICE

     The chief  executive  office  (as such term is  defined in Article 9 of the
UCC) of Lessee is located at 2929 Allen Parkway, Houston, Texas 77019.

               6.1.10    NO DEFAULT

     No event which,  if the Aircraft  were subject to the Lease,  constitutes a
Lease Default or Lease Event of Default has occurred and is continuing.

               6.1.11    NO EVENT OF LOSS

     No Event of Loss has  occurred  with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Lessee, no circumstance, condition, act or event
has occurred that, with the giving of notice or lapse of time or both gives rise
to or constitutes an Event of Loss with respect to the Airframe or any Engine.

               6.1.12    COMPLIANCE WITH LAWS

     (a) Lessee is a Citizen of the United States and a U.S. Air Carrier.

     (b) Lessee holds all licenses,  permits and franchises from the appropriate
Government  Entities  necessary  to authorize  Lessee to lawfully  engage in air
transportation  and to  carry  on  scheduled  commercial  passenger  service  as
currently  conducted,  except  where the  failure  to so hold any such  license,
permit or franchise would not give rise to a Material Adverse Change to Lessee.

     (c) Lessee is not an  "investment  company" or a company  controlled  by an
"investment  company" within the meaning of the Investment  Company Act of 1940,
as amended.

               6.1.13    SECURITIES LAWS

     Neither Lessee nor any person  authorized to act on its behalf has directly
or  indirectly  offered any  beneficial  interest  or  Security  relating to the
ownership  of the  Aircraft or the Lease or any interest in the Trust Estate and
Trust  Agreement,  or any of the  Equipment  Notes or any other  interest  in or
security  under the Trust  Indenture,  for sale to,  or  solicited  any offer to
acquire any such  interest or security  from,  or has sold any such  interest or
security to, any person in violation of the Securities Act.




               6.1.14    BROKER'S FEES

     No Person acting on behalf of Lessee is or will be entitled to any broker's
fee, commission or finder's fee in connection with the Transactions,  except for
fees payable to Lessee's Advisor, if any.

               6.1.15    SECTION 1110

     Owner Trustee, as lessor under the Lease (and Mortgagee,  as assignee under
the Trust Indenture),  is entitled to the benefits of Section 1110 (as currently
in effect)  with  respect to the right to take  possession  of the  Airframe and
Engines as provided in the Lease in the event of a case under  Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.

               6.1.16    TITLE

     On the Closing Date, Lessee will deliver to Owner Trustee good title to the
Aircraft, free and clear of all Liens (other than Permitted Liens).

     6.2       OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES

     Owner  Participant  represents  and warrants to Lessee,  Loan  Participant,
Subordination Agent, Owner Trustee and Mortgagee that:

               6.2.1     ORGANIZATION, ETC.

     Owner Participant is a limited  liability  company duly organized,  validly
existing and in good standing under the Laws of the State of Delaware, has power
and  authority to conduct the  business in which it is currently  engaged and to
own or hold under  lease its  properties  and to enter  into,  and  perform  its
obligations under the Owner Participant Agreements.

               6.2.2     AUTHORIZATION

     Owner  Participant has taken, or caused to be taken,  all necessary  action
(including,  without  limitation,  the  obtaining  of any  consent  or  approval
required by its governing  documents) to authorize the execution and delivery of
each of the Owner Participant Agreements, and the performance of its obligations
thereunder.

               6.2.3     NO VIOLATION

     The execution and delivery by Owner  Participant  of the Owner  Participant
Agreements,  the performance by Owner Participant of its obligations  thereunder



and  the  consummation  by  Owner   Participant  on  the  Closing  Date  of  the
transactions contemplated thereby, do not and will not (a) violate any provision
of the governing documents of Owner Participant,  (b) violate any Law applicable
to or binding on Owner  Participant  or (c)  violate or  constitute  any default
under  (other than any  violation or default that would not result in a Material
Adverse  Change to Owner  Participant),  or result in the  creation  of any Lien
(other than as provided for or otherwise permitted in the Operative  Agreements)
upon the Trust Estate under, any indenture,  mortgage, chattel mortgage, deed of
trust,  conditional  sales contract,  lease,  loan or other material  agreement,
instrument or document to which Owner  Participant  is a party or by which Owner
Participant or any of its properties is bound.

               6.2.4 APPROVALS

     The execution and delivery by Owner  Participant  of the Owner  Participant
Agreements,  the performance by Owner Participant of its obligations  thereunder
and  the  consummation  by  Owner   Participant  on  the  Closing  Date  of  the
transactions  contemplated  thereby do not and will not  require  the consent or
approval  of, or the  giving of notice  to,  or the  registration  with,  or the
recording or filing of any documents  with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Owner Participant and
(b) any Government Entity,  other than the filing of the FAA Filed Documents and
the Financing Statements.

               6.2.5     VALID AND BINDING AGREEMENTS

     The Owner  Participant  Agreements have been duly authorized,  executed and
delivered by Owner  Participant and, assuming the due  authorization,  execution
and delivery by the other party or parties thereto,  constitute the legal, valid
and binding  obligations of Owner Participant and are enforceable  against Owner
Participant  in accordance  with the respective  terms  thereof,  except as such
enforceability  may  be  limited  by  bankruptcy,  insolvency,   reorganization,
receivership,  moratorium  and  other  similar  Laws  affecting  the  rights  of
creditors  generally and general  principles of equity,  whether considered in a
proceeding at law or in equity.

               6.2.6     CITIZENSHIP

     On the Closing Date, Owner Participant is a Citizen of the United States.




               6.2.7      NO LIENS

     On the  Closing  Date,  there are no  Lessor  Liens  attributable  to Owner
Participant  or any  Member  thereof  in respect of all or any part of the Trust
Estate.

               6.2.8     INVESTMENT BY OWNER PARTICIPANT

     Owner  Participant's  beneficial  interest  in the  Trust  Estate  is being
acquired by it for its own account,  for  investment  and not with a view to any
resale or  distribution  thereof,  except that,  subject to the  restrictions on
transfer set forth in Section 10, the  disposition  by Owner  Participant of its
beneficial  interest  in the  Trust  Estate  shall at all  times be  within  its
control.

               6.2.9     ERISA

     No part of the funds to be used by Owner Participant to acquire or hold its
interests in the Trust Estate to be acquired by it under this Agreement directly
or indirectly constitutes assets of a Plan.

               6.2.10    LITIGATION

     There are no pending  or, to the  Actual  Knowledge  of Owner  Participant,
threatened  actions  or  proceedings  against  Owner  Participant  or any Member
thereof before any court,  governmental body, arbitration board,  administrative
agency or tribunal which, if determined  adversely to Owner  Participant or such
Member,  would materially  adversely affect the ability of Owner  Participant to
perform its obligations under the Owner Participant Agreements.

               6.2.11    SECURITIES LAWS

     Neither Owner  Participant nor any person Owner  Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial  interest
in or Security  relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust  Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the Securities Act or applicable state
securities Laws.

               6.2.12    BROKER'S FEES

     No Person acting on behalf of Owner  Participant  is or will be entitled to
any  broker's  fee,   commission   or  finder's  fee  in  connection   with  the
Transactions.




     6.3       FIRST SECURITY'S REPRESENTATIONS AND WARRANTIES

     First Security represents and warrants to Lessee,  Owner Participant,  Loan
Participants, Subordination Agent and Mortgagee that:

               6.3.1     ORGANIZATION, ETC.

     First Security is a national banking  association  duly organized,  validly
existing and in good  standing  under the Laws of the United  States,  holding a
valid certificate to do business as a national banking  association with banking
authority to execute and deliver,  and perform its obligations  under, the Owner
Trustee Agreements.

               6.3.2     CORPORATE AUTHORIZATION

     First Security has taken,  or caused to be taken,  all necessary  corporate
action (including,  without limitation, the obtaining of any consent or approval
of stockholders required by Law or by its Articles of Association or By-Laws) to
authorize  the  execution  and  delivery by First  Security,  in its  individual
capacity and as Owner Trustee, of each of the Owner Trustee Agreements,  and the
performance of its obligations thereunder.

               6.3.3     NO VIOLATION

     The execution and delivery by First  Security,  in its individual  capacity
and as Owner Trustee of the Owner Trustee  Agreements,  the performance by First
Security,  in its individual  capacity and as Owner Trustee,  of its obligations
thereunder and the consummation by First Security in its individual capacity and
as Owner Trustee on the Closing Date of the transactions  contemplated  thereby,
do not and will not (a) violate any provision of the Articles of  Association or
By-Laws of First  Security,  (b) violate any Law of the State of Utah or federal
banking Law  applicable to or binding on Owner Trustee or First  Security or (c)
violate or constitute any default under(other than any violation or default that
would  not  result  in a  Material  Adverse  Change  to First  Security,  in its
individual capacity or as Owner Trustee),  or result in the creation of any Lien
(other  than  the  Lien of the  Trust  Indenture)  upon  any  property  of First
Security,  in its  individual  capacity  and  as  Owner  Trustee,  or any of its
subsidiaries under, any indenture,  mortgage,  chattel mortgage,  deed of trust,
conditional sales contract, lease, loan or other material agreement,  instrument
or document to which First  Security,  in its  individual  capacity and as Owner
Trustee,  is a party or by which First Security,  in its individual capacity and
as Owner Trustee, or any of its properties is or may be bound or affected.




               6.3.4     APPROVALS

     The execution and delivery by First  Security,  in its individual  capacity
and as Owner Trustee, of the Owner Trustee Agreements,  the performance by First
Security,  in its individual  capacity and as Owner Trustee,  of its obligations
thereunder and the  consummation by First Security,  in its individual  capacity
and as Owner  Trustee,  on the  Closing  Date of the  transactions  contemplated
thereby do not and will not require the consent,  approval or authorization  of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents  with, or the taking of any other action in respect of, (a) any
trustee  or other  holder of any Debt of First  Security  or (b) any  Government
Entity  governing  banking  and trust  powers,  other than the filing of the FAA
Filed Documents and the Financing Statements.

               6.3.5     VALID AND BINDING AGREEMENTS

     The  Owner  Trustee  Agreements  have been duly  authorized,  executed  and
delivered by First Security,  in its individual capacity or as Owner Trustee, as
the case may be, and  constitute  the legal,  valid and binding  obligations  of
First Security,  in its individual capacity and as Owner Trustee,  and, assuming
the due  authorization,  execution  and  delivery  thereof by the other party or
parties  thereto,  are  enforceable  against First  Security,  in its individual
capacity and as Owner Trustee,  in accordance with the respective terms thereof,
except  as  such  enforceability  may  be  limited  by  bankruptcy,  insolvency,
reorganization,  receivership,  moratorium  and other similar Laws affecting the
rights  of  creditors  generally  and  general  principles  of  equity,  whether
considered in a proceeding at law or in equity.

               6.3.6     CITIZENSHIP

     On the Closing Date, First Security is a Citizen of the United States.

               6.3.7     CHIEF EXECUTIVE OFFICE

     The chief  executive  office  (as such term is  defined in Article 9 of the
UCC) of Owner Trustee is located at 79 South Main Street,  Salt Lake City,  Utah
84111.

               6.3.8     TITLE

     On the Closing Date,  Owner Trustee shall have received  whatever  title as
was conveyed to it by Lessee.




               6.3.9     NO LIENS; FINANCING STATEMENTS

     On the  Closing  Date,  there are no  Lessor  Liens  attributable  to First
Security or Owner Trustee in respect of all or any part of the  Aircraft,  Trust
Estate or the Trust Indenture Estate.  Except for the Financing  Statements,  it
has not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.

               6.3.10    LITIGATION

     There  are no  pending  or,  to the  Actual  Knowledge  of First  Security,
threatened actions or proceedings against First Security or Owner Trustee before
any  court,  governmental  body,  arbitration  board,  administrative  agency or
tribunal which,  if determined  adversely to First  Security,  would  materially
adversely  affect the ability of First  Security or Owner Trustee to perform its
obligations under the Owner Trustee Agreements.

               6.3.11    SECURITIES LAWS

     Neither First Security, nor any person authorized to act on its behalf, has
directly or indirectly  offered any beneficial  interest or Security relating to
the  ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment  Notes or any other interest in or security under the Trust  Indenture
for sale to, or  solicited  any offer to acquire  any such  interest or security
from,  or has sold any such  interest or security  to, any person other than the
Participants, except for the offering and sale of the Pass Through Certificates.

               6.3.12    EXPENSES AND TAXES

     There are no Expenses  or Taxes that may be imposed on or asserted  against
the Trust,  the Trust Estate or any part thereof or any  interest  therein,  the
Trust Indenture Estate,  Lessee,  Owner  Participant,  any Pass Through Trustee,
Subordination  Agent,  Owner Trustee or Mortgagee  (except as to Owner  Trustee,
Taxes  imposed on the fees payable to Owner  Trustee)  under the laws of Utah in
connection  with  the  execution,  delivery  or  performance  of  any  Operative
Agreement by Owner Trustee or in  connection  with the issuance of the Equipment
Notes,  which Expenses or Taxes would not have been imposed if Owner Trustee had
not (x) had its principal place of business in, (y) performed (in its individual
capacity  or as Owner  Trustee)  any or all of its  duties  under the  Operative
Agreements  in or (z) engaged in any  activities  unrelated to the  transactions
contemplated by the Operative Agreements in, the State of Utah.




     6.4       WTC'S REPRESENTATIONS AND WARRANTIES

     WTC represents and warrants (with respect to Section 6.4.10,  solely in its
capacity as Subordination  Agent) to Lessee, Owner Participant and Owner Trustee
that:

               6.4.1     ORGANIZATION, ETC.

     WTC is a Delaware banking corporation duly organized,  validly existing and
in good  standing  under  the Laws of the  State of  Delaware,  holding  a valid
certificate  to do  business  as a Delaware  banking  corporation  with  banking
authority  to execute  and  deliver,  and  perform its  obligations  under,  the
Mortgagee Agreements,  the Pass Through Trustee Agreements and the Subordination
Agent Agreements.

               6.4.2     CORPORATE AUTHORIZATION

     WTC has  taken,  or caused  to be taken,  all  necessary  corporate  action
(including,  without  limitation,  the  obtaining  of any consent or approval of
stockholders  required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the  Mortgagee   Agreements,   the  Pass  Through  Trustee  Agreements  and  the
Subordination   Agent   Agreements  and  the   performance  of  its  obligations
thereunder.

               6.4.3     NO VIOLATION

     The  execution  and  delivery  by WTC,  in its  individual  capacity  or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the  Mortgagee   Agreements,   the  Pass  Through  Trustee  Agreements  and  the
Subordination  Agent  Agreements,  the  performance  by WTC,  in its  individual
capacity or as Mortgagee,  a Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations  thereunder and the  consummation on the Closing
Date of the transactions  contemplated  thereby, do not and will not (a) violate
any provision of the Certificate of Incorporation or By-Laws of WTC, (b) violate
any Law applicable to or binding on WTC, in its  individual  capacity or (except
in the case of any Law  relating  to any  Plan)  as  Mortgagee,  a Pass  Through
Trustee or  Subordination  Agent, or (c) violate or constitute any default under
(other than any violation or default that would not result in a Material Adverse
Change to WTC, in its individual  capacity or Mortgagee,  a Pass Through Trustee
or Subordination  Agent),  or result in the creation of any Lien (other than the
Lien of the  Trust  Indenture)  upon  any  property  of WTC,  in its  individual
capacity or as Mortgagee,  a Pass Through Trustee or Subordination Agent, or any



of WTC's subsidiaries under, any indenture,  mortgage, chattel mortgage, deed of
trust, conditional sales contract, lease, loan or other agreement, instrument or
document  to which WTC,  in its  individual  capacity  or as  Mortgagee,  a Pass
Through  Trustee or  Subordination  Agent,  is a party or by which  WTC,  in its
individual  capacity or as Mortgagee,  a Pass Through  Trustee or  Subordination
Agent, or any of their respective properties is bound.

               6.4.4     APPROVALS

     The  execution  and  delivery  by WTC,  in its  individual  capacity  or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the  Mortgagee   Agreements,   the  Pass  Through  Trustee  Agreements  and  the
Subordination  Agent  Agreements,  the  performance  by WTC,  in its  individual
capacity or as Mortgagee,  a Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations  thereunder and the  consummation on the Closing
Date by WTC, in its individual capacity or as Mortgagee,  a Pass Through Trustee
or  Subordination  Agent, as the case may be, of the  transactions  contemplated
thereby do not and will not require the consent,  approval or authorization  of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents  with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of WTC or (b) any Government  Entity,  other
than the filing of the FAA Filed Documents and the Financing Statements.

               6.4.5     VALID AND BINDING AGREEMENTS

     The  Mortgagee  Agreements,  the Pass Through  Trustee  Agreements  and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization,  execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its  individual  capacity or as  Mortgagee,  a Pass  Through  Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual  capacity or as Mortgagee,  a Pass Through  Trustee or  Subordination
Agent,  as the case may be, in accordance  with the  respective  terms  thereof,
except  as  such  enforceability  may  be  limited  by  bankruptcy,  insolvency,
reorganization,  receivership,  moratorium or other  similar Laws  affecting the
rights  of  creditors  generally  and  general  principles  of  equity,  whether
considered in a proceeding at law or in equity.

               6.4.6     CITIZENSHIP

     WTC is a Citizen of the United States.




               6.4.7     NO LIENS

     On the  Closing  Date,  there are no Lessor  Liens  attributable  to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.

               6.4.8     LITIGATION

     There are no pending or, to the Actual Knowledge of WTC, threatened actions
or proceedings against WTC, in its individual  capacity or as Mortgagee,  a Pass
Through Trustee or Subordination Agent, before any court,  administrative agency
or tribunal which, if determined adversely to WTC, in its individual capacity or
as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be,
would materially adversely affect the ability of WTC, in its individual capacity
or as Mortgagee,  a Pass Through Trustee or Subordination Agent, as the case may
be, to perform its obligations under any of the Mortgagee  Agreements,  the Pass
Through Trustee Agreements or the Subordination Agent Agreements.

               6.4.9     SECURITIES LAWS

     Neither WTC nor any person  authorized to act on its behalf has directly or
indirectly offered any beneficial interest or Security relating to the ownership
of the  Aircraft  or any  interest in the Trust  Indenture  Estate or any of the
Equipment  Notes or any other interest in or security under the Trust  Indenture
for sale to, or  solicited  any offer to acquire  any such  interest or security
from,  or has sold any such  interest or security  to, any Person other than the
Participants, except for the offering and sale of the Pass Through Certificates.

               6.4.10    INVESTMENT

     The  Equipment  Notes to be acquired by the  Subordination  Agent are being
acquired by it for the account of the Pass Through Trustees,  for investment and
not with a view to any resale or distribution  thereof,  except that, subject to
the restrictions on transfer set forth in Section 10.1.3,  the disposition by it
of its Equipment Notes shall at all times be within its control.

               6.4.11    TAXES

     There are no Taxes payable by any Pass Through  Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political  subdivision or taxing
authority thereof in connection with the execution,  delivery and performance by
such Pass Through  Trustee or WTC, as the case may be, of this  Agreement or any
of the Pass  Through  Trustee  Agreements  (other than  franchise or other taxes
based on or  measured  by any fees or  compensation  received  by any such  Pass
Through Trustee or WTC, as the case may be, for services  rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes  payable by any Pass Through  Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision thereof in
connection  with the  acquisition,  possession  or  ownership  by any such  Pass
Through  Trustee of any of the  Equipment  Notes (other than  franchise or other



taxes based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services  rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and,  assuming that the trusts created by the Pass Through Trust Agreements will
not be taxable as  corporations,  but,  rather,  each will be characterized as a
grantor  trust  under  subpart  E,  Part I of  Subchapter  J of the Code or as a
partnership  under  Subchapter K of the Code, such trusts will not be subject to
any Taxes imposed by the State of Delaware or any political subdivision thereof.

               6.4.12    CONTROL

     WTC is not an Affiliate of the Owner Participant or the Owner Trustee.

               6.4.13    BROKER'S FEES

     No  Person  acting  on  behalf of WTC,  in its  individual  capacity  or as
Mortgagee,  any Pass  Through  Trustee  or  Subordination  Agent,  is or will be
entitled to any broker's fee,  commission or finder's fee in connection with the
Transactions.

SECTION 7.     COVENANTS, UNDERTAKINGS AND AGREEMENTS

     7.1       COVENANTS OF LESSEE

     Lessee  covenants  and  agrees,  at its own cost and  expense,  with  Owner
Participant, Loan Participant, Owner Trustee and Mortgagee as follows:

               7.1.1     CORPORATE EXISTENCE; U.S. AIR CARRIER

     Lessee  shall at all times  maintain  its  corporate  existence,  except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.

               7.1.2     NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE

     Lessee will give Owner  Participant,  Owner  Trustee and  Mortgagee  timely
written  notice (but in any event within 30 days prior to the  expiration of the



period of time specified under applicable Law to prevent lapse of perfection) of
any relocation of its chief executive office (as such term is defined in Article
9 of the UCC) from its then present  location and will  promptly take any action
required by Section 7.1.3(c) as a result of such relocation.

               7.1.3     CERTAIN ASSURANCES

     (a) Lessee shall duly execute,  acknowledge and deliver,  or shall cause to
be  executed,   acknowledged  and  delivered,   all  such  further   agreements,
instruments,  certificates or documents,  and shall do and cause to be done such
further acts and things,  in any case,  as Owner  Participant,  Owner Trustee or
Mortgagee  shall  reasonably  request  for  accomplishing  the  purposes of this
Agreement and the other  Operative  Agreements,  PROVIDED THAT any instrument or
other  document so executed by Lessee will not expand any  obligations  or limit
any  rights  of  Lessee  in  respect  of the  transactions  contemplated  by any
Operative Agreement.

     (b) Lessee shall  promptly take such action with respect to the  recording,
filing,  re-recording  and refiling of the Lease,  the Trust  Agreement  and the
Trust  Indenture and the  respective  supplements  thereto,  including,  without
limitation,  Lease Supplement No. 1 and the initial Trust Indenture  Supplement,
as shall be necessary to establish, perfect and protect the interests and rights
of Owner  Trustee in and to the Aircraft and under the Lease and the  perfection
and priority of the Lien created by the Trust Indenture. Lessee shall furnish to
Owner Participant or Owner Trustee such information  (other than with respect to
the citizenship of Owner  Participant and Owner Trustee) in Lessee's  possession
or otherwise  reasonably  available to Lessee as may be required to enable Owner
Participant  or  Owner  Trustee  to make  application  for  registration  of the
Aircraft  under the Act (subject to Lessee's  rights under  Section 7.1.2 of the
Lease) and shall pay or cause to be paid all out-of-pocket costs and expenses in
connection therewith (including, without limitation,  reasonable attorneys' fees
and disbursements).

     (c)  Lessee,  at its sole  cost  and  expense,  will  cause  the FAA  Filed
Documents,  the Financing  Statements and all  continuation  statements (and any
amendments necessitated by any combination,  consolidation or merger pursuant to
Section 13.2 of the Lease, or any relocation of its chief  executive  office) in
respect of the  Financing  Statements  to be prepared  and,  subject only to the
execution and delivery  thereof by Owner Trustee and  Mortgagee,  as applicable,
duly and timely  filed and  recorded,  or filed for  recordation,  to the extent
permitted under the Act (with respect to the FAA Filed  Documents) or the UCC or



similar law of any other  applicable  jurisdiction  (with  respect to such other
documents).

     (d) If the Aircraft has been  registered in a country other than the United
States  pursuant to Section  7.1.2 of the Lease,  Lessee  will  furnish to Owner
Trustee,  Mortgagee  and each  Participant  annually  after  such  registration,
commencing  with the  calendar  year after such  registration  is  effected,  an
opinion  of  special  counsel  reasonably  satisfactory  to  Owner  Trustee  and
Mortgagee  stating that,  in the opinion of such  counsel,  either that (i) such
action has been taken with respect to the  recording,  filing,  rerecording  and
refiling of the Operative  Agreements and any supplements and amendments thereto
as  is  necessary  to  establish,   perfect  and  protect  Owner  Trustee's  and
Mortgagee's  respective right, title and interest in and to the Aircraft and the
Operative  Agreements,  reciting  the details of such  actions,  or (ii) no such
action  is  necessary  to  maintain  the  perfection  of such  right,  title and
interest.

               7.1.4     SECURITIES LAWS

     Neither Lessee nor any person authorized to act on its behalf will directly
or  indirectly  offer  any  beneficial  interest  or  Security  relating  to the
ownership  of the  Aircraft or the Lease or any interest in the Trust Estate and
Trust  Agreement  or any of the  Equipment  Notes or any  other  interest  in or
security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such  interest or security  from,  or sell any such interest or security to,
any person in violation of the  Securities  Act or  applicable  state or foreign
securities Laws.

     7.2       COVENANTS OF OWNER PARTICIPANT

     Owner Participant covenants and agrees with Lessee, and except with respect
to Section 7.2.4, Loan Participant, Owner Trustee and Mortgagee as follows:

               7.2.1     LIENS

     Owner Participant (a) will not directly or indirectly create, incur, assume
or suffer to exist any Lessor Lien  attributable to it on or with respect to all
or any part of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b)
will, at its own cost and expense, promptly take such action as may be necessary
to discharge any Lessor Lien  attributable  to Owner  Participant  on all or any
part of the Trust  Estate,  the Trust  Indenture  Estate or the Aircraft and (c)
will hold  harmless  and  indemnify  Lessee,  Owner  Trustee,  each Note Holder,
Mortgagee,  each  of  their  respective  Affiliates,  successors  and  permitted
assigns,  the Trust Estate and the Trust  Indenture  Estate from and against (i)



any and all Expenses,  (ii) any reduction in the amount payable out of the Trust
Estate or the  Trust  Indenture  Estate  and  (iii)  any  interference  with the
possession,  operation or other use of all or any part of the  Aircraft  imposed
on, incurred by or asserted against any of the foregoing as a consequence of any
such Lessor Lien.

               7.2.2     REVOCATION OF TRUST AGREEMENT

     (a)  Owner  Participant  will  comply  with  the  provisions  of the  Trust
Agreement applicable to it, and will not terminate or revoke the Trust Agreement
or the trusts created thereunder without the prior written consent of (i) Lessee
prior to the end of the  Term,  and (ii)  Mortgagee,  so long as the Lien of the
Trust  Indenture  has not  been  discharged,  and  will  not  amend,  modify  or
supplement the Trust Agreement,  or waive any of the provisions thereof, if such
amendment,  modification,  supplement  or waiver  would have a material  adverse
effect on Lessee,  without the consent of Lessee,  or on  Mortgagee  or any Note
Holder, without the consent of Mortgagee.

     (b)  Notwithstanding  Section  7.2.2(a),  Owner Participant may at any time
remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or terminate
the Trust Agreement pursuant to Section 11.2 of the Trust Agreement.

               7.2.3     CHANGE OF SITUS OF OWNER TRUST

     If, at any time, any Tax Indemnitee or the Trust Estate becomes  subject to
any Taxes for which it is indemnified  pursuant to Section 9.3 of this Agreement
and if, as a consequence  thereof,  Lessee should  request that the situs of the
Trust be moved to another  state in the United States from the state in which it
is then located, the situs of the Trust may be moved with the written consent of
Owner Participant  (which consent shall not be unreasonably  withheld) and Owner
Participant will take whatever action may be reasonably  necessary to accomplish
such removal;  PROVIDED,  that, in any event,  (a) Lessee shall  indemnify Owner
Participant,  the Note  Holders and the Pass Through  Trustees  against and hold
them  harmless  from  any  Taxes  or  loss  of  Tax  benefits  described  in the
assumptions  in the Tax Indemnity  Agreement  resulting  from such change in the
situs  of the  Trust,  (b)  the  rights  and  obligations  under  the  Operative
Agreements of Owner  Participant,  the Note Holders,  Pass Through  Trustees and
Mortgagee  shall not be  adversely  affected  as a result of the  taking of such
action,  (c) the Lien of the Trust Indenture on the Trust Indenture Estate shall
not be adversely  affected by such action,  and Lessee and Owner  Trustee  shall
execute and deliver such  documents as may  reasonably be requested by Mortgagee
to protect and maintain  the  perfection  and  priority of such Lien,  (d) Owner



Participant,  Pass Through Trustees and Mortgagee shall have received an opinion
or  opinions  of counsel  (which  counsel is  reasonably  satisfactory  to Owner
Participant,  Pass Through Trustees and Mortgagee) in scope,  form and substance
reasonably  satisfactory  to  Owner  Participant,   Pass  Through  Trustees  and
Mortgagee  to the effect that (i) the Trust,  as thus  removed,  shall  remain a
validly   established   trust,  (ii)  any  amendments  to  the  Trust  Agreement
necessitated  by such  removal  shall have been duly  authorized,  executed  and
delivered  by the  parties  thereto and shall  constitute  the valid and binding
obligations of such parties,  enforceable in accordance with their terms,  (iii)
covering  such other  matters as Owner  Participant,  Pass  Through  Trustees or
Mortgagee may reasonably  request,  (e) if such removal involves the replacement
of Owner Trustee,  then Owner  Participant,  Pass Through Trustees and Mortgagee
shall have  received an opinion of counsel to such  successor  Owner  Trustee in
form and substance  reasonably  satisfactory to Owner Participant,  Pass Through
Trustees and Mortgagee  covering the matters  described in the opinion delivered
pursuant to Section  5.1.2(xviii)(C)  and (f) Lessee  shall  indemnify  and hold
harmless  Owner  Participant,  Note  Holders,  Pass  Through  Trustees and First
Security,  in its individual  capacity and as Owner Trustee,  on a net after-tax
basis against any and all reasonable  out-of-pocket costs and expenses including
attorneys' fees and  disbursements,  fees and expenses of any new owner trustee,
registration,  recording or filing fees and taxes incurred by Owner Participant,
Note Holders,  Pass Through  Trustees or Owner  Trustee in connection  with such
change of situs.  Owner Participant  agrees with Lessee that it will not consent
to or direct a change in the situs of the Trust Estate without the prior written
consent of Lessee.

               7.2.4     COMPLIANCE WITH LEASE PROVISIONS

     Owner Participant  will, solely for the benefit of Lessee,  comply with the
express provisions applicable to it contained in the Lease.

               7.2.5     LLC AGREEMENT MATTERS

     Owner  Participant  will,  solely for the benefit of the Loan  Participant,
each Note Holder and Mortgagee,  so long as any Equipment  Note is  outstanding,
comply with the provisions of Sections 2.7, 11.1(b) and 13.13, the last sentence
to Section  13.14 and the proviso to the last  sentence  of Section  13.6 of the
Limited Liability Company Agreement.  In addition, so long as any Equipment Note
is  outstanding,  Lessee will not (i) become the beneficial  owner,  directly or
indirectly, of more than 75% of the membership interest in the Owner Participant
or (ii) be or permit any  Affiliate of Lessee to be the "Manager" (as defined in



the Limited Liability Company Agreement) of Owner Participant or a Transferee of
Owner Participant.

               7.2.6     REGARDING THE OWNER TRUSTEE

     Owner  Participant  will  instruct  Owner Trustee as necessary in order for
Owner Trustee to perform its obligations under each Owner Trustee Agreement.

     7.3       COVENANTS OF FIRST SECURITY AND OWNER TRUSTEE

     First  Security,  in its individual  capacity  and/or as Owner Trustee,  as
provided below,  covenants and agrees with Lessee, Owner Participant,  each Note
Holder and Mortgagee as follows:

               7.3.1     LIENS

     First Security (a) will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien attributable to it or Owner Trustee with respect
to all or any part of the  Trust  Estate,  the  Trust  Indenture  Estate  or the
Aircraft,  (b) will,  at its own cost and expense,  promptly take such action as
may be necessary to discharge any Lessor Lien  attributable to First Security or
Owner Trustee on all or any part of the Trust Estate, the Trust Indenture Estate
or the Aircraft and (c) will  personally  hold  harmless and  indemnify  Lessee,
Owner  Participant,  each  Note  Holder,  Mortgagee,  each of  their  respective
Affiliates,  successors  and permitted  assigns,  the Trust Estate and the Trust
Indenture  Estate from and against (i) any and all Expenses,  (ii) any reduction
in the amount payable out of the Trust Estate or the Trust Indenture  Estate and
(iii) any interference with the possession, operation or other use of all or any
part of the  Aircraft  imposed on,  incurred  by or asserted  against any of the
foregoing as a consequence of any such Lessor Lien.

               7.3.2     OTHER BUSINESS

     Owner Trustee will not enter into any business or other activity  except as
contemplated by the Operative Agreements.

               7.3.3     NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE

     First Security,  in its individual capacity and as Owner Trustee, will give
Lessee,  each  Participant  and Mortgagee 30 days' prior  written  notice of any
relocation of its chief  executive  office (as such term is defined in Article 9
of the UCC) from its then  present  location and will  promptly  take any action
required by Section 7.3.8 as a result of such relocation.




               7.3.4     SECURITIES ACT

     First Security,  in its individual capacity and as Owner Trustee,  will not
directly or indirectly offer any beneficial interest or Security relating to the
ownership  of the  Aircraft or any  interest  in the Trust  Estate or any of the
Equipment  Notes or any other interest in or security under the Trust  Indenture
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such  interest  or  security  to,  any  Person in  violation  of the
Securities Act or applicable state or foreign securities Laws, provided that the
foregoing  shall not be deemed to  impose on First  Security  in its  individual
capacity or as Owner Trustee, any responsibility with respect to any such offer,
sale or solicitation by any other party hereto.

               7.3.5     PERFORMANCE OF AGREEMENTS

     Owner  Trustee  shall  perform  its  obligations  under the  Owner  Trustee
Agreements in accordance with the terms thereof.

               7.3.6     RELEASE OF LIEN OF TRUST INDENTURE

     Owner  Trustee,  in each  instance  referred  to in the  Lease  in  which a
transfer of any  property  is required to be made by Owner  Trustee to Lessee or
any other Person (other than Mortgagee or Owner Participant), shall, at Lessee's
request and expense,  use its  reasonable  efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.

               7.3.7     NOTICES; DOCUMENTS

     In the event any claim with respect to any liabilities is filed against the
Owner  Trustee in its  capacity  as such and Owner  Trustee  shall  have  Actual
Knowledge  thereof,  the Owner Trustee shall  promptly  notify Lessee in writing
thereof.  Owner  Trustee  further  agrees  to  provide  to Lessee  promptly  any
documents (including the certificate of aircraft  registration) that it receives
from the FAA with respect to the Aircraft.

               7.3.8     FILINGS

     After the Closing  Date,  Owner  Trustee  shall duly execute and deliver to
Lessee all filings and recordings  (including,  without limitation,  all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing  statements  necessitated  by any  relocation  of its chief  executive
office),  prepared  and  delivered  to it by Lessee  required  to perfect  Owner
Trustee's title to the Aircraft and the liens of and security  interests granted



by the Trust Indenture (or to maintain such  perfection) and to make such title,
liens and security interests valid and enforceable.

               7.3.9     TRUST AGREEMENT

     Each of First  Security  and Owner  Trustee  hereby (i) agrees with Lessee,
Loan Participant and Mortgagee not to amend, supplement,  terminate or otherwise
modify any  provision  of the Trust  Agreement  in such a manner as to adversely
affect the rights of any such party  without the prior  written  consent of such
party and (ii) agrees with Lessee,  Loan Participant and Mortgagee not to revoke
the trust created by the Trust Agreement so long as the Trust Indenture  remains
undischarged or if such  revocation  would have an adverse effect on the Lessee.
Nothing  contained  in this  Agreement  shall  impair any right  under the Trust
Agreement of First  Security to resign as Owner Trustee in  accordance  with the
provisions of the Trust Agreement.

     7.4       COVENANTS OF WTC

     WTC in its individual  capacity or as Mortgagee,  each Pass Through Trustee
or  Subordination  Agent, as the case may be,  covenants and agrees with Lessee,
Owner Participant and Owner Trustee as follows:

               7.4.1     LIENS

     WTC (a) will not directly or indirectly create,  incur, assume or suffer to
exist any Lessor Lien  attributable  to it on or with respect to all or any part
of the Trust Estate,  the Trust Indenture  Estate or the Aircraft,  (b) will, at
its own cost and  expense,  promptly  take such  action as may be  necessary  to
discharge  any Lessor Lien  attributable  to WTC on all or any part of the Trust
Estate,  the Trust Indenture Estate or the Aircraft and (c) will personally hold
harmless and  indemnify  Lessee,  Owner  Participant,  each Note  Holder,  Owner
Trustee, each of their respective Affiliates,  successors and permitted assigns,
the Trust Estate and the Trust Indenture Estate from and against (i) any and all
Expenses,  (ii) any  reduction in the amount  payable out of the Trust Estate or
the Trust  Indenture  Estate  and (iii) any  interference  with the  possession,
operation or other use of all or any part of the Aircraft,  imposed on, incurred
by or asserted  against any of the foregoing as a consequence of any such Lessor
Lien.

               7.4.2     SECURITIES ACT

     WTC in its individual  capacity or as Mortgagee,  a Pass Through Trustee or
Subordination Agent, will not offer any beneficial interest or Security relating
to the ownership of the Aircraft or any interest in the Trust Indenture  Estate,



or any of the  Equipment  Notes or any other  interest in or security  under the
Trust  Indenture  for sale to, or solicit any offer to acquire any such interest
or  security  from,  or sell any such  interest  or  security  to, any Person in
violation of the Securities Act or applicable state or foreign  securities Laws,
provided  that  the  foregoing  shall  not  be  deemed  to  impose  on  WTC  any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.

               7.4.3     PERFORMANCE OF AGREEMENTS

     WTC, in its individual capacity and as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, shall perform its obligations under the
Indenture Agreements,  the Pass Through Trustee Agreements and the Subordination
Agent Agreements in accordance with the terms thereof.

               7.4.4     WITHHOLDING TAXES

     WTC shall  indemnify  (on an  after-tax  basis) and hold  harmless  Lessee,
Lessor and Owner  Participant  against any United States  withholding taxes (and
related interest,  penalties and additions to tax) as a result of the failure by
WTC to withhold  on  payments  to any Note Holder if such Note Holder  failed to
provide to Mortgagee  necessary  certificates or forms to substantiate the right
to exemption from such withholding tax.

     7.5       COVENANTS OF NOTE HOLDERS

     Each  Note  Holder  (including  Subordination  Agent)  as  to  itself  only
covenants and agrees with Lessee, Owner Participant, Owner Trustee and Mortgagee
as follows:

               7.5.1     WITHHOLDING TAXES

     Such Note Holder (if it is a Non-U.S.  Person)  agrees to indemnify  (on an
after-tax  basis)  and hold  harmless  Lessee,  Lessor,  Owner  Participant  and
Mortgagee  against any United States  withholding  taxes (and related  interest,
penalties and  additions to tax) as a result of the  inaccuracy or invalidity of
any  certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding  taxes. Any amount payable  hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.

               7.5.2     TRANSFER; COMPLIANCE

     (a) Such Note Holder will (i) not transfer any  Equipment  Note or interest
therein  in  violation  of the  Securities  Act or  applicable  state or foreign



securities Law;  PROVIDED,  that the foregoing  provisions of this section shall
not be deemed to impose on such Note Holder any  responsibility  with respect to
any such offer, sale or solicitation by any other party hereto, and (ii) perform
and comply with the obligations specified to be imposed on it (as a Note Holder)
under each of the Trust  Indenture  and the form of Equipment  Note set forth in
the Trust Indenture.

     (b) Except as otherwise  required by the terms of Section 2.13 of the Trust
Indenture or Section 11 hereof, each Note Holder will not sell, assign,  convey,
exchange  or  otherwise  transfer  any  Equipment  Note or any  interest  in, or
represented  by, any Equipment Note (it being  understood that this provision is
not applicable to the Pass Through  Certificates) unless the proposed transferee
thereof first provides Lessee and Owner Participant with both of the following:

          (i) a written  representation  and covenant that either (a) no portion
     of the funds it uses to purchase,  acquire and hold such  Equipment Note or
     interest  directly or  indirectly  constitutes,  or may be deemed under the
     Code or ERISA or any rulings,  regulations or court decisions thereunder to
     constitute,  the  assets of any Plan or (b) the  transfer,  and  subsequent
     holding,  of such Equipment Note or interest shall not involve or give rise
     to a  transaction  that  constitutes  a prohibited  transaction  within the
     meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code involving
     Lessee, Owner Participant,  a Pass Through Trustee, the Subordination Agent
     or the proposed  transferee (other than a transaction that is exempted from
     the prohibitions of such sections by applicable  provisions of ERISA or the
     Code or administrative exemptions or regulations issued thereunder); and

          (ii) a written  covenant that it will not transfer any Equipment  Note
     or any  interest  in, or  represented  by, any  Equipment  Note  unless the
     subsequent transferee also makes the representation described in clause (i)
     above and agrees to comply with this clause (ii).

     7.6       AGREEMENTS

               7.6.1     OWNER TRUSTEE IS OWNER FOR ALL PURPOSES

     Lessee,  the  Owner  Participant  and  Owner  Trustee  agree  that  for all
purposes,  after the  Closing,  Owner  Trustee will be the owner of the Aircraft
(except that Owner  Participant  will be the owner for income tax  purposes) and
Lessee  will  be  the  lessee  thereof.  No  transfer,  by  operation  of Law or



otherwise,  of the beneficial  interest of Owner Participant in and to the Trust
Estate shall operate to transfer  legal title to any part of the Trust Estate to
any transferee thereof.

               7.6.2     COMMENCEMENT OF BANKRUPTCY PROCEEDINGS

     Lessee, each Participant,  each Note Holder, First Security, Owner Trustee,
WTC and  Mortgagee  agree for the benefit of each of the others that it will not
commence or join in any proceeding  under the Bankruptcy Code to commence a case
under  Section 303 of the  Bankruptcy  Code  against the Trust  Estate.  Nothing
contained herein shall be deemed to preclude any  Participant,  any Note Holder,
First  Security,  Owner Trustee,  WTC or Mortgagee from filing any claim against
the Trust Estate in any case commenced against the Trust Estate.

               7.6.3     CERTAIN BANKRUPTCY MATTERS

     If (a) all or any part of the Trust  Estate  becomes  the  property  of, or
Owner  Trustee  or  Owner   Participant   becomes,   a  debtor  subject  to  the
reorganization   provisions  of  the  Bankruptcy  Code,  (b)  pursuant  to  such
reorganization  provisions,  including  Section 1111(b) of the Bankruptcy  Code,
First Security or Owner Participant is required,  by reason of First Security or
Owner  Participant  being held to have recourse  liability to any Note Holder or
Mortgagee  directly or  indirectly  (other than the recourse  liability of First
Security or Owner  Participant  under this Agreement,  the Trust Indenture or by
separate  agreement),  to make  payment  on  account  of any  amount  payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as  defined  below,  which  reflects  any  payment  by First  Security  or Owner
Participant on account of (b) above, then such Note Holder or Mortgagee,  as the
case may be,  shall  promptly  refund  to First  Security  or Owner  Participant
(whichever shall have made such payment) such Excess Amount.

     For purposes of this Section  7.6.3,  "Excess  Amount"  means the amount by
which such  payment  exceeds the amount that would have been  received by a Note
Holder or  Mortgagee  if First  Security  or Owner  Participant  had not  become
subject to the  recourse  liability  referred  to in clause  (b) above.  Nothing
contained in this Section  7.6.3 shall  prevent a Note Holder or Mortgagee  from
enforcing any personal recourse  obligation (and retaining the proceeds thereof)
of First  Security  or Owner  Participant  under this  Agreement  (other than as
referred  to in clause (b) above) or the Trust  Indenture  (and any  exhibits or
annexes  thereto) or from retaining any amount paid by Owner  Participant  under
Sections 2.13 or 4.03 of the Trust Indenture.




               7.6.4     QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING

     (a) Owner Participant, each Pass Through Trustee, Subordination Agent, each
Note Holder,  Owner Trustee and Mortgagee  agrees as to itself with Lessee that,
so long as no Lease Event of Default shall have occurred and be continuing, such
Person shall not (and shall not permit any  Affiliate  or other Person  claiming
by,  through or under it to) interfere with Lessee's  rights in accordance  with
the Lease to the quiet enjoyment,  possession and use of the Aircraft during the
Term.

     (b) Any assignment,  sale,  transfer or other conveyance of the Aircraft by
Owner  Trustee made  pursuant to the terms of this  Agreement or the Lease shall
bind Owner  Participant  and shall be effective to transfer or convey all right,
title  and  interest  of  Owner  Trustee  and  Owner  Participant  in and to the
Aircraft.  No purchaser or other  grantee shall be required to inquire as to the
authorization,  necessity,  expediency or regularity of such  assignment,  sale,
transfer or conveyance,  or as to the  application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.

               7.6.5     RELEASE OF LIEN OF TRUST INDENTURE

     Each of Lessee,  Lessor and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer  of any  property  is required to be made by
Lessor to Lessee or any other Person (other than  Mortgagee),  Mortgagee  shall,
upon request of Lessor and  compliance  with the  applicable  provisions  of the
Lease and the Trust  Indenture,  including  payment of all amounts  then due and
payable to each Liquidity  Provider as Supplemental  Rent,  promptly execute (at
Lessee's cost and expense) such  instruments  as Lessor or Lessee may reasonably
request to evidence the release of the Lien of the Trust  Indenture with respect
to such property.

               7.6.6     NON-RECOURSE

     Loan  Participant and Mortgagee agree that (a) obligations of Owner Trustee
under the Trust Indenture or any other  Operative  Agreement and with respect to
the Equipment  Notes shall be  non-recourse  to Owner  Participant  and to First
Security and (b) they will look solely to the income and proceeds from the Trust
Estate and the Trust Indenture  Estate to the extent  available for distribution
to Note Holder or Mortgagee as provided in the Trust  Indenture and that neither
Owner  Participant  nor  First  Security  will  be  personally  liable  to  Loan
Participant  or Mortgagee  for any amounts  payable by Owner  Trustee  under the
Trust Indenture or any other Operative Agreement;  PROVIDED,  HOWEVER,  that the



foregoing  is not  intended  nor shall it be  construed  to limit  any  recourse
liability  of Owner  Participant  or First  Security  to the  extent  that  such
liability is expressly  set forth in this  Agreement or in any of the  Operative
Agreements or arises by reason of the breach of any  representation  or warranty
or  covenant  given  by such  Person  (in the  case of  First  Security,  in its
individual capacity).

               7.6.7     OTHER DOCUMENTS; AMENDMENT

     (a) Each of the Owner  Participant and the Owner Trustee hereby agrees with
Lessee,  the Loan  Participant  and the  Mortgagee  not to amend,  supplement or
otherwise  modify any  provision  of the Trust  Agreement in a manner that could
adversely  affect such party  without the prior  written  consent of such party.
Notwithstanding  the foregoing,  so long as the Lease has not been terminated or
expired, each Participant,  the Mortgagee and the Owner Trustee hereby agree for
the  benefit of Lessee  that  without the consent of Lessee they will not amend,
supplement  or otherwise  modify (i) Article III,  Article IX or Section 2.05 of
the Trust  Indenture,  (ii) any provision of any Operative  Agreement  that will
affect the stated  principal  amount of or premium or interest on the  Equipment
Notes or (iii)  unless a Lease  Event of  Default  shall  have  occurred  and be
continuing,  any other  provision of the Trust Indenture or Equipment Notes in a
manner  that could  materially  adversely  affect  Lessee.  Mortgagee  and Owner
Trustee agree to promptly furnish to Lessee copies of any supplement, amendment,
waiver or modification of any of the Operative Agreements to which Lessee is not
a party. Loan Participant  agrees that it will not take any action in respect of
the Trust  Indenture  Estate except through the Mortgagee  pursuant to the Trust
Indenture or as otherwise permitted by Trust Indenture.

     (b) Owner  Trustee  agrees to join with Lessee to the extent that action on
its part is  necessary  or  appropriate  (i) to cause the  following  to be duly
accomplished in accordance with applicable United States federal Law by the time
the  Aircraft  is  delivered  under  this  Agreement  and  the  Lease:  (A)  the
application  for  registration  of the Aircraft in the name of Owner Trustee and
(B) all  related  action  necessary  in order for  Lessee to have  temporary  or
permanent  authority  to operate the Aircraft as  contemplated  by the Lease and
(ii) forthwith upon delivery of the Aircraft under this Agreement and the Lease,
to cause all  necessary  documents to be duly filed for  recording in accordance
with applicable United States federal Law.




               7.6.8     CONSENTS

     Each Participant,  each Pass Through Trustee,  Subordination  Agent,  Owner
Trustee and Mortgagee  covenants and agrees, for the benefit of Lessee,  that it
shall not unreasonably withhold its consent to any consent or approval requested
of it or of Owner  Trustee or Mortgagee  under the terms of any of the Operative
Agreements which by its terms is not to be unreasonably withheld.

               7.6.9     INSURANCE

     Each of Owner  Participant,  the Pass Through  Trustees,  the Subordination
Agent and the Owner Trustee  agrees not to obtain or maintain  insurance for its
own  account  as  permitted  by  Section  11.2 of the Lease to the  extent  such
insurance  would  limit  or  otherwise  adversely  affect  the  coverage  of any
insurance required to be obtained or maintained by Lessee pursuant to Section 11
and Annex D of the Lease.

               7.6.10    EXTENT OF INTEREST OF NOTE HOLDERS

     A Note Holder  shall not, as such,  have any further  interest in, or other
right with respect to, the Trust Estate or the Trust  Indenture  Estate when and
if the principal and Make-Whole Amount, if any, of and interest on the Equipment
Note held by such Note Holder,  and all other sums, then due and payable to such
Note Holder hereunder and under any other Operative  Agreement,  shall have been
paid in full.

               7.6.11    FOREIGN REGISTRATION

     Each Participant, Owner Trustee and Mortgagee hereby agree, for the benefit
of Lessee but subject to the provisions of Section 7.1.2 of the Lease:

     (a) that Lessee  shall be entitled  to register  the  Aircraft or cause the
Aircraft to be registered  in a country other than the United States  subject to
compliance with the following:

          (i) each of the following requirements is satisfied:

          (A)  such  registration  shall be made only  after  the Tax  Attribute
               Period,  unless  Lessee  prepays at such time on a lump sum basis
               any liability  due under the Tax Indemnity  Agreement as a result
               of  such  registration   based  upon  the  assumption  that  such
               registration  would continue for the remainder of the term of the
               Permitted Sublease described in clause (C) below;




          (B)  no Lease Event of Default or Special  Default shall have occurred
               and be continuing at the time of such registration;

          (C)  such proposed change of registration is made in connection with a
               Permitted Sublease to a Permitted Air Carrier;

          (D)  such country is a Permitted  Country with which the United States
               then maintains normal diplomatic  relations,  or, if Taiwan,  the
               United  States then  maintains  diplomatic  relations at least as
               good as those in effect on the Closing Date;

          (ii) the Owner Trustee and Mortgagee shall have received an opinion in
     form and substance reasonably satisfactory to Owner Participant (subject to
     customary  exceptions)  from counsel  qualified in the laws of the relevant
     jurisdiction  reasonably satisfactory to the Owner Participant addressed to
     each such party to the effect that:

               (A) such country would  recognize the Owner  Trustee's  ownership
          interest in the  Aircraft,  and all filing,  recording or other action
          necessary  to protect  the same shall have been  accomplished  (or, if
          such opinion  cannot be given at the time of such  proposed  change in
          registration because such change in registration is not yet effective,
          (1) the opinion shall detail what filing, recording or other action is
          necessary  and (2) the Owner  Trustee  and the  Mortgagee  shall  have
          received a certificate  from Lessee that all possible  preparations to
          accomplish  such  filing,  recording  and other action shall have been
          done,   and  such  filing,   recording   and  other  action  shall  be
          accomplished  and a  supplemental  opinion  to that  effect  shall  be
          delivered  to the Owner  Trustee and the  Mortgagee on or prior to the
          effective date of such change in registration);

               (B) the  obligations  of Lessee,  and the rights and  remedies of
          Owner  Trustee,  under the Lease are valid,  binding  and  enforceable
          under the laws of such  jurisdiction  (or the laws of the jurisdiction
          to which the laws of such  jurisdiction  would refer as the applicable
          governing law);

               (C) after giving effect to such change in registration,  the Lien
          of the  Trust  Indenture  on the  Owner  Trustee's  right,  title  and
          interest  in and to the  Aircraft  and the Lease  shall  continue as a



          valid and duly  perfected  first  priority  security  interest and all
          filing,  recording or other action necessary to protect the same shall
          have been  accomplished  (or, if such  opinion  cannot be given at the
          time of such proposed  change in  registration  because such change in
          registration  is not yet effective,  (1) the opinion shall detail what
          filing,  recording  or other  action  is  necessary  and (2) the Owner
          Trustee  and the  Mortgagee  shall have  received a  certificate  from
          Lessee that all  possible  preparations  to  accomplish  such  filing,
          recording  and other  action  shall have been done,  and such  filing,
          recording and other action shall be  accomplished  and a  supplemental
          opinion to that effect shall be delivered to the Owner Trustee and the
          Mortgagee  on or  prior  to the  effective  date  of  such  change  in
          registration);

               (D) it is not  necessary,  solely as a consequence of such change
          in registration and without giving effect to any other activity of the
          Owner  Trustee,  the  Owner  Participant  or  the  Mortgagee  (or  any
          Affiliate  thereof),  as the case may be, for the Owner  Trustee,  the
          Owner  Participant  or the Mortgagee to qualify to do business in such
          jurisdiction as a result of such  reregistration  in order to exercise
          any rights or remedies  with respect to the  Aircraft  pursuant to the
          Lease;

               (E)  there is no tort  liability  of the  owner or  lessor  of an
          aircraft not in possession thereof under the laws of such jurisdiction
          (it being  agreed  that,  in the event such latter  opinion  cannot be
          given in a form  satisfactory to the Owner  Participant,  such opinion
          shall be  waived if  insurance  reasonably  satisfactory  to the Owner
          Participant is provided to cover such risk); and

               (F) unless Lessee shall have agreed to provide insurance covering
          the risk of  requisition  of use of the Aircraft by the  government of
          such country (so long as the Aircraft is registered  under the laws of
          such country),  the laws of such country require fair  compensation by
          the government of such country payable in currency freely  convertible
          into Dollars and freely  removable from such country  (without license
          or permit,  unless  Lessee prior to such proposed  reregistration  has
          obtained such license or permit) for the taking or requisition by such
          government of such use.




     (b) In addition,  as a condition  precedent  to any change in  registration
Lessee shall have given to Lessor,  Mortgagee and Owner  Participant  assurances
reasonably satisfactory to each of them:

          (i)  to the effect that the provisions of Section 11 of the Lease have
               been  complied  with  after  giving  effect  to  such  change  of
               registration;

          (ii) of the payment by Lessee of all reasonable out-of-pocket expenses
               of Lessor, each Participant and Mortgagee in connection with such
               change  of  registry,   including,  without  limitation  (1)  the
               reasonable fees and  disbursements of counsel to Lessee,  Lessor,
               Owner  Participant  and  Mortgagee,  (2) any filing or  recording
               fees, Taxes or similar  payments  incurred in connection with the
               change of  registration  of the  Aircraft  and the  creation  and
               perfection of the security interest therein in favor of Mortgagee
               for the benefit of Note  Holders,  and (3) all costs and expenses
               incurred in connection with any filings  necessary to continue in
               the United States the perfection of the security  interest in the
               Aircraft and the Lease in favor of  Mortgagee  for the benefit of
               Note Holders; and

          (iii)to the  effect  that the tax and  other  indemnities  in favor of
               each  person  named as an  indemnitee  under any other  Operative
               Agreement  afford  each  such  person   substantially   the  same
               protection as provided prior to such change of  registration  (or
               Lessee  shall  have  agreed  upon  additional  indemnities  that,
               together  with  such  original  indemnities,  in  the  reasonable
               judgment of Lessor, Owner Participant and Mortgagee,  afford such
               protection).

     (c)  Notwithstanding  anything to the  contrary  contained  in this Section
7.6.11,  Section  7.1.2 of the Lease and  paragraph (e) of Annex A to the Lease,
Lessee may not  reregister  the Aircraft  pursuant to Section 7.1.2 of the Lease
and this Section  7.6.11 so long as a Lease Event of Default or Special  Default
has occurred and is continuing.

               7.6.12    [INTENTIONALLY OMITTED.]



               7.6.13    INTEREST IN CERTAIN ENGINES

     Each  Participant,  Owner Trustee,  and Mortgagee agree, for the benefit of
each of the  lessor,  conditional  seller,  mortgagee  or  secured  party of any
airframe or engine leased to, or purchased by, Lessee or any Permitted Sublessee
subject  to a  lease,  conditional  sale,  trust  indenture  or  other  security
agreement that it will not acquire or claim, as against such lessor, conditional
seller,  mortgagee or secured party, any right,  title or interest in any engine
as the result of such engine  being  installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security  agreement and owned by such lessor or conditional seller or subject to
a trust  indenture  or security  interest in favor of such  mortgagee or secured
party.

SECTION 8.     CONFIDENTIALITY

     Lessee, Owner Participant,  Note Holders, Owner Trustee and Mortgagee shall
take commercially reasonable actions to keep Annexes B, C and D and Schedules 1,
2, 3 and 4 to the Lease,  the  Participation  Agreement,  and the Tax  Indemnity
Agreement  confidential  and shall not disclose,  or cause to be disclosed,  the
same to any Person,  except (A) to  prospective  and  permitted  transferees  of
Lessee's,  Owner Participant's,  a Note Holder's, a Liquidity Provider's,  Owner
Trustee's,  Mortgagee's  or  other  Indenture  Indemnitee's  interest  or  their
respective counsel or special counsel,  independent insurance brokers, auditors,
or  other  agents  who  agree  to hold  such  information  confidential,  (B) to
Lessee's,  Owner Participant's,  a Note Holder's, a Liquidity Provider's, a Pass
Through Trustee's, Owner Trustee's,  Mortgagee's or other Indenture Indemnitee's
counsel or special counsel,  independent  insurance brokers,  auditors, or other
agents, Affiliates or investors who agree to hold such information confidential,
(C) as may be required by any statute,  court or administrative order or decree,
legal  process or  governmental  ruling or  regulation,  including  those of any
applicable  insurance  regulatory bodies  (including,  without  limitation,  the
National  Association  of  Insurance  Commissioners),  federal or state  banking
examiners,  Internal  Revenue Service  auditors or any stock exchange,  (D) with
respect to Lessee and Owner  Participant,  by mutual  agreement of such parties,
(E) with respect to a Note Holder or any Pass Through  Trustee,  to a nationally
recognized  rating agency for the purpose of obtaining a rating on the Equipment
Notes or the Pass Through  Trust  Certificates  or to support an NAIC rating for
the Equipment Notes,(F) such other Persons as are reasonably deemed necessary by
the disclosing  party in order to protect the interests of such party or for the
purposes  of  enforcing  such  documents  by  such  party  or (G) to the  extent
information  becomes  publicly  available other than through  disclosure by such



Person in violation of this  Agreement;  PROVIDED,  that any and all disclosures
permitted by clauses (C),  (D),  (E), (F) or (G) above shall be made only to the
extent  necessary  to meet the  specific  requirements  or needs of the  Persons
making such disclosures.

SECTION 9.     INDEMNIFICATION AND EXPENSES

     9.1       GENERAL INDEMNITY

               9.1.1     INDEMNITY

     Whether or not any of the transactions contemplated hereby are consummated,
Lessee shall indemnify,  protect, defend and hold harmless each Indemnitee from,
against and in respect of, and shall pay on a net After-Tax  Basis,  any and all
Expenses of any kind or nature whatsoever that may be imposed on, incurred by or
asserted against any Indemnitee,  relating to, resulting from, or arising out of
or in connection with, any one or more of the following:

     (a)  The  Operative  Agreements,   the  Pass  Through  Agreements,  or  the
enforcement  of any of the terms of any of the Operative  Agreements or the Pass
Through Agreements;

     (b) The Aircraft, the Airframe, any Engine or any Part, including,  without
limitation,  with  respect  thereto,  (i)  the  manufacture,  design,  purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration,  delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation,  maintenance,  testing, repair, overhaul,  condition,
alteration,   modification,   addition,  improvement,   storage,  airworthiness,
replacement,  repair, sale,  substitution,  return,  abandonment,  redelivery or
other  disposition  of the Aircraft,  any Engine or any Part,  (ii) any claim or
penalty arising out of violations of applicable Laws by Lessee (or any Permitted
Sublessee),  (iii) tort liability,  whether or not arising out of the negligence
of any Indemnitee (whether active,  passive or imputed),  (iv) death or property
damage of passengers,  shippers or others, (v) environmental  control,  noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;

     (c) The offer,  sale,  or delivery of any  Equipment  Notes,  Pass  Through
Certificates or any interest therein or represented thereby;

     (d)  Any  breach  of or  failure  to  perform  or  observe,  or  any  other
noncompliance  with,  any  covenant  or  agreement  or  other  obligation  to be
performed  by Lessee  under any Lessee  Operative  Agreement or any Pass Through



Agreement  or the  falsity of any  representation  or  warranty of Lessee in any
Lessee Operative  Agreement or any Pass Through  Agreement other than in the Tax
Indemnity Agreement; and

     (e) In the case of the Owner Participant and the Owner Trustee, any failure
of a refunding or refinancing  transaction to occur pursuant to Section 11 after
the Mortgagee has given notice  thereof to the Note Holders  pursuant to Section
2.12(b) of the Trust Indenture and such notice has not been effectively  revoked
pursuant to the terms of such Section 2.12(b).

               9.1.2     EXCEPTIONS

     Notwithstanding  anything  contained in Section 9.1.1,  Lessee shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 9.1.1 in respect of any Expense of such Indemnitee:

     (a) For any  Taxes  or a loss of Tax  benefit,  whether  or not  Lessee  is
required to  indemnify  therefor  pursuant  to Section 9.3 or the Tax  Indemnity
Agreement;

     (b) Except to the extent  attributable  to acts or events  occurring  prior
thereto, acts or events (other than acts or events related to the performance by
Lessee  of its  obligations  pursuant  to the  terms  of  the  Lessee  Operative
Agreements)  that occur after the earliest of: (i) with respect to the Airframe,
any Engine or any Part, the return of possession (it being  understood  that the
date of the placement of the Aircraft in storage as provided in Section 5 of the
Lease  constitutes  the date of return of the Aircraft  under the Lease) of such
Airframe,  Engine or Part  pursuant to the terms of and in  compliance  with the
Lease  (other  than  pursuant  to Section  15  thereof,  in which case  Lessee's
liability  under this  Section 9.1 shall  survive for so long as Lessor shall be
entitled to exercise  remedies under such Section 15) or (ii) the termination of
the Term in  accordance  with the Lease  (other  than  pursuant  to  Section  15
thereof,  in which case Lessee's  liability under this Section 9.1 shall survive
for so long as Lessor shall be entitled to exercise  remedies under such Section
15);

     (c) To the extent  attributable to any Transfer  (voluntary or involuntary)
by or on behalf of such  Indemnitee of any Equipment  Note or interest  therein,
except (i) for out-of-pocket costs and expenses incurred as a result of any such
Transfer  pursuant to the  exercise of remedies  under any  Operative  Agreement
resulting  from a Lease Event of Default and (ii) as  otherwise  required by the
terms of Section 2.13 of the Trust Indenture or Section 11 hereof;




     (d) To the extent  attributable to any Transfer  (voluntary or involuntary)
by or on behalf of Owner  Participant  of any interest in the  Aircraft,  or the
Trust Estate except  transfers  contemplated by Section 4.5 of the Lease and for
out-of-pocket  costs and expenses incurred as a result of such Transfer,  if, at
the time of such  Transfer,  a Lease Event of Default shall have occurred and be
continuing;

     (e)  To  the  extent  attributable  to  the  gross  negligence  or  willful
misconduct  of such  Indemnitee  or any related  Indemnitee  (as defined  below)
(other than gross  negligence  or willful  misconduct  imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);

     (f) In the case of First  Security,  to the extent  attributable to matters
enumerated in the proviso to Section 14;

     (g) To the  extent  attributable  to the  incorrectness  or  breach  of any
representation  or  warranty  of  such  Indemnitee  or  any  related  Indemnitee
contained  in or made  pursuant to any  Operative  Agreement or any Pass Through
Agreement;

     (h) To the extent  attributable  to the failure by such  Indemnitee  or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be  performed  or observed in any  Operative  Agreement  or any Pass
Through Agreement;

     (i) To the extent  attributable  to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass Through Trust Certificates,  the Trust Estate or the Trust Agreement or any
similar  interest,  in  violation  of the  Securities  Act or  other  applicable
federal,  state or foreign securities Laws (other than any thereof caused by the
acts or omissions of Lessee);

     (j) (i) With  respect to any  Indemnitee  (other  than  Mortgagee),  to the
extent attributable to the failure of the Mortgagee to distribute funds received
and  distributable  by it in  accordance  with the  Trust  Indenture,  (ii) with
respect  to any  Indemnitee  (other  than  the  Owner  Trustee),  to the  extent
attributable  to the failure of the Owner Trustee to distribute  funds  received
and  distributable  by it in  accordance  with the Trust  Agreement,  (iii) with
respect  to  any  Indemnitee  (other  than  the  Subordination  Agent  or  Owner
Participant),  to the extent  attributable  to the failure of the  Subordination
Agent to distribute  funds received and  distributable  by it in accordance with
the Intercreditor Agreement, (iv) with respect to any Indemnitee (other than the
Pass Through Trustees or Owner  Participant),  to the extent attributable to the



failure of a Pass Through Trustee to distribute funds received and distributable
by it in accordance with the Pass Through Trust Agreements,  (v) with respect to
Mortgagee, to the extent attributable to the negligence or willful misconduct of
Mortgagee  in the  distribution  of funds  received and  distributable  by it in
accordance with the Trust Indenture,  (vi) with respect to Owner Trustee, to the
extent  attributable to the negligence or willful misconduct of Owner Trustee in
the  distribution of funds received and  distributable  by it in accordance with
the Trust  Agreement,  (vii) with  respect to the  Subordination  Agent,  to the
extent attributable to the negligence or willful misconduct of the Subordination
Agent  in  the  distribution  of  funds  received  and  distributable  by  it in
accordance with the Intercreditor Agreement, and (viii) with respect to the Pass
Through  Trustees,  to the  extent  attributable  to the  negligence  or willful
misconduct of a Pass Through  Trustee in the  distribution of funds received and
distributable by it in accordance with the Pass Through Trust Agreements.

     (k) Other than during the continuation of a Lease Event of Default,  to the
extent  attributable to the authorization or giving or withholding of any future
amendments,  supplements,  waivers or  consents  with  respect to any  Operative
Agreement or Pass Through  Agreement  other than such as have been  requested by
Lessee or as are  required  by or made  pursuant  to the terms of the  Operative
Agreements or Pass Through Agreements (unless such requirement  results from the
actions of an  Indemnitee  not  required by or made  pursuant  to the  Operative
Agreements or the Pass Through Agreements);

     (l) To the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such  Indemnitee  expressly  agrees  shall not be paid by or be
reimbursed by Lessee;

     (m) To the extent that it is an ordinary  and usual  operating  or overhead
expense;

     (n) With  respect to the Owner  Participant  or the Owner  Trustee,  or any
related  Indemnitee,  to the extent  attributable to the  deregistration  of the
Aircraft under the Act as a result of Owner Participant's or Owner Trustee's (or
any related  Indemnitee of either) not being a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to Section
7.1.2 of the Lease) of Owner  Participant,  or any related  Indemnitee  of Owner
Participant (not taken at the request of the Lessee) (for purposes hereof, First
Security shall not be considered a Related Indemnitee of Owner Participant);

     (o) For any Lessor  Lien  attributable  to such  Indemnitee  or any related
Indemnitee (for purposes hereof, neither the Owner Trust or First Security shall
be considered a related Indemnitee of the Owner Participant);




     (p) If  another  provision  of an  Operative  Agreement  or a Pass  Through
Agreement  specifies the extent of Lessee's  responsibility  or obligation  with
respect to such Expense, to the extent arising from other than failure of Lessee
to comply with such specified responsibility or obligation;

     (q) Except in respect of circumstances  referenced in Section 9.1.1(e),  to
the  extent  constituting  principal,  Make-Whole  Amount  or  interest  on  the
Equipment Notes  attributable  solely to an Event of Default not  constituting a
Lease Event of Default;

     (r) To the extent incurred by or asserted against an Indemnitee (other than
as a result of  Lessee's  action  or  inaction)  as a result of any  "prohibited
transaction",  within the meaning of Section 406 of ERISA or Section  4975(c)(1)
of the Code;

     (s) To the  extent  attributable  to any  increased  obligation  of  Lessee
resulting from a Transfer of Owner  Participant's  interests in the Trust Estate
or Trust Agreement pursuant to Section 10.1.1; or

     (t) With  respect to First  Security,  or any  related  Indemnitee,  to the
extent  attributable  to the  deregistration  of the Aircraft under the Act as a
result of First  Security's  (or any related  Indemnitee of First  Security) not
being a  Citizen  of the  United  States  as a  result  of any act  (other  than
reregistration  of the Aircraft pursuant to Section 7.1.2 of the Lease) of First
Security,  or any related Indemnitee of First Security (not taken at the request
of the Lessee).

     For purposes of this Section 9.1, a Person shall be  considered a "related"
Indemnitee  with  respect to an  Indemnitee  if such Person is an  Affiliate  or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate.

               9.1.3     SEPARATE AGREEMENT

     This  Agreement  constitutes  a  separate  agreement  with  respect to each
Indemnitee and is enforceable directly by each such Indemnitee.



               9.1.4     NOTICE

     If a claim for any Expense that an Indemnitee shall be indemnified  against
under this Section 9.1 is made, such Indemnitee shall give prompt written notice
thereof to Lessee.  Notwithstanding the foregoing, the failure of any Indemnitee
to notify Lessee as provided in this Section 9.1.4,  or in Section 9.1.5,  shall
not release  Lessee from any of its  obligations  to indemnify  such  Indemnitee
hereunder,  except to the extent  that such  failure  results  in an  additional
Expense to Lessee  (in which  event  Lessee  shall not be  responsible  for such
additional  expense) or  materially  impairs  Lessee's  ability to contest  such
claim.

               9.1.5     NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS

     (a) In case any action,  suit or  proceeding  shall be brought  against any
Indemnitee  for  which  Lessee is  responsible  under  this  Section  9.1,  such
Indemnitee  shall notify Lessee of the  commencement  thereof and Lessee may, at
its expense, participate in and to the extent that it shall wish (subject to the
provisions of the following  paragraph),  assume and control the defense thereof
and, subject to Section 9.1.5(c), settle or compromise the same.

     (b) Lessee or its insurer(s) shall have the right, at its or their expense,
to  investigate  or, if  Lessee or its  insurer(s)  shall  agree not to  dispute
liability to the  Indemnitee  giving  notice of such action,  suit or proceeding
under this Section  9.1.5 for  indemnification  hereunder or under any insurance
policies  pursuant  to which  coverage  is sought,  control  the defense of, any
action, suit or proceeding, relating to any Expense for which indemnification is
sought  pursuant to this Section 9.1, and each  Indemnitee  shall cooperate with
Lessee or its insurer(s) with respect thereto;  PROVIDED,  that Lessee shall not
be  entitled  to control the defense of any such  action,  suit,  proceeding  or
compromise any such Expense during the continuance of any Lease Event of Default
arising  under Section 14.1 of the Lease.  In  connection  with any such action,
suit or proceeding  being  controlled by Lessee,  such Indemnitee shall have the
right to  participate  therein,  at its  sole  cost and  expense,  with  counsel
reasonably   satisfactory   to   Lessee;   PROVIDED,   that  such   Indemnitee's
participation  does not, in the reasonable  opinion of the  independent  counsel
appointed by the Lessee or its insurers to conduct such  proceedings,  interfere
with the defense of such case.

     (c) In no event  shall any  Indemnitee  enter  into a  settlement  or other
compromise  with  respect to any Expense  without the prior  written  consent of



Lessee, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 9.1.

     (d) In the case of any Expense indemnified by the Lessee hereunder which is
covered by a policy of insurance  maintained by Lessee pursuant to Section 11 of
the Lease, at Lessee's  expense,  each  Indemnitee  agrees to cooperate with the
insurers in the exercise of their rights to  investigate,  defend or  compromise
such  Expense as may be required to retain the benefits of such  insurance  with
respect to such Expense.

     (e) If an Indemnitee is not a party to this  Agreement,  Lessee may require
such  Indemnitee  to agree in writing to the terms of this Section 9 and Section
15.8 prior to making any payment to such Indemnitee under this Section 9.

     (f)  Nothing  herein  shall be  deemed  to be an  assumption  by  Lessee of
obligations  of Owner  Trustee with respect to, or a guarantee by Lessee of, any
amounts  payable by Owner  Trustee  upon  Equipment  Notes or a guarantee of any
residual value of the Aircraft.

     (g) Nothing  contained in this Section  9.1.5 shall be deemed to require an
Indemnitee to contest any Expense or to assume  responsibility for or control of
any judicial proceeding with respect thereto.

               9.1.6     INFORMATION

     Lessee will  provide the  relevant  Indemnitee  with such  information  not
within  the  control  of  such  Indemnitee,  as is  in  Lessee's  control  or is
reasonably available to Lessee, which such Indemnitee may reasonably request and
will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations  under Section 9.1.5. The Indemnitee shall supply Lessee
with  such  information  not  within  the  control  of  Lessee,  as is  in  such
Indemnitee's control or is reasonably available to such Indemnitee, which Lessee
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.1.5.

               9.1.7     EFFECT  OF  OTHER  INDEMNITIES;  SUBROGATION;   FURTHER
                         ASSURANCES

     Upon the payment in full by Lessee of any indemnity provided for under this
Agreement,  Lessee,  without any further action and to the full extent permitted
by Law, will be subrogated to all rights and remedies of the person  indemnified



(other than with respect to any of such  Indemnitee's  insurance  policies or in
connection  with any indemnity claim such Indemnitee may have under Section 5.03
or  Article  VII  of the  Trust  Indenture  or  Section  5.3  or 7 of the  Trust
Agreement) in respect of the matter as to which such  indemnity  was paid.  Each
Indemnitee  will give such further  assurances or agreements  and cooperate with
Lessee to permit Lessee to pursue such claims,  if any, to the extent reasonably
requested by Lessee and at Lessee's expense.

               9.1.8     REFUNDS

     If an Indemnitee  receives any refund, in whole or in part, with respect to
any Expense paid by Lessee  hereunder,  it will promptly pay the amount refunded
(but not an amount in excess of the  amount  Lessee or any of its  insurers  has
paid in respect of such  Expense) over to Lessee unless a Lease Event of Default
shall have occurred and be continuing,  in which case such amounts shall be paid
over to Owner  Trustee (or, so long as the Trust  Indenture  shall not have been
discharged, to Mortgagee) to hold as security for Lessee's obligations under the
Lessee Operative Agreements or, if requested by Lessee,  applied to satisfy such
obligations.

     9.2       EXPENSES

               9.2.1     INVOICES AND PAYMENT

     Each of the Owner Trustee,  Mortgagee,  the Owner Participant,  Lessee, the
Pass Through  Trustees,  and the  Subordination  Agent shall promptly  submit to
Lessee for its prompt approval (which shall not be unreasonably withheld) copies
of invoices in  reasonable  detail of the  Transaction  Expenses for which it is
responsible  for  providing  information  as they are received  (but in no event
later than the 90th day after the Closing  Date).  If so submitted and approved,
the Owner Participant agrees promptly,  but in any event no later than the 105th
day after the Closing  Date,  to pay (but not in excess of 1% of Lessor's  Cost)
Transaction  Expenses.  Lessee  shall be  obligated  to pay directly any and all
Transaction  Expenses  which  are in  excess of 1% of  Lessor's  Cost.  If Owner
Participant  shall fail to pay any  Transaction  Expense that it is obligated to
pay hereunder,  Lessee shall pay such Transaction  Expense.  Any such payment by
Lessee  shall not affect  Owner  Participant's  obligations  or Lessee's  rights
against Owner Participant for its failure to make any such payment.

               9.2.2     PAYMENT OF OTHER EXPENSES

     Lessee  shall pay (i) the ongoing  fees and  expenses of Owner  Trustee and
Mortgagee in performing their  obligations under the Operative  Agreements,  and



(ii) all reasonable  out-of-pocket  costs and expenses (including the reasonable
fees and disbursements of counsel)  incurred by any Participant  attributable to
(A) any transfer of title to the Aircraft or any Engine  contemplated by Section
4.5 of the Lease or (B) any waiver,  amendment or  modification of any Operative
Agreement to the extent requested by Lessee.

     9.3       GENERAL TAX INDEMNITY

               9.3.1     GENERAL

     Except as provided in Section  9.3.2,  Lessee  agrees that each  payment of
Rent paid by Lessee  pursuant to the Lease,  and any other  payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement,  shall be free
of all  withholdings  or  deductions  with respect to Taxes of any nature (other
than U.S. federal,  state or local withholding taxes on, based on or measured by
gross  or net  income),  and in the  event  that  Lessee  shall be  required  by
applicable  law to make any such  withholding  or deduction for any such payment
(x)  Lessee  shall  make all such  withholdings  or  deductions,  (y) the amount
payable  by  Lessee  shall  be  increased  so that  after  making  all  required
withholdings or deductions such Tax Indemnitee  receives the same amount that it
would have received had no such  withholdings  or deductions  been made, and (z)
Lessee  shall pay the full amount  withheld or deducted to the  relevant  Taxing
Authority in accordance  with applicable law. Lessee further agrees that, in the
event it is required to withhold from any payment of Basic Rent, Stipulated Loss
Value (and amounts  determined by reference  thereto),  and amounts payable upon
exercise of Lessee's  purchase option pursuant to Section 17.3 of the Lease, any
Tax imposed upon Owner  Participant or Owner Trustee  (including any withholding
Tax based on income or receipts of Owner  Participant or Owner Trustee) and such
Tax is excluded from indemnification pursuant to Section 9.3.2, Lessee shall pay
such additional amount, if any, required so that the total amount paid by Lessee
(after making all required withholdings) is equal to (assuming timely payment of
the Equipment Notes prior to the relevant Payment Date) the aggregate  principal
amount of scheduled  installments due on the Equipment Notes  outstanding on the
relevant  Payment Date,  together with accrued and unpaid  interest,  due on the
Equipment Notes;  Owner Participant or Owner Trustee,  as the case may be, shall
reimburse Lessee for any such additional  amounts within two Business Days after
demand  therefor.  Except as provided in Section 9.3.2 and whether or not any of
the  transactions  contemplated  hereby  are  consummated,   Lessee  shall  pay,
indemnify,  protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed  by any  Taxing  Authority  that may from time to time be  imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or



any Part or any  interest in any of the  foregoing  (whether or not  indemnified
against by any other Person),  upon or with respect to the Operative  Agreements
or the transactions or payments contemplated thereby,  including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft,  the Airframe,  any
Engine,  any Part, any Operative  Agreement  (including  without  limitation any
Equipment  Notes) or any data or any other thing  delivered  or to be  delivered
under  an  Operative  Agreement,  (y)  the  purchase,  manufacture,  acceptance,
rejection,  sale, transfer of title, return,  ownership,  mortgaging,  delivery,
transport, charter, rental, lease, re-lease, sublease,  assignment,  possession,
repossession,  presence,  use,  condition,  storage,  preparation,  maintenance,
modification,  alteration,  improvement,  operation,  registration,  transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control,  the  imposition  of any Lien  (other than a Lessor  Lien),  financing,
refinancing  requested by the Lessee,  abandonment  or other  disposition of the
Aircraft,  the  Airframe,  any  Engine,  any Part,  any data or any other  thing
delivered or to be delivered under an Operative Agreement or (z) rent, interest,
fees or any other  income,  proceeds,  receipts or earnings,  whether  actual or
deemed, arising upon, in connection with, or in respect of, any of the Operative
Agreements  (including  the property or income or other proceeds with respect to
property  held as part of the Trust  Estate)  or the  transactions  contemplated
thereby.

               9.3.2     CERTAIN EXCEPTIONS

     The  provisions  of Section 9.3.1 shall not apply to, and Lessee shall have
no liability hereunder for, Taxes:

     (a) imposed on a Tax  Indemnitee  by the federal  government  of the United
States or any Taxing Authority or governmental  subdivision of the United States
or therein  (including any state or local Taxing Authority) (i) on, based on, or
measured by,  gross or net income or gross or net  receipts,  including  capital
gains  taxes,  excess  profits  taxes,   minimum  taxes  from  tax  preferences,
alternative  minimum taxes,  branch profits taxes,  accumulated  earnings taxes,
personal  holding  company  taxes,  succession  taxes and estate taxes,  and any
withholding taxes on, based on or measured by gross or net income or receipts or
(ii) on, or with  respect  to, or  measured  by,  capital or net worth or in the
nature of a franchise  tax or a tax for the privilege of doing  business  (other
than, in the case of clause (i) or (ii), sales, use, license or property Taxes);

     (b) imposed on a Tax  Indemnitee  by any Taxing  Authority or  governmental
subdivision  thereof or therein  outside of the  United  States  (including  any
Taxing Authority in or of a territory,  possession or commonwealth of the United



States) (i) on,  based on, or measured  by,  gross or net income or gross or net
receipts,  including  capital gains taxes,  excess profits taxes,  minimum taxes
from  tax  preferences,   alternative   minimum  taxes,  branch  profits  taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes and
estate taxes, and any withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with  respect to, or measured  by,  capital or
net worth or in the  nature of a  franchise  tax or a tax for the  privilege  of
doing business  (other than, in the case of clause (i) or (ii), (A) sales,  use,
license or  property  Taxes,  or (B) any Taxes  imposed by any Taxing  Authority
(other than a Taxing Authority within whose  jurisdiction such Tax Indemnitee is
incorporated  or organized or maintains its principal place of business) if such
Tax  Indemnitee  would  not have  been  subject  to  Taxes of such  type by such
jurisdiction  but for (I) the location,  use or operation of the  Aircraft,  the
Airframe,  any  Engine  or any  Part  thereof  by a  Lessee  Person  within  the
jurisdiction of the Taxing  Authority  imposing such Tax, or (II) the activities
of any Lessee  Person  (except for  activities of a Lessee Person that is not an
Affiliate,  successor or assign of the Lessee, which activities are unrelated to
the transactions contemplated by the Operative Agreements) in such jurisdiction,
including,  but not  limited  to,  use of any other  aircraft  by Lessee in such
jurisdiction, (III) the status of any Lessee Person as a foreign entity or as an
entity owned in whole or in part by foreign persons, (IV) Lessee having made (or
having  been  deemed to have  made)  payments  to such Tax  Indemnitee  from the
relevant  jurisdiction  or (V) in the case of the  Pass  Through  Trustees,  any
Participant  or any  related  Tax  Indemnitee,  the Lessee  being  incorporated,
organized,  maintaining  a place of business or  conducting  activities  in such
jurisdiction);

     (c) on, or with respect to, or measured by, any trustee  fees,  commissions
or compensation received by Owner Trustee,  Pass Through Trustee,  Subordination
Agent or Mortgagee;

     (d) on the Trust or the Trust  Estate  that result  from  treatment  of the
Trust or the Trust  Estate as an entity,  such as a  corporation,  separate  and
apart from the Owner Participant;

     (e) that are being contested as provided in Section 9.3.4 hereof;

     (f) imposed on any Tax Indemnitee to the extent that such Taxes result from
the  gross  negligence  or  willful  misconduct  of such Tax  Indemnitee  or any
Affiliate thereof;

     (g)  imposed  on  or  with  respect  to a  Tax  Indemnitee  (including  the
transferee  in those  cases in which the Tax on  transfer  is imposed  on, or is



collected from, the  transferee) as a result of a transfer or other  disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of the Owner Participant,  by Owner Trustee, or,
in the case of Taxes imposed on a transferee, by the transferor) of any interest
in the Aircraft,  the Airframe, any Engine or any Part, the Rent (other than the
assignment of Rent to the Mortgagee pursuant to the Trust Indenture), the Trust,
the Trust Estate,  the Trust Indenture Estate, the Lease or any interest arising
under  the  Operative  Agreements  or  any  Equipment  Note  or  a  transfer  or
disposition  (including a deemed  transfer or  disposition) of any interest in a
Tax Indemnitee  (other than (A) a  substitution  or replacement of the Aircraft,
the Airframe,  any Engine or any Part by a Lessee Person that is treated for Tax
purposes as a transfer or disposition or (B) a transfer  pursuant to an exercise
of remedies upon a Lease Event of Default that shall have occurred and have been
continuing;

     (h) Taxes in excess of those  that would  have been  imposed  had there not
been a transfer or other  disposition  by or to such Tax Indemnitee or a related
Tax Indemnitee described in paragraph (g) above;

     (i) imposed on the Owner  Participant and indemnified by Lessee pursuant to
the Tax Indemnity Agreement;

     (j) imposed  with  respect to any period  after the  expiration  or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of  possession  of the  Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease (provided that this exclusion (j)
shall  not apply to Taxes  imposed  after  such  period  arising  as a result of
payments by Lessee under the Operative Agreements after such period);

     (k) consisting of any interest,  penalties or additions to tax imposed on a
Tax  Indemnitee  as a  result  of (in  whole  or in  part)  failure  of such Tax
Indemnitee or a related Tax  Indemnitee to file any return  properly and timely,
unless  such  failure  shall be caused by the  failure of Lessee to fulfill  its
obligations, if any, under Section 9.3.6 with respect to such return;

     (l) resulting from, or that would not have been imposed but for, any Lessor
Liens  arising  as a result  of  claims  against,  or acts or  omissions  of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;

     (m)  imposed  on any Tax  Indemnitee  as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or



any Affiliate thereof contained in any Operative  Agreement or the inaccuracy of
any  representation  or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;

     (n) in the nature of an  intangible or similar Tax (i) upon or with respect
to the value or principal amount of the interest of Loan Participant or any Note
Holder in any Equipment Note or the loan evidenced  thereby or (ii) upon or with
respect  to the  value of the  interest  of the Owner  Participant  in the Trust
Estate  or the  Trust,  in each case  only if such  Taxes  are in the  nature of
franchise  Taxes or result from the Tax Indemnitee  doing business in the taxing
jurisdiction  and are  imposed  because  of the  place of  incorporation  or the
activities   unrelated  to  the  transactions   contemplated  by  the  Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;

     (o) that is included in Lessor's  Cost and paid to the  appropriate  Taxing
Authority;

     (p) imposed on a Tax  Indemnitee  by a Taxing  Authority of a  jurisdiction
outside  the  United  States to the extent  that such Taxes  would not have been
imposed  but for a  connection  between  the Tax  Indemnitee  or a  related  Tax
Indemnitee and such jurisdiction imposing such Tax unrelated to the transactions
contemplated by the Operative Agreements; or

     (q) Taxes relating to ERISA or Section 4975 of the Code.

     For purposes  hereof,  a Tax Indemnitee and any other Tax Indemnitees  that
are successors,  assigns,  agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.

               9.3.3     PAYMENT

     (a) Lessee's  indemnity  obligation to a Tax Indemnitee  under this Section
9.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 9.3 and any tax
benefits  actually  recognized  by  such  Tax  Indemnitee  as a  result  of  the
indemnifiable Tax (including,  without limitation,  any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable  under this Section 9.3), shall equal the amount
of the Tax indemnifiable under this Section 9.3.

     (b) At Lessee's  request,  the  computation  of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this Section 9.3 shall be verified and  certified  by an  independent  public



accounting  firm selected by such Tax Indemnitee and reasonably  satisfactory to
Lessee.  Such  verification  shall be  binding.  The costs of such  verification
(including  the fee of such  public  accounting  firm)  shall be borne by Lessee
unless such  verification  shall result in an adjustment in Lessee's favor of 5%
or more of the  net  present  value  of the  payment  as  computed  by such  Tax
Indemnitee, in which case the costs shall be paid by such Tax Indemnitee.

     (c) Each Tax  Indemnitee  shall  provide  Lessee with such  certifications,
information and  documentation as shall be in such Tax  Indemnitee's  possession
and as shall be reasonably requested by Lessee to minimize any indemnity payment
pursuant to this Section 9.3;  provided,  that  notwithstanding  anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Lessee
with any Tax returns.

     (d) Each Tax  Indemnitee  shall  promptly  forward  to Lessee  any  written
notice,  bill or advice received by it from any Taxing Authority  concerning any
Tax for which it seeks  indemnification under this Section 9.3. Lessee shall pay
any amount for which it is liable  pursuant to this  Section 9.3 directly to the
appropriate  Taxing  Authority  if legally  permissible  or upon demand of a Tax
Indemnitee,  to such Tax  Indemnitee  within 30 days of such  demand  (or,  if a
contest occurs in accordance  with Section  9.3.4,  within 30 days after a Final
Determination  (as defined  below)),  but in no event more than one Business Day
prior to the date the Tax to which such amount payable hereunder relates is due.
If  requested  by a Tax  Indemnitee  in  writing,  Lessee  shall  furnish to the
appropriate  Tax  Indemnitee  the original or a certified  copy of a receipt for
Lessee's  payment of any Tax paid by Lessee or such other evidence of payment of
such Tax as is  acceptable  to such Tax  Indemnitee.  Lessee  shall also furnish
promptly upon written  request such data as any Tax  Indemnitee  may  reasonably
require to enable such Tax  Indemnitee  to comply with the  requirements  of any
taxing jurisdiction  unless such data is not reasonably  available to Lessee or,
unless  such  data is  specifically  requested  by a  Taxing  Authority,  is not
customarily furnished by domestic air carriers under similar circumstances.  For
purposes of this Section 9.3, a "Final Determination" shall mean (i) a decision,
judgment,  decree or other  order by any court of  competent  jurisdiction  that
occurs pursuant to the provisions of Section 9.3.4,  which  decision,  judgment,
decree  or other  order  has  become  final  and  unappealable,  (ii) a  closing
agreement or settlement  agreement entered into in accordance with Section 9.3.4
that has become  binding and is not subject to further  review or appeal (absent
fraud,  misrepresentation,  etc.),  or (iii) the  termination of  administrative
proceedings  and the  expiration of the time for  instituting a claim in a court
proceeding.




     (e) If any Tax Indemnitee shall actually realize a tax savings by reason of
any Tax paid or indemnified by Lessee pursuant to this Section 9.3 (whether such
tax  savings  shall be by means of a foreign tax  credit,  depreciation  or cost
recovery  deduction or otherwise)  and such savings is not otherwise  taken into
account in computing such payment or indemnity such Tax Indemnitee  shall pay to
Lessee an amount equal to the lesser of (i) the amount of such tax savings, plus
any additional tax savings recognized as the result of any payment made pursuant
to this sentence,  when, as, if, and to the extent,  realized or (ii) the amount
of all payments  pursuant to this  Section 9.3 by Lessee to such Tax  Indemnitee
(less any payments  previously made by such Tax Indemnitee to Lessee pursuant to
this  Section  9.3.3 (e)) (and the excess,  if any, of the amount  described  in
clause (i) over the amount described in clause (ii) shall be carried forward and
applied  to  reduce  pro  tanto  any  subsequent  obligations  of Lessee to make
payments to such Tax Indemnitee  pursuant to this Section 9.3);  provided,  that
such Tax Indemnitee  shall not be required to make any payment  pursuant to this
sentence so long as a Lease Event of Default of a monetary  nature has  occurred
and  is  continuing.  If a tax  benefit  is  later  disallowed  or  denied,  the
disallowance  or denial shall be treated as a Tax  indemnifiable  under  Section
9.3.1  without  regard to the  provisions  of Section  9.3.2 (other than Section
9.3.2 (f)). Each such Tax Indemnitee shall in good faith use reasonable  efforts
in filing its tax returns and in dealing  with  Taxing  Authorities  to seek and
claim any such tax benefit.

               9.3.4     CONTEST

     (a) If a written  claim is made  against a Tax  Indemnitee  for Taxes  with
respect to which Lessee could be liable for payment or indemnity  hereunder,  or
if a Tax  Indemnitee  makes a  determination  that a Tax is due for which Lessee
could have an indemnity obligation hereunder, such Tax Indemnitee shall promptly
give Lessee notice in writing of such claim (provided, that failure to so notify
Lessee shall not relieve Lessee of its indemnity  obligations  hereunder  unless
such  failure  to notify  effectively  forecloses  Lessee's  rights to require a
contest  of such  claim)  and shall  take no action  with  respect to such claim
without the prior written consent of Lessee for 30 days following the receipt of
such notice by Lessee; provided, that, in the case of a claim made against a Tax
Indemnitee, if such Tax Indemnitee shall be required by law to take action prior
to the end of such 30-day period,  such Tax Indemnitee  shall, in such notice to
Lessee,  so inform Lessee,  and such Tax Indemnitee  shall take no action for as
long as it is legally able to do so (it being  understood  that a Tax Indemnitee
shall be entitled  to pay the Tax claimed and sue for a refund  prior to the end
of such 30-day  period if (i)(A) the  failure to so pay the Tax would  result in



substantial  penalties (unless immediately  reimbursed by Lessee) and the act of
paying the Tax would not  materially  prejudice  the right to contest or (B) the
failure  to so pay  would  result  in  criminal  penalties  and  (ii)  such  Tax
Indemnitee  shall take any action so required in  connection  with so paying the
Tax in a manner that is the least prejudicial to the pursuit of the contest). In
addition, such Tax Indemnitee shall (provided,  that Lessee shall have agreed to
keep such information  confidential  other than to the extent necessary in order
to contest the claim) furnish Lessee with copies of any requests for information
from any Taxing  Authority  relating to such Taxes with  respect to which Lessee
may be required to indemnify hereunder. If requested by Lessee in writing within
30 days after its receipt of such  notice,  such Tax  Indemnitee  shall,  at the
expense of Lessee (including, without limitation, all reasonable costs, expenses
and reasonable  attorneys' and  accountants'  fees and  disbursements),  in good
faith  contest  (or, if permitted by  applicable  law,  allow Lessee to contest)
through  appropriate  administrative  and  judicial  proceedings  the  validity,
applicability or amount of such Taxes by (I) resisting payment thereof, (II) not
paying the same except under protest if protest is necessary and proper or (III)
if the payment is made, using  reasonable  efforts to obtain a refund thereof in
an appropriate  administrative and/or judicial proceeding. If requested to do so
by Lessee,  the Tax  Indemnitee  shall  appeal  any  adverse  administrative  or
judicial  decision,  except  that the Tax  Indemnitee  shall not be  required to
pursue any appeals to the United States Supreme Court.  If and to the extent the
Tax  Indemnitee  is able to separate  the  contested  issue or issues from other
issues  arising  in the same  administrative  or  judicial  proceeding  that are
unrelated to the transactions  contemplated by the Operative Agreements without,
in the good faith judgment of such Tax Indemnitee,  adversely affecting such Tax
Indemnitee,  such Tax  Indemnitee  shall permit Lessee to control the conduct of
any such  proceeding  and shall provide to Lessee (at Lessee's cost and expense)
with  such  information  or data  that is in such Tax  Indemnitee's  control  or
possession that is reasonably  necessary to conduct such contest. In the case of
a contest controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with
Lessee in good faith  regarding  the manner of  contesting  such claim and shall
keep Lessee reasonably  informed  regarding the progress of such contest.  A Tax
Indemnitee shall not fail to take any action expressly  required by this Section
9.3.4  (including,  without  limitation,  any action  regarding any appeal of an
adverse  determination  with respect to any claim) or settle or  compromise  any
claim without the prior written consent of the Lessee (except as contemplated by
Section 9.3.4(b) or (c)).

     (b)  Notwithstanding  the foregoing,  in no event shall a Tax Indemnitee be
required  to pursue any  contest  (or to permit  Lessee to pursue  any  contest)



unless (i) Lessee  shall have  agreed to pay such Tax  Indemnitee  on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting  such Taxes,  including,  without  limitation,  all reasonable out of
pocket costs and expenses and reasonable  attorneys' and  accountants'  fees and
disbursements,  (ii) if such  contest  shall  involve  the payment of the claim,
Lessee shall advance the amount  thereof (to the extent  indemnified  hereunder)
plus  interest,  penalties  and  additions to tax with respect  thereto that are
required  to  be  paid  prior  to  the   commencement  of  such  contest  on  an
interest-free  after-Tax  basis to such Tax Indemnitee  (and such Tax Indemnitee
shall  promptly pay to the Lessee any net realized tax benefits  resulting  from
such advance  including any tax benefits  resulting  from making such  payment),
(iii) such Tax Indemnitee shall have reasonably determined that the action to be
taken will not result in any material  risk of  forfeiture,  sale or loss of the
Aircraft  (unless Lessee shall have made  provisions to protect the interests of
any  such  Tax  Indemnitee  in a  manner  reasonably  satisfactory  to such  Tax
Indemnitee)  (provided,  that such Tax  Indemnitee  agrees  to notify  Lessee in
writing  promptly after it becomes aware of any such risk),  (iv) no Lease Event
of Default  shall have  occurred and be  continuing  unless  Lessee has provided
security for its  obligations  hereunder  by  advancing  to such Tax  Indemnitee
before  proceeding or continuing with such contest,  the amount of the Tax being
contested, plus any interest and penalties and an amount estimated in good faith
by such Tax  Indemnitee  for expenses,  and (v) prior to commencing any judicial
action  controlled by Lessee,  Lessee shall have  acknowledged its liability for
such  claim  hereunder,   provided  that  Lessee  shall  not  be  bound  by  its
acknowledgment  if the Final  Determination  articulates  conclusions of law and
fact that  demonstrate  that Lessee has no liability for the  contested  amounts
hereunder.  Notwithstanding the foregoing,  if any Tax Indemnitee shall release,
waive,  compromise  or settle  any claim  which may be  indemnifiable  by Lessee
pursuant to this Section 9.3 without the written permission of Lessee,  Lessee's
obligation to indemnify such Tax Indemnitee  with respect to such claim (and all
directly  related  claims and claims  based on the outcome of such claim)  shall
terminate,  subject to Section 9.3.4(c),  and subject to Section 9.3.4(c),  such
Tax Indemnitee  shall repay to Lessee any amount  previously paid or advanced to
such Tax Indemnitee  with respect to such claim,  plus interest at the rate that
would have been  payable by the  relevant  Taxing  Authority  with  respect to a
refund of such Tax.

     (c)  Notwithstanding   anything  contained  in  this  Section  9.3,  a  Tax
Indemnitee  will not be required to contest the  imposition of any Tax and shall
be permitted to settle or compromise any claim without  Lessee's consent if such
Tax  Indemnitee  (i) shall waive its right to  indemnity  under this Section 9.3



with  respect  to such Tax (and any  directly  related  claim  and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Lessee any amount  previously paid or advanced by Lessee pursuant to this
Section 9.3 with respect to such Tax,  plus interest at the rate that would have
been payable by the relevant  Taxing  Authority with respect to a refund of such
Tax,  and (iii) shall agree to discuss with Lessee the views or positions of any
relevant Taxing Authority with respect to the imposition of such Tax.

               9.3.5     REFUND

     If any Tax Indemnitee shall receive a refund of, or be entitled to a credit
against other  liability  for, all or any part of any Taxes paid,  reimbursed or
advanced by Lessee,  such Tax  Indemnitee  shall pay to Lessee within 30 days of
such  receipt an amount  equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit  (taking into account any Taxes incurred by such
Tax  Indemnitee by reason of the receipt of such refund or  realization  of such
credit)  actually  realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee  made pursuant to this sentence  (including this clause (a))
and (b) such  tax  payment,  reimbursement  or  advance  by  Lessee  to such Tax
Indemnitee  theretofore  made  pursuant to this Section 9.3 (and the excess,  if
any, of the amount  described in clause (a) over the amount  described in clause
(b) shall be carried  forward  and  applied  to reduce pro tanto any  subsequent
obligation  of Lessee to make payments to such Tax  Indemnitee  pursuant to this
Section  9.3).  If, in addition to such  refund or credit,  such Tax  Indemnitee
shall  receive  (or be  credited  with) an amount  representing  interest on the
amount of such refund or credit,  such Tax Indemnitee shall pay to Lessee within
30 days of such receipt or  realization  of such credit that  proportion of such
interest that shall be fairly attributable to Taxes paid, reimbursed or advanced
by Lessee prior to the receipt of such refund or realization of such credit.

               9.3.6     TAX FILING

     If any report,  return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 9.3, Lessee shall
timely file the same  (except for any such report,  return or statement  which a
Tax  Indemnitee  has  timely  notified  the  Lessee  in  writing  that  such Tax
Indemnitee  intends to file, or for which such Tax Indemnitee is required by law
to file,  in its own name);  provided,  that the relevant Tax  Indemnitee  shall
furnish  Lessee with any  information  in such Tax  Indemnitee's  possession  or
control  that is  reasonably  necessary  to file  any  such  return,  report  or
statement and is reasonably  requested in writing by Lessee (it being understood



that the Tax  Indemnitee  shall not be required to furnish  copies of its actual
tax  returns,  although  it may be  required  to  furnish  relevant  information
contained  therein).  Lessee shall either file such report,  return or statement
and send a copy of such report, return or statement to such Tax Indemnitee,  and
Owner Trustee if the Tax  Indemnitee is not Owner  Trustee,  or, where Lessee is
not permitted to file such report, return or statement, it shall notify such Tax
Indemnitee of such  requirement  and prepare and deliver such report,  return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable  time prior to the time such report,  return or statement is
to be filed.

               9.3.7     FORMS

     Each Tax  Indemnitee  agrees to furnish from time to time to Lessee or Loan
Trustee or to such other  person as Lessee or Loan  Trustee  may  designate,  at
Lessee's or Loan Trustee's  request,  such duly executed and properly  completed
forms as may be necessary or  appropriate  in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority,  if
(x) such  reduction or exemption  is  available to such Tax  Indemnitee  and (y)
Lessee has  provided  such Tax  Indemnitee  with any  information  necessary  to
complete such form not otherwise reasonably available to such Tax Indemnitee.

               9.3.8     NON-PARTIES

     If a Tax  Indemnitee is not a party to this  Agreement,  Lessee may require
the Tax  Indemnitee  to agree in writing,  in a form  reasonably  acceptable  to
Lessee,  to the terms of this  Section 9.3 and Section  15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.

               9.3.9     SUBROGATION

     Upon  payment of any Tax by Lessee  pursuant  to this  Section 9.3 to or on
behalf  of a Tax  Indemnitee,  Lessee,  without  any  further  action,  shall be
subrogated to any claims that such Tax  Indemnitee  may have  relating  thereto.
Such Tax Indemnitee  shall cooperate with Lessee (to the extent such cooperation
does not  result in any  unreimbursed  cost,  expense or  liability  to such Tax
Indemnitee) to permit Lessee to pursue such claims.

               9.3.10    FOREIGN TAX ON LOAN PAYMENTS

     If an Owner Participant is incorporated or organized,  or maintains a place
of business or conducts activities in, a country other than the United States or
in a territory,  possession or  commonwealth  of the United  States  (within the



meaning of the tax law of that foreign  jurisdiction) and if as a result thereof
any foreign Taxes (including  withholding Taxes) are imposed on the Pass Through
Trustees,  Pass Through Trusts,  or Note Holders,  then Owner  Participant shall
reimburse  Lessee for any payments Lessee is required to make to or on behalf of
any Pass Through Trustee,  Pass Through Trust, or Note Holder under this Section
9.3 as a result of the  imposition  of such Taxes.  The amount  payable by Owner
Participant  to Lessee shall be an amount  which,  after taking into account any
such  Taxes,  any Tax  imposed  upon the  receipt  or  accrual by Lessee of such
payment by Owner  Participant  and any tax  benefits or tax savings  realized by
Lessee  with  respect to the  payment  of such  withholding  Tax or the  payment
hereunder,  shall equal the amount of  Lessee's  payment to or on behalf of such
Pass Through Trustee, or Note Holder.

     9.4       PAYMENTS

     Except as  otherwise  provided  in  Section  9.3.3(d),  any  payments  made
pursuant to Section 9.1 or 9.3 shall be due on demand therefor and shall be made
directly  to  the  relevant  Indemnitee  or  Tax  Indemnitee  or to  Lessee,  in
immediately available funds at such bank or to such account as specified by such
Indemnitee  or Tax  Indemnitee  or  Lessee,  as the  case  may  be,  in  written
directives  to the payor,  or, if no such  direction  shall have been given,  by
check of the payor  payable to the order of, and mailed to, such  Indemnitee  or
Tax  Indemnitee  or  Lessee,  as the case may be,  by  certified  mail,  postage
prepaid, at its address as set forth in this Agreement.

     9.5       INTEREST

     If any amount,  payable by Lessee,  any  Indemnitee  or any Tax  Indemnitee
under Section 9.1 or 9.3 is not paid when due, the person obligated to make such
payment  shall pay on demand,  to the  extent  permitted  by Law,  to the person
entitled thereto,  interest on any such amount for the period from and including
the due date for such amount to but  excluding the date the same is paid, at the
Payment Due Rate.  Such interest  shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.

     9.6       BENEFIT OF INDEMNITIES

     The  obligations  of Lessee in  respect  of all  indemnities,  obligations,
adjustments  and  payments  in  Section  9.1 or 9.3 are  expressly  made for the
benefit  of, and shall be  enforceable  by,  the  Indemnitee  or Tax  Indemnitee
entitled  thereto,  without declaring the Lease to be in default or taking other
action thereunder, and notwithstanding any provision of the Trust Indenture.




SECTION 10.    ASSIGNMENT OR TRANSFER OF INTERESTS

     10.1      PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS

               10.1.1    OWNER PARTICIPANT

     (a) During the Term, Owner Participant shall not Transfer any or all of its
right,  title or interest in the Trust Estate or the Trust Agreement and to this
Agreement unless:

          (i) The Transferee shall have full power, authority and legal right to
     execute and deliver and to perform  the  obligations  of Owner  Participant
     under this Agreement and the other Owner  Participant  Agreements and shall
     provide  reasonably  satisfactory  evidence of such power and  authority to
     Lessee, Owner Trustee and Mortgagee;

          (ii) The Transferee shall enter into one or more legal, valid, binding
     and enforceable agreements effective to confirm that such Transferee agrees
     to be bound by all the terms of, and to  undertake  all of the  obligations
     arising  after  such  transfer  of,  the  transferring   Owner  Participant
     contained  in the  Owner  Participant  Agreements  and in  which  it  makes
     representations and warranties substantially the same as those contained in
     Section 6.2 of the Participation Agreement;

          (iii) The  terms and  conditions  of this  Lease and the other  Lessee
     Operative  Agreements  insofar as they relate to the rights and obligations
     of Lessee or the Loan Participant shall not be altered;

          (iv) Owner  Participant or Transferee  shall deliver to Lessee,  Owner
     Trustee and Mortgagee an opinion of counsel reasonably satisfactory to each
     of them to the effect  that such  agreement  or  agreements  referred to in
     Section 10.1.1(a)(ii) and, if applicable,  10.1.1(a)(vi) are legal, binding
     and  enforceable  in  accordance  with its or their terms and (y) that such
     Transfer will not violate applicable  securities laws, the Act or any other
     applicable  law and is in accordance  with  subsection  (i) and (v) of this
     Section  10.1.1(a)  (provided  that any  opinion  with  respect  to Section
     10.1.1(a)(v)  may  rely on  customary  certificates  and  affidavits  of an
     appropriate  officer of the  Transferee,  in determining  the status of the
     Transferee as "Citizen of the United States");

          (v) The  Transferee  is a  Citizen  of the  United  States  (it  being
     understood  that the existence of any such  requirement is to be determined



     without giving  consideration to Section 47.9 of the FAA Regulations or any
     other  provision  that  may  restrict  Lessee's  use  or  operation  of the
     Aircraft),  or shall use a voting  powers trust or similar  arrangement  in
     order to hold an interest in the Trust Estate such that the Aircraft can be
     registered in the United States  (without giving  consideration  to Section
     47.9 of the FAA  Regulations  or any  other  provision  that  may  restrict
     Lessee's use or operation of the Aircraft); and

          (vi) The Transferee shall be a single person and shall be either (A) a
     Permitted Institution or (B) any other person (other than, without Lessee's
     consent, an air carrier (as defined in Section 1.1 of the FAA Regulations),
     a commercial operator (as defined in Section 1.1 of the FAA Regulations) or
     an Affiliate of any of the  foregoing)  the  obligations of which under the
     Owner Participant  Agreements are guaranteed by a Permitted  Institution in
     any case, pursuant to a written guaranty,  in form and substance reasonably
     satisfactory to Lessee, Owner Trustee and Mortgagee.

     (b) Owner  Participant  shall give written notice to Lessee,  Mortgagee and
Owner Trustee at least 10 days prior to any such  Transfer,  specifying the name
and address of the proposed  Transferee,  and providing financial  statements of
the proposed Transferee evidencing satisfaction of the requirements described in
Section 10.1.1(a)(vi)(A) or (B) above.

     (c) Any fees,  charges and expenses,  including the reasonable  legal fees,
charges and expenses incurred by Lessee, Owner Participant,  Mortgagee, any Note
Holder or Owner  Trustee in  connection  with any Transfer by Owner  Participant
permitted by this Section 10.1.1, or by the Transferee in any such case, will be
paid for by Owner Participant.

               10.1.2    OWNER TRUSTEE

     Owner Trustee may transfer its interests in the Trust Agreement pursuant to
Section 9 thereof.

               10.1.3    NOTE HOLDERS

     Subject to Section  7.5.2 hereof and Section  2.07 of the Trust  Indenture,
any Note  Holder  may,  at any time and  from  time to time,  Transfer  or grant
participations  in all or any portion of the  Equipment  Notes and/or all or any
portion  of its  beneficial  interest  in its  Equipment  Notes  and  the  Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through  Certificates  by a Pass Through  Trustee shall not be considered a
Transfer  or  participation);   provided,  that  any  participant  in  any  such



participations  shall not have any direct rights under the Operative  Agreements
or any Lien on all or any part of the  Aircraft  or Trust  Indenture  Estate and
Lessee shall not have any increased  liability or obligations as a result of any
such  participation.  In the  case of any  such  Transfer,  the  Transferee,  by
acceptance of Equipment Notes in connection with such Transfer,  shall be deemed
to be bound by all of the  covenants of Note Holders  contained in the Operative
Agreements.

     10.2      EFFECT OF TRANSFER

     Upon any  Transfer in  accordance  with  Section  10.1.1,  10.1.2 or 10.1.3
(other  than any  Transfer  by any Note  Holder,  to the  extent it only  grants
participations  in  Equipment  Notes  or in its  beneficial  interest  therein),
Transferee  shall be deemed an "Owner  Participant,"  "Owner Trustee" or a "Note
Holder,"  respectively,  for all  purposes  of  this  Agreement  and  the  other
Operative Agreements and, in the case of a Transferee of any Loan Participant or
Note Holder,  shall be deemed to have paid its ratable  portion of Lessor's Cost
previously  made by Loan  Participant  making such conveyance and represented by
the interest being  conveyed,  and each reference  herein to Owner  Participant,
Owner  Trustee  or Note  Holder,  respectively,  shall  thereafter  be  deemed a
reference  to such  Transferee  for all  purposes,  and the  transferring  Owner
Participant,  Owner Trustee,  Loan  Participant or Note Holder shall be released
(except,  in the  case of  Owner  Participant,  to the  extent  of any  guaranty
provided by it under  Section  10.1.1(a)(vi))  from all of its  liabilities  and
obligations  under this  Agreement  and any other  Operative  Agreements  to the
extent such  liabilities and obligations  arise after such Transfer and, in each
case,  to the  extent  such  liabilities  and  obligations  are  assumed  by the
Transferee; PROVIDED, that such transferring Owner Participant, Owner Trustee or
Note  Holder  (and  its  respective  Affiliates,  successors,  assigns,  agents,
servants,  representatives,  directors and  officers)  will continue to have the
benefit of any rights or  indemnities  under any Operative  Agreement  vested or
relating to circumstances, conditions, acts or events prior to such Transfer.

SECTION 11.    REFUNDING AND CERTAIN OTHER MATTERS

     11.1      REFUNDING GENERALLY

     Subject to  Sections  11.2 and 11.4,  in the event that at any time  Lessee
shall  have  given  written  notice to Owner  Participant,  Owner  Trustee,  and
Mortgagee that Lessee is requesting a voluntary  redemption of all, but not less
than all, of the outstanding  Equipment Notes (in compliance with the provisions
of Sections 2.11 and 2.12 of the Trust  Indenture) by Owner Trustee as part of a



refunding  transaction,  Owner Participant agrees to negotiate in good faith and
promptly  conclude an  agreement  with Lessee as to the terms of such  refunding
transaction  (including  the terms of any Debt to be issued in  connection  with
such refunding  transaction and the  documentation  to be executed in connection
therewith),  and after Lessee and Owner Participant shall have concluded such an
agreement:

               11.1.1    REFUNDING CERTIFICATE

     Within ten Business Days after reaching such agreement,  Owner  Participant
will deliver to Lessee a Refunding Certificate.  Within ten Business Days of its
receipt of the Refunding Certificate,  Lessee may demand a verification pursuant
to Section  3.2.1(d) of the Lease of the  information set forth in the Refunding
Certificate.  Upon the  acceptance by Lessee of the accuracy of the  information
set forth in the Refunding  Certificate  or the  determination  pursuant to such
verification  procedures of the Refunding  Information,  the appropriate parties
will take the actions specified in Sections 11.1.2 through 11.1.7 below.

               11.1.2    FINANCING AGREEMENTS

     The appropriate  parties will enter into appropriate  documentation  (which
may include an underwriting  agreement or similar private  placement  agreement)
with the institution or  institutions to be named therein  providing for (a) the
issuance and sale by Owner Trustee to such  institution or  institutions  on the
Refunding  Date of the New Debt and (b) the  application  of the proceeds of the
sale of the New  Debt to the  redemption  of all  such  Equipment  Notes  on the
Refunding Date. Lessee, acting on behalf of Owner Trustee,  shall give Mortgagee
at least 30 days'  revocable  prior  written  notice of the proposed date of the
optional redemption.

               11.1.3    LEASE AMENDMENTS

     As a condition  to the  closing of the  refunding  transaction,  Lessee and
Owner Trustee will amend the Lease, as  contemplated by Section  3.2.1(b) of the
Lease,  to provide  that (a) Basic Rent in respect of the period  from and after
the  Refunding  Date shall be as provided in the Refunding  Information  and (b)
amounts payable in respect of Stipulated Loss Value and Termination  Value, from
and after the Refunding Date shall be as provided in the Refunding Information.




               11.1.4    SECURITY AGREEMENTS

     Owner  Trustee  will enter into an  agreement  to provide for the  securing
thereunder of the New Debt in like manner as the Equipment  Notes and will enter
into  such  amendments  and  supplements  to the  Trust  Indenture  (or such new
indenture or other security agreement) and the other Operative Agreements as may
be necessary to effect such refunding).

               11.1.5    EXPENSES

     Whether or not such refunding transaction is consummated,  Lessee shall pay
or reimburse all of the reasonable out-of-pocket expenses of all parties to such
refunding  transaction,  including,  without  limitation,  any  underwriting  or
placement fees and the reasonable fees and expenses of such parties' counsel and
any related loan or commitment fees.

               11.1.6    MAKE WHOLE AMOUNT

     At the closing of such refunding,  Owner Trustee shall pay, upon receipt of
the same from Lessee (which Lessee shall pay as Supplemental Rent as a condition
to the closing to the refunding  transaction),  to the Mortgagee for the account
of each Note Holder,  the Make-Whole Amount, if any, payable to such Note Holder
under Section 2.11 of the Trust Indenture.

               11.1.7    RETURN OF EQUIPMENT NOTES

     Subject to compliance by Owner Trustee and Lessee with all applicable terms
and  conditions  for  voluntary  prepayment  under the Trust  Indenture and this
Agreement,  each Note Holder will transfer to Owner Trustee the Equipment  Notes
held by it for cancellation  (and Owner Trustee shall cancel the same),  against
receipt by such Note  Holder of the  then-outstanding  principal  amount of such
Equipment  Notes,  accrued and unpaid  interest and Make-Whole  Amount,  if any,
thereon, together with payment in full of all other amounts then payable to such
Note Holder and Mortgagee hereunder or under the Trust Indenture.

     11.2      LIMITATIONS ON OBLIGATION TO REFUND

     Notwithstanding the other provisions of Section 11, Owner Participant shall
have no obligation to proceed with any refunding  transaction as contemplated by
this Section 11:

     (a) If, in the opinion of the Owner  Participant,  such  transaction  would
have,  or create any risk of,  adverse  tax  consequences  to Owner  Participant



unless Lessee  agrees to indemnify  Owner  Participant  against such adverse tax
consequences;

     (b)  Unless  Lessee   indemnifies  Owner  Participant  for  any  liability,
obligation  (other than the obligation to pay principal and interest and related
payments  in  respect  of the New Debt),  cost or  expense  (including,  without
limitation,  reasonable  attorneys'  fees) related to or arising out of any such
refunding transaction;

     (c) If a Lease Event of Default or Special  Default shall have occurred and
be continuing;

     (d)  If  there  shall  have  previously  been   consummated  two  refunding
transactions at Lessee's request pursuant to this Section 11;

     (e) If any amendment or supplement or other  modification  of the Operative
Documents  contemplated  by this Section 11.1 would increase the  obligations or
impair  the  rights of the Owner  Participant  or the  Owner  Trustee  under the
Operative Agreements;

     (f) Unless,  in the case of a  refinancing  involving a public  offering of
debt securities, neither the Owner Trustee nor the Owner Participant shall be an
"issuer" for securities laws purposes or an "obligor"  within the meaning of the
Trust Indenture Act of 1939, as amended;

     (g) If such  refunding  transaction  would  result  in (i) the  outstanding
principal  amount of the New Debt exceeding the outstanding  principal amount of
the Equipment Notes immediately  prior to such refinancing  (after giving effect
to the payment of any Basic Rent due on the date of such refinancing),  (ii) the
final  maturity  of the New Debt  being  later  than the final  maturity  of the
Equipment  Notes or (iii) the Weighted  Average Life to Maturity of the New Debt
being  greater or less (by more than six months) than the Weighted  Average Life
to Maturity of the Equipment Notes; or

     (h) If Owner  Participant,  after  being  advised by  reasonably  competent
counsel,  (i) in the case of a refinancing  involving a public  offering of debt
securities,  is not reasonably satisfied on the second Business Day prior to the
third day prior to the  proposed  Refunding  Date  that such  refunding  will be
consummated on the proposed Refunding Date (it being understood that the failure
of pricing  with respect to the public  offering to have  occurred at such time,
shall not  constitute  a reason for Owner  Participant  not being so  reasonably
satisfied) or (ii) in the case of a refinancing  not involving a public offering
of debt securities,  is not reasonably satisfied by the close of business on the



fifth day prior to the proposed Refunding Date that such refunding will occur on
the Refunding Date. In the event Owner  Participant is not reasonably  satisfied
as provided in the foregoing  sentence,  Owner  Participant  shall so notify the
Lessee,  the Owner Trustee and the Mortgagee and the Owner Trustee and Mortgagee
will  revoke  the  notice  of  redemption  relating  to the  proposed  refunding
transaction delivered under the Trust Indenture.

     11.3      EXECUTION OF CERTAIN DOCUMENTS

     Lessee,  Owner  Participant,  Owner  Trustee  and  Mortgagee  each agree to
execute any  document  necessary  or  advisable  to  implement  this  Section 11
(including,  without limitation, the execution, delivery and/or provision of any
appropriate   additional  or  modified  amendment,   representation,   warranty,
certificate,  opinion or other  document  that may  reasonably  be  requested by
Lessee, Owner Participant or any other person).

     11.4      ERISA

     Owner Participant shall not be obligated to conclude the proposed refunding
transaction  unless the agreements  utilized to effect such refunding contain an
agreement  by the  initial  holders  of the New Debt  substantially  the same as
Section  7.5.2(b)  of  this  Agreement,  except  in the  case  of any  refunding
transaction where the New Debt is sold in a public offering under the Securities
Act or a private  placement  intended for resale pursuant to Rule 144A under the
Securities  Act,  in which case the  holders of the New Debt shall be subject to
the restrictions relating to ERISA substantially the same as those applicable to
the purchasers of the Pass Through Certificates,  as described in the Prospectus
Supplement  relating  to the  initial  issuance  and  sale of the  Pass  Through
Certificates.

     11.5      CONSENT TO OPTIONAL REDEMPTIONS

     Each of Owner  Participant,  Owner Trustee and Mortgagee agrees with Lessee
not to cause an optional  redemption  of the Equipment  Notes  without  Lessee's
consent except as set forth in Section 2.13 of the Trust Indenture.

SECTION 12.    SECTION 1110

     It is the intention of each of Lessee, Owner Participant, Loan Participant,
the Note Holders (such intention being evidenced by each of their  acceptance of
an Equipment  Note),  Owner Trustee and Mortgagee that Owner Trustee,  as lessor
under the Lease (and  Mortgagee  as  assignee of Owner  Trustee  under the Trust



Indenture),  shall be entitled to the benefits of Section 1110 in the event of a
case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.

SECTION 13.    CHANGE OF CITIZENSHIP

     13.1      GENERALLY

     Without prejudice to the representations, warranties or covenants regarding
the status of any party hereto as a Citizen of the United States:

     (a) Each of Lessee, First Security,  WTC and Mortgagee agrees that it will,
immediately upon obtaining knowledge of any facts that would cast doubt upon its
continuing  status as a Citizen of the United  States and  promptly  upon public
disclosure of negotiations  in respect of any  transaction  which would or might
adversely  affect  such  status,  notify in writing  all  parties  hereto of all
relevant matters in connection therewith; and

     (b) Owner Participant  agrees that, in the event its status is to change or
has changed as a Citizen of the United States,  or it makes public disclosure of
circumstances  as a result of which it  believes  that such  status is likely to
change, it will notify all the other parties to this Participation  Agreement of
(i) such change in status promptly after obtaining Actual  Knowledge  thereof or
(ii) such belief as soon as practicable  after such public disclosure but in any
event within ten Business Days after such public disclosure.

     13.2      OWNER PARTICIPANT

     Owner  Participant  agrees,  solely for the  benefit of Lessee and the Note
Holders that if,  during such time as the Aircraft is  registered  in the United
States,  (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become,  ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable  thereunder (without
giving  consideration  to  Section  47.9 of the  FAA  Regulations  or any  other
provision  that may restrict  Lessee's use or operation of the  Aircraft),  then
Owner Participant shall as soon as is reasonably  practicable,  but in any event
within 30 days after obtaining  Actual  Knowledge of such  ineligibility  and of
such loss of citizenship,  (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements  restricting
Owner  Participant's  or Owner  Trustee's  ability to amend the Trust  Agreement
shall not apply to the extent necessary to permit the use of such a voting trust
or other  similar  arrangement)  or take any other action as may be necessary to
prevent any  deregistration  or maintain the United States  registration  of the
Aircraft or (z) transfer in accordance  with the terms of this Agreement all its



right,  title and  interest in and to this  Agreement,  the Trust Estate and the
Trust Agreement in accordance with Section 10.1.

     13.3      OWNER TRUSTEE

     Upon First Security giving any notice in accordance  with Section  13.1(a),
Owner Trustee shall, subject to Section 9.1.1 of the Trust Agreement,  resign as
Owner  Trustee.  Upon its receipt of such  notice,  Owner  Participant  shall as
promptly  as  practicable  appoint a Citizen of the United  States as  successor
Owner  Trustee  pursuant to Section 9.1 of the Trust  Agreement and Lessee shall
pay  Owner  Participant's   reasonable   out-of-pocket  costs  and  expenses  in
connection with such appointment of a successor Owner Trustee.

     13.4      MORTGAGEE

     Upon WTC giving any notice in accordance  with Section  13.1(a),  Mortgagee
shall  (if and so long as such  citizenship  is  necessary  under  the Act as in
effect at such time or, if it is not  necessary,  if and so long as  Mortgagee's
citizenship could have any adverse effect on Lessee, any Participant or any Note
Holder),  subject to Section  8.02 of the Trust  Indenture,  resign as Mortgagee
promptly upon its ceasing to be such a citizen.

SECTION 14.    CONCERNING OWNER TRUSTEE

     It is understood and agreed that,  except as otherwise  expressly  provided
herein or in the  Trust  Agreement  or the Trust  Indenture,  Owner  Trustee  is
entering  into this  Agreement  solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable  or  accountable  in its  individual  capacity  for any of the
statements,  representations,  warranties,  agreements or  obligations  of Owner
Trustee  hereunder,  or for any loss in respect thereof,  as to all of which the
parties agree to look solely to the Trust Estate; PROVIDED, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of First  Security (a) to Owner  Participant as expressly set forth in the Trust
Agreement,  (b) in respect of the representations,  warranties and agreements of
First Security expressly made as such herein or in any other Operative Agreement
to  which  it is a  party,  and  (c)  for  the  consequences  of its  own  gross
negligence,  willful  misconduct,  and, in  receiving,  handling or remitting of
funds only, its willful misconduct or simple negligence as a trustee.




SECTION 15.    MISCELLANEOUS

     15.1      AMENDMENTS

     No  provision  of this  Agreement  may be  amended,  supplemented,  waived,
modified,  discharged,  terminated or otherwise  varied  orally,  but only by an
instrument  in  writing  that  specifically  identifies  the  provision  of this
Agreement  that it  purports to amend,  supplement,  waive,  modify,  discharge,
terminate  or  otherwise  vary and is  signed  by the  party  against  which the
enforcement  of the  amendment,  supplement,  waiver,  modification,  discharge,
termination  or variance is sought.  Each such  amendment,  supplement,  waiver,
modification,  discharge, termination or variance shall be effective only in the
specific  instance  and for the  specific  purpose  for  which it is  given.  No
provision  of  this  Agreement   shall  be  varied  or   contradicted   by  oral
communication, course of dealing or performance or other manner not set forth in
an agreement,  document or instrument in writing and signed by the party against
which enforcement of the same is sought.

     15.2      SEVERABILITY

     If any provision hereof shall be held invalid,  illegal or unenforceable in
any respect in any  jurisdiction,  then, to the extent permitted by Law, (a) all
other  provisions  hereof  shall  remain  in  full  force  and  effect  in  such
jurisdiction and (b) such invalidity,  illegality or unenforceability  shall not
affect the validity,  legality or  enforceability of such provision in any other
jurisdiction.  If,  however,  any Law pursuant to which such provisions are held
invalid,  illegal or unenforceable  may be waived,  such Law is hereby waived by
the parties hereto to the full extent permitted,  to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.

     15.3      SURVIVAL

     The  indemnities  set forth herein shall  survive the delivery or return of
the  Aircraft,  the  Transfer  of any  interest  of  Owner  Participant  in this
Agreement,  the  Trust  Estate  and the Trust  Agreement,  the  Transfer  of any
interest by any Note Holder of its  Equipment  Note and the  expiration or other
termination of this Agreement or any other Operative Agreement.

     15.4      REPRODUCTION OF DOCUMENTS

     This  Agreement,  all  annexes,  schedules  and  exhibits  hereto  and  all
agreements,  instruments  and  documents  relating  hereto,  including,  without
limitation,  (a)  consents,  waivers and  modifications  that may  hereafter  be



executed  and (b)  financial  statements,  certificates  and  other  information
previously or hereafter furnished to any party hereto, may be reproduced by such
party  by  any  photographic,   photostatic,  microfilm,  micro-card,  miniature
photographic or other similar  process,  and such party may destroy any original
documents  so  reproduced.  Any  such  reproduction  shall be as  admissible  in
evidence as the  original  itself in any judicial or  administrative  proceeding
(whether  or  not  the  original  is  in  existence  and  whether  or  not  such
reproduction  was made by such party in the regular  course of business) and any
enlargement,  facsimile or further reproduction of such reproduction likewise is
admissible in evidence.

     15.5      COUNTERPARTS

     This Agreement and any amendments,  waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate  signature pages
bound  together into one or more  counterparts),  each of which when so executed
shall  be  deemed  to be an  original,  and  all of  which  counterparts,  taken
together, shall constitute one and the same instrument.

     15.6      NO WAIVER

     No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising,  any of its respective rights,  powers,  remedies or
privileges under this Agreement or provided at Law, in equity or otherwise shall
impair,  prejudice or  constitute a waiver of any such right,  power,  remedy or
privilege or be construed as a waiver of any breach hereof or default  hereunder
or as an  acquiescence  therein nor shall any single or partial  exercise of any
such right,  power,  remedy or privilege  preclude any other or further exercise
thereof by it or the exercise of any other right,  power, remedy or privilege by
it.  No notice to or  demand  on any  party  hereto  in any case  shall,  unless
otherwise  required  under this  Agreement,  entitle  such party to any other or
further  notice or demand in  similar or other  circumstances  or  constitute  a
waiver of the rights of any party  hereto to any other or further  action in any
circumstances without notice or demand.

     15.7      NOTICES

     Unless  otherwise  expressly  permitted by the terms  hereof,  all notices,
requests,  demands,  authorizations,  directions,  consents,  waivers  and other
communications  required or  permitted  to be made,  given,  furnished  or filed
hereunder shall be in writing (it being  understood that the  specification of a
writing in certain  instances and not in others does not imply an intention that
a writing is not required as to the latter),  shall refer  specifically  to this



Agreement  or other  applicable  Operative  Agreement,  and shall be  personally
delivered, sent by facsimile or telecommunication  transmission (which in either
case  provides  written  confirmation  to the sender of its  delivery),  sent by
registered mail or certified mail, return receipt requested, postage prepaid, or
sent by overnight courier service,  in each case to the respective  address,  or
facsimile  number  set  forth for such  party in  Schedule  1, or to such  other
address, facsimile or other number as each party hereto may hereafter specify by
notice  to  the  other  parties  hereto.  Each  such  notice,  request,  demand,
authorization,  direction,  consent,  waiver  or  other  communication  shall be
effective when received or, if made, given,  furnished or filed (a) by facsimile
or  telecommunication  transmission,  when  confirmed,  or (b) by  registered or
certified mail, three Business Days after being deposited,  properly  addressed,
with the U.S. Postal Service.

     15.8      GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

     (A) THIS  AGREEMENT  SHALL IN ALL  RESPECTS  BE GOVERNED BY THE LAWS OF THE
STATE  OF  NEW  YORK,  INCLUDING  ALL  MATTERS  OF  CONSTRUCTION,  VALIDITY  AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.

     (B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF
TO THE NON-EXCLUSIVE  JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE
CITY AND COUNTY OF NEW YORK AND OF THE UNITED  STATES FOR THE SOUTHERN  DISTRICT
OF NEW YORK,  IN  CONNECTION  WITH ANY LEGAL  ACTION,  SUIT OR  PROCEEDING  WITH
RESPECT TO ANY MATTER  RELATING TO OR ARISING OUT OF OR IN CONNECTION  WITH THIS
AGREEMENT.

     (C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE
OF ANY AND ALL LEGAL  PROCESS,  SUMMONS,  NOTICES  AND  DOCUMENTS  OF ANY OF THE
AFOREMENTIONED  COURTS IN ANY SUCH  SUIT,  ACTION OR  PROCEEDING  MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,  AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 15.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE  UPON IT, OR ANY OF ITS  AGENTS,  IN EACH CASE IN  ACCORDANCE  WITH THIS
SECTION 15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH  SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH  SERVICE ON SUCH PARTY OR ANY JUDGMENT  RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.




     (D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE  LAW, AND AGREES NOT TO ASSERT,  BY WAY OF MOTION,  AS A DEFENSE,  OR
OTHERWISE,  IN ANY LEGAL ACTION OR  PROCEEDING  BROUGHT  HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM,  THAT  VENUE  FOR THE  ACTION  OR  PROCEEDING  IS  IMPROPER  OR THAT THIS
AGREEMENT  OR ANY OTHER  OPERATIVE  AGREEMENT  MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.

     (E) EACH PARTY HERETO HEREBY WAIVES ITS  RESPECTIVE  RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY  JURISDICTION  BASED UPON OR
ARISING OUT OF OR RELATING TO THIS AGREEMENT.

     15.9      THIRD-PARTY BENEFICIARY

     This Agreement is not intended to, and shall not,  provide any person not a
party hereto  (other than the Liquidity  Provider,  each of which is an intended
third party  beneficiary  with respect to the provisions of Section 9.1, and the
other  persons  referred  to in Section  7.6.13,  who are  intended  third party
beneficiaries of such Section) with any rights of any nature whatsoever  against
any of the  parties  hereto and no person  not a party  hereto  (other  than the
Liquidity Provider, with respect to the provisions of Section 9.1, and the other
persons referred to in Section 7.6.13,  with respect to such Section) shall have
any  right,  power or  privilege  in respect  of any party  hereto,  or have any
benefit or interest, arising out of this Agreement.

     15.10     ENTIRE AGREEMENT

     This Agreement,  together with the other Operative Agreements, on and as of
the date hereof,  constitutes  the entire  agreement of the parties  hereto with
respect  to  the  subject  matter  hereof,  and  all  prior  or  contemporaneous
understandings or agreements,  whether written or oral, among any of the parties
hereto  with  respect to such  subject  matter are  hereby  superseded  in their
entireties.

     15.11     FURTHER ASSURANCES

     Each party hereto shall execute,  acknowledge and deliver or shall cause to
be  executed,   acknowledged  and  delivered,   all  such  further   agreements,
instruments,  certificates or documents,  and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request  in  connection  with  the  administration  of,  or to  carry  out  more
effectively  the  purposes  of, or to better  assure and confirm into such other



party the rights and benefits to be provided  under this Agreement and the other
Operative Agreements.

                      [This space intentionally left blank]






     IN WITNESS  WHEREOF,  each of the  parties  has caused  this  Participation
Agreement to be duly  executed and  delivered as of the day and year first above
written.


                                   CONTINENTAL AIRLINES, INC.,
                                     Lessee



                                   By_________________________________
                                     Name:
                                     Title:


                                   CALJET LLC,
                                     Owner Participant

                                     By GATX/CALJET CORP.,
                                        Manager


                                   By_________________________________
                                     Name:
                                     Title:


                                   FIRST SECURITY BANK, NATIONAL
                                   ASSOCIATION,
                                     not in its individual capacity,
                                     except  as  expressly  provided
                                     herein,  but  solely  as  Owner
                                     Trustee


                                   By_________________________________
                                     Name:
                                     Title:








                                   WILMINGTON TRUST COMPANY,
                                     not in its individual capacity,
                                     except  as  expressly  provided
                                     herein, but solely as Mortgagee




                                   By_________________________________
                                     Name:
                                     Title:


                                   WILMINGTON TRUST COMPANY,
                                     not in  its individual capacity,
                                     except  as  expressly   provided
                                     herein,   but   solely  as  Pass
                                     Through Trustee  under  the Pass
                                     Through  Trust Agreement for the
                                     Continental     Airlines    Pass
                                     Through Trust, 1998-2A





                                   By_________________________________
                                     Name:
                                     Title:








                                   WILMINGTON TRUST COMPANY,
                                     not in  its individual capacity,
                                     except  as  expressly   provided
                                     herein,   but   solely  as  Pass
                                     Through Trustee  under  the Pass
                                     Through  Trust Agreement for the
                                     Continental     Airlines    Pass
                                     Through Trust, 1998-2B



                                   By_________________________________
                                     Name:
                                     Title:


                                   WILMINGTON TRUST COMPANY,
                                     not in  its individual capacity,
                                     except  as  expressly   provided
                                     herein,   but   solely  as  Pass
                                     Through Trustee  under  the Pass
                                     Through  Trust Agreement for the
                                     Continental     Airlines    Pass
                                     Through Trust, 1998-2C



                                   By_________________________________
                                     Name:
                                     Title:


                                   WILMINGTON TRUST COMPANY,
                                     not in its individual capacity,
                                     except  as  expressly provided
                                     herein, but solely as
                                     Subordination Agent



                                   By_________________________________
                                     Name:
                                     Title:



                                     ANNEX A


DEFINITIONS


GENERAL PROVISIONS
(a)  In  each  Operative  Agreement,  unless  otherwise  expressly  provided,  a
reference to:

          (i) each of "Lessee," "Lessor," "Loan  Participant,"  "Owner Trustee,"
     "Owner  Participant,"  "Mortgagee,"  "Note  Holder"  or  any  other  person
     includes,  without prejudice to the provisions of any Operative  Agreement,
     any  successor in interest to it and any  permitted  transferee,  permitted
     purchaser or permitted assignee of it;

          (ii)  words  importing  the  plural  include  the  singular  and words
     importing the singular include the plural;

          (iii) any agreement, instrument or document, or any annex, schedule or
     exhibit thereto, or any other part thereof,  includes, without prejudice to
     the provisions of any Operative  Agreement,  that agreement,  instrument or
     document, or annex, schedule or exhibit, or part, respectively, as amended,
     modified or supplemented from time to time in accordance with its terms and
     in accordance with the Operative Agreements, and any agreement,  instrument
     or document entered into in substitution or replacement therefor;

          (iv) any provision of any Law includes any such  provision as amended,
     modified,  supplemented,  substituted,  reissued or reenacted  prior to the
     Closing Date, and thereafter from time to time;

          (v) the  words  "Agreement,"  "this  Agreement,"  "hereby,"  "herein,"
     "hereto," "hereof" and "hereunder" and words of similar import when used in
     any Operative  Agreement  refer to such Operative  Agreement as a whole and
     not to any particular provision of such Operative Agreement;

          (vi)  the  words   "including,"   "including,   without   limitation,"
     "including,  but not  limited  to," and terms or phrases of similar  import
     when used in any Operative Agreement,  with respect to any matter or thing,
     mean including, without limitation, such matter or thing; and




          (vii) a "Section,"  an  "Exhibit,"  an "Annex" or a "Schedule"  in any
     Operative  Agreement,  or in any annex thereto, is a reference to a section
     of, or an exhibit,  an annex or a schedule to, such Operative  Agreement or
     such annex, respectively.

     (b) Each  exhibit,  annex  and  schedule  to each  Operative  Agreement  is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.

     (c) Unless otherwise defined or specified in any Operative  Agreement,  all
accounting  terms therein shall be construed and all  accounting  determinations
thereunder shall be made in accordance with GAAP.

     (d) Headings used in any Operative  Agreement are for convenience  only and
shall not in any way affect the construction of, or be taken into  consideration
in interpreting, such Operative Agreement.

     (e)  For  purposes  of  each  Operative   Agreement,   the  occurrence  and
continuance of a Lease Default or Lease Event of Default  referred to in Section
14.5  shall not be deemed to  prohibit  the  Lessee  from  taking  any action or
exercising  any right that is  conditioned  on no Lease Event of Default,  Lease
Default or Special  Default  having  occurred  and be  continuing  if such Lease
Default,  Special Default or Lease Event of Default  consists of the institution
of  reorganization  proceedings  with respect to Lessee under  Chapter 11 of the
Bankruptcy  Code and the  trustee or  debtor-in-possession  in such  proceedings
shall  have (i)  agreed to  perform  its  obligations  under the Lease  with the
approval of the applicable  court and thereafter shall have continued to perform
such  obligations in accordance with Section 1110 or (ii) shall have assumed the
Lease  with the  approval  of the  relevant  court  and  thereafter  shall  have
continued to perform its obligations under the Lease.

DEFINED TERMS

     "ACT" means part A of subtitle VII of title 49, United States Code.

     "ACTUAL  KNOWLEDGE"  means (a) as it applies to Owner Trustee or Mortgagee,
as the case may be, actual  knowledge of a responsible  officer in the Corporate
Trust  Department or the Corporate  Trust  Office,  respectively,  and (b) as it
applies to Owner Participant or Lessee,  actual knowledge of a Vice President or
more senior officer of any Member of Owner Participant or Lessee,  respectively,
or any other officer of any Member of Owner Participant or Lessee, respectively,



having  responsibility  for  the  transactions  contemplated  by  the  Operative
Agreements;  PROVIDED that each of Lessee, Owner Participant,  Owner Trustee and
Mortgagee  shall be deemed to have "Actual  Knowledge" of any matter as to which
it has received notice from Lessee,  Owner Participant,  any Note Holder,  Owner
Trustee or Mortgagee,  such notice having been given pursuant to Section 15.7 of
the Participation Agreement.

     "ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.

     "ADVERSE CHANGE IN TAX LAW" means (a) for Lessee,  a Change in Tax Law that
Lessee regards as one that could adversely  affect the economic  consequences of
the  transactions  contemplated  by the  Participation  Agreement  and the other
Operative   Agreements   that  are  anticipated  by  Lessee  or  (b)  for  Owner
Participant,  any  Change  in Tax Law that  would  adversely  affect  any of the
following tax assumptions:

          (i) For federal income tax purposes,  the Lease will be a "true" lease
     for purposes of the Code and Owner Participant will be treated as the owner
     of the Aircraft and Lessee will be treated as the lessee thereof;

          (ii) For  federal  income  tax  purposes,  Owner  Participant  will be
     entitled  to  depreciation  or cost  recovery  deductions  with  respect to
     Lessor' s Cost of the Aircraft; and

          (iii) For  federal  income tax  purposes,  Owner  Participant  will be
     entitled to deductions for interest payments on the Equipment Notes.

     "AFFILIATE" means, with respect to any person, any other person directly or
indirectly controlling,  controlled by or under common control with such person.
For  purposes  of this  definition,  "control"  means  the  power,  directly  or
indirectly,  to direct or cause the direction of the  management and policies of
such person,  whether through the ownership of voting  securities or by contract
or otherwise and "controlling,"  "controlled by" and "under common control with"
have correlative meanings.

     "AFTER-TAX BASIS" means, with respect to any payment required to be made on
an  After-Tax  Basis,  that such  payment  shall be  adjusted  such that,  after
deduction of all Taxes resulting from receipt or accrual of such payment and any
tax benefits realized as a result of the indemnified cost or liability,  the net
amount received is equal to such payment required to be made.

     "AIRCRAFT" means, collectively, the Airframe and Engines.




     "AIRCRAFT  BILL OF SALE" means the full  warranty bill of sale covering the
Aircraft delivered by Lessee to Owner Trustee on the Delivery Date.

     "AIRCRAFT  DOCUMENTS" means all technical data,  manuals and log books, and
all inspection,  modification  and overhaul  records and other service,  repair,
maintenance  and  technical  records that are required by the FAA (and any other
applicable Aviation  Authority),  to be maintained with respect to the Aircraft,
Airframe, Engines or Parts; and such term shall include all additions, renewals,
revisions  and  replacements  of any such  materials  from time to time made, or
required to be made, by the FAA (and any other  applicable  Aviation  Authority)
regulations,  and in each case in whatever form and by whatever  means or medium
(including, without limitation,  microfiche,  microfilm, paper or computer disk)
such  materials  may  be  maintained  or  retained  by or on  behalf  of  Lessee
(PROVIDED, that all such materials shall be maintained in the English language).

     "AIRFRAME" means (a) the aircraft  (excluding  Engines or engines from time
to time installed thereon)  manufactured by Airframe Manufacturer and identified
by Airframe  Manufacturer's model number,  United States registration number and
Airframe  Manufacturer's  serial number set forth in Lease  Supplement No. 1 and
any Replacement  Airframe and (b) any and all Parts incorporated or installed in
or attached or appurtenant to such airframe,  and any and all Parts removed from
such  airframe,  unless  title to such  Parts  shall  not be vested in Lessor in
accordance  with Section 8.1 and Annex C of the Lease.  Upon  substitution  of a
Replacement  Airframe under and in accordance with the Lease,  such  Replacement
Airframe  shall become  subject to the Lease and shall be the "Airframe" for all
purposes  of the Lease and the other  Operative  Agreements  and  thereupon  the
Airframe  for which the  substitution  is made shall no longer be subject to the
Lease, and such replaced Airframe shall cease to be the "Airframe."

     "AIRFRAME  MANUFACTURER" means [McDonnell Douglas  Corporation,  a Maryland
corporation][The Boeing Company, a Delaware corporation].

     "AMORTIZATION  AMOUNT" means, with respect to any Equipment Note, as of any
Payment Date,  the amount  determined by  multiplying  the  percentage set forth
opposite such Payment Date on the  Amortization  Schedule by the Original Amount
of such Equipment Note.

     "AMORTIZATION  SCHEDULE"  means,  with respect to each Equipment  Note, the
amortization schedule for such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.




     "APPRAISER"  means  a  firm  of  internationally  recognized,   independent
aircraft appraisers.

     "AUTHORIZED TERMINATION DATE" is defined in Schedule 1 to the Lease.

     "AVERAGE LIFE DATE" for any Equipment  Note shall be the date which follows
the time of  determination  by a period equal to the Remaining  Weighted Average
Life of such Equipment Note.  "Remaining  Weighted Average Life" on a given date
with  respect  to any  Equipment  Note  shall be the number of days equal to the
quotient  obtained by dividing (a) the sum of each of the  products  obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such  Equipment  Note by (ii) the  number  of days  from and  including  such
determination  date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then  outstanding  principal  amount of such
Equipment Note.

     "AVIATION  AUTHORITY" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 7.1.2 of the Lease, such other Government Entity.

     "BANKRUPTCY  CODE" means the United States  Bankruptcy  Code, 11 U.S.C. ss.
101 ET SEQ.

     "BASE LEASE TERM" means the period  beginning on and  including the Closing
Date and ending on the Scheduled  Expiration Date, or such earlier date on which
the Term terminates in accordance with the provisions of the Lease.

     "BASIC  PASS  THROUGH  TRUST   AGREEMENT"  means  the  Pass  Through  Trust
Agreement,  dated September 25, 1997,  between Lessee and Pass Through  Trustee,
but does not include any Trust Supplement.

     "BASIC RENT" means the rent  payable for the  Aircraft  pursuant to Section
3.2.1(a) of the Lease.

     "BENEFICIAL  OWNER"  when used in  relation  to an  Equipment  Note means a
Person  that,  by reason of  direct  ownership,  contract,  share  ownership  or
otherwise,  has the right to receive or  participate  in receiving,  directly or
indirectly,  payments of principal,  interest or Make-Whole Amount in respect of
such  Equipment  Note;  provided  that a  Person  shall  not be  deemed  to be a
Beneficial  Owner of an Equipment  Note solely  because  another Person in which
such a Person owns  common  stock or other  equity  securities  is a  registered
holder or  Beneficial  Owner of such  Equipment  Note  unless  such Person is an
Affiliate of such other Person.




     "BILLS OF SALE" means the Aircraft Bill of Sale and the FAA Bill of Sale.

     "BUSINESS DAY" means any day other than a Saturday,  Sunday or other day on
which  commercial  banks are authorized or required by law to close in New York,
New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.

     "CASH  EQUIVALENTS"  means the  following  securities  (which  shall mature
within 90 days of the date of purchase  thereof):  (a) direct obligations of the
U.S. Government;  (b) obligations fully guaranteed by the U.S.  Government;  (c)
certificates of deposit issued by, or bankers'  acceptances of, or time deposits
or a deposit account with,  Owner Trustee,  Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained  earnings of at least  $500,000,000  and having a rate of "C" or better
from the Thomson BankWatch Service;  or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
or Moody's equal to A1 or higher.

     "CHANGE IN TAX LAW" means any amendment,  modification,  addition or change
in or to the  provisions  of the  Code,  any other  federal  tax  statutes,  the
Treasury  Regulations  promulgated  thereunder,  the  Internal  Revenue  Service
Revenue  Rulings,   Revenue  Procedures  or  other  administrative  or  judicial
interpretations  of the Code or the federal tax  statutes  that  affects the tax
assumptions set forth in the Tax Indemnity  Agreement or otherwise affects Owner
Participant's  anticipated  Net  Economic  Return  (other  than a change  in the
alternative  minimum tax or other change that results in Owner Participant being
subject to  alternative  minimum  tax or unable to fully  utilize  tax  benefits
because of its particular tax situation).

     "CITIZEN OF THE UNITED  STATES" is defined in Section  40102(a)(15)  of the
Act and in the FAA Regulations.

     "CLOSING" means the occurrence of the following concurrent events: (i) sale
of the Aircraft to the Owner Trustee and the filing of the FAA Bill of Sale with
the FAA in connection therewith;  (ii) payment of Lessor's Cost by Owner Trustee
to Lessee;  (iii) lease of the Aircraft by Owner  Trustee to Lessee  pursuant to
the  Lease;  and  (iv)  completion  of  the  other  events  contemplated  by the
Participation Agreement to occur at the Closing.




     "CLOSING  DATE" means the Business Day specified in Lease  Supplement No. 1
as the Closing Date, which shall be the date on which the Closing occurs.

     "CODE" means the Internal Revenue Code of 1986, as amended;  PROVIDED, that
when used in relation to a Plan,  "Code" shall mean the Internal Revenue Code of
1986 and any  regulations and rulings issued  thereunder,  all as amended and in
effect from time to time.

     "COMMITMENT" means, for any Participant, the amount of its participation in
the payment of Lessor's Cost.

     "COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the Participation
Agreement.

     "CONTINUOUS  STAY  PERIOD"  is  defined  in  Section  4.04(a)  of the Trust
Indenture.

     "CORPORATE  TRUST   DEPARTMENT"  or  "TRUST  OFFICE"  means  the  principal
corporate  trust  office  of Owner  Trustee  located  from time to time at Owner
Trustee's  address for notices under the  Participation  Agreement or such other
office at which Owner  Trustee's  corporate trust business shall be administered
which  Owner  Trustee  shall  have  specified  by notice in  writing  to Lessee,
Mortgagee and each Note Holder.

     "CORPORATE TRUST OFFICE" means the principal office of Mortgagee located at
Mortgagee's address for notices under the Participation  Agreement or such other
office at which Mortgagee's corporate trust business shall be administered which
Mortgagee shall have specified by notice in writing to Lessee, Owner Trustee and
each Note Holder.

     "CRAF" means the Civil Reserve Air Fleet Program established pursuant to 10
U.S.C.ss. 9511-13 or any similar substitute program.

     "DEBT" means any  liability  for borrowed  money,  or any liability for the
payment  of money in  connection  with any letter of credit  transaction  or any
other liabilities  evidenced or to be evidenced by bonds,  debentures,  notes or
other similar instruments.

     "DEBT  RATE"  means,  with  respect to (i) any  Series,  the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust  Indenture  and (ii) any other  purpose,  with respect to any period,  the
weighted  average  interest  rate per  annum  during  such  period  borne by the



outstanding  Equipment Notes,  excluding any interest payable at the Payment Due
Rate.

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

     "DELAYED CLOSING DATE" means a delayed Closing Date established pursuant to
Section 4.3 of the Participation Agreement,  which delayed Closing Date shall be
a Business Day not later than the Commitment Termination Date.

     "DOLLARS,"  "UNITED STATES DOLLARS" or "$" means the lawful currency of the
United States.

     "DOT" means the  Department of  Transportation  of the United States or any
Government   Entity   succeeding  to  the   functions  of  such   Department  of
Transportation.

     "ELIGIBLE  ACCOUNT"  means an account  established  by and with an Eligible
Institution at the request of the Mortgagee,  which institution  agrees, for all
purposes of the UCC including Article 8 thereof,  that (a) such account shall be
a  "securities  account"  (as  defined  in  Section  8-501 of the UCC),  (b) all
property  (other  than  cash)  credited  to such  account  shall be treated as a
"financial asset" (as defined in Section 8-102(9) of the UCC), (c) the Mortgagee
shall be the "entitlement holder" (as defined in Section 8-102(7) of the UCC) in
respect of such account,  (d) it will comply with all entitlement  orders issued
by the Mortgagee to the exclusion of the Lessee and the Owner  Trustee,  and (e)
the "securities  intermediary  jurisdiction" (under Section 8-110(e) of the UCC)
shall be the State of New York.

     "ELIGIBLE   INSTITUTION"  means  the  corporate  trust  department  of  (a)
Wilmington  Trust  Company,  acting  solely  in its  capacity  as a  "securities
intermediary"  (as defined in Section 8-102(14) of the UCC), or (b) a depository
institution  organized under the laws of the United States of America or any one
of the states  thereof or the  District  of  Columbia  (or any U.S.  branch of a
foreign  bank),  which has a long-term  unsecured  debt rating from  Moody's and
Standard & Poor's of at least A-3 or its equivalent.

     "ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.

     "ENGINE" means (a) each of the engines  manufactured by Engine Manufacturer
and identified by Engine  Manufacturer's model number and Engine  Manufacturer's
serial number set forth in Lease  Supplement No. 1 and  originally  installed on
the  Airframe on delivery  thereof  pursuant to the Lease,  and any  Replacement



Engine,  in any case whether or not from time to time installed on such Airframe
or  installed  on any  other  airframe  or  aircraft,  and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such engine,  and any
and all Parts removed from such engine,  unless title to such Parts shall not be
vested in Lessor in accordance  with Section 8.1 and Annex C of the Lease.  Upon
substitution  of a Replacement  Engine under and in  accordance  with the Lease,
such  Replacement  Engine  shall  become  subject  to the  Lease and shall be an
"Engine" for all purposes of the Lease and the other  Operative  Agreements  and
thereupon  the  Engine  for which the  substitution  is made  shall no longer be
subject to the Lease, and such replaced Engine shall cease to be an "Engine."

     "ENGINE  MANUFACTURER"  means the Pratt & Whitney  division  of the  United
Technologies Corporation, a Delaware corporation.

     "EQUIPMENT  NOTE  REGISTER"  is  defined  in  Section  2.07  of  the  Trust
Indenture.

     "EQUIPMENT  NOTES" means and includes any equipment  notes issued under the
Trust  Indenture in the form specified in Section 2.01 thereof (as such form may
be varied  pursuant to the terms of the Trust  Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.

     "ERISA" means the Employee  Retirement  Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.

     "EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.

     "EVENT OF LOSS"  means,  with  respect  to the  Aircraft,  Airframe  or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:

     (a)  the  destruction  of such  property,  damage to such  property  beyond
          economic  repair or rendition of such property  permanently  unfit for
          normal use by Lessee;

     (b)  the actual or  constructive  total loss of such property or any damage
          to such  property,  or  requisition  of title or use of such property,
          which results in an insurance settlement with respect to such property
          on the basis of a total  loss or  constructive  or  compromised  total
          loss;




     (c)  any theft, hijacking or disappearance of such property for a period of
          180 consecutive days or more;

     (d)  any  seizure,  condemnation,   confiscation,   taking  or  requisition
          (including loss of title) of such property by any Government Entity or
          purported Government Entity (other than a requisition of use by a U.S.
          Government  Entity) for a period exceeding 180 consecutive days or, if
          earlier,  at the end of the Term or, in the case of a  requisition  of
          title, the requisition of title shall not have been reversed within 90
          days from the date of such requisition of title or, if earlier, at the
          end of the Term;

     (e)  any seizure, condemnation,  confiscation, taking or requisition of use
          of such property by any U.S.  Government  Entity that continues  until
          the 30th day  after the last day of the  Term,  PROVIDED  that no such
          Event of Loss shall  exist if Lessor  shall have  elected not to treat
          such event as an Event of Loss  pursuant to Section 10.6 of the Lease;
          and

     (f)  as a result of any law, rule, regulation, order or other action by the
          Aviation  Authority or by any  Government  Entity of the government of
          registry of the Aircraft or by any Government  Entity otherwise having
          jurisdiction  over the  operation or use of the  Aircraft,  the use of
          such property in the normal  course of Lessee's  business of passenger
          air transportation is prohibited for a period of 180 consecutive days,
          unless Lessee,  prior to the expiration of such 180 day period,  shall
          have undertaken and shall be diligently carrying forward such steps as
          may be  necessary  or  desirable  to  permit  the  normal  use of such
          property  by  Lessee,  but in any  event if such use  shall  have been
          prohibited  for a period of one year (or if earlier the  expiration of
          the  Term),  provided  that no Event of Loss  shall be  deemed to have
          occurred if such  prohibition  has been  applicable to Lessee's entire
          U.S.  fleet of such  property and Lessee,  prior to the  expiration of
          such one-year  period,  shall have conformed at least one unit of such
          property  in its  fleet to the  requirements  of any such  law,  rule,
          regulation, order or other action and commenced regular commercial use
          of the same in such  jurisdiction  and  shall be  diligently  carrying
          forward, in a manner which does not discriminate against such property
          in so conforming such property, steps which are necessary or desirable
          to permit the normal use of the  Aircraft by Lessee,  but in any event



          if such use shall  have been  prohibited  for a period of two years or
          such use shall be prohibited at the expiration of the Term.

An Event of Loss with respect to the Aircraft  shall be deemed to have  occurred
if an Event of Loss occurs with respect to its Airframe.  The date of such Event
of Loss shall be the date of such loss, damage,  insurance settlement,  seizure,
condemnation,  taking or requisition of title or use or prohibition, except that
for purpose of clause  (c),  (d),  (e) and (f) above,  no Event of Loss shall be
deemed to have occurred  until the date of expiration of the  applicable  period
referred to therein (unless an insurance settlement shall have occurred prior to
such date).

     "EXCLUDED  PAYMENTS" means (i) indemnity payments paid or payable by Lessee
to or in  respect  of Owner  Participant,  or Owner  Trustee  in its  individual
capacity,  their  respective  Affiliates,  successors and permitted  assigns and
their directors,  officers, employees, servants and agents pursuant to Section 9
of the Participation  Agreement or any  corresponding  payments under the Lease,
(ii)  proceeds  of public  liability  insurance  paid or  payable as a result of
insurance  claims made, or losses  suffered,  by Owner Trustee in its individual
capacity or by Owner Participant,  that are payable directly to Owner Trustee in
its  individual  capacity,  or Owner  Participant,  respectively,  for their own
account,  (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner  Participant  or any  Affiliate  thereof  for its or their own  account or
benefit (whether  directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee  whether or not  denominated as  Supplemental  Rent, (v) any
Transaction  Expenses paid or payable by the Lessee to the Owner Trustee (to the
extent for its sole benefit) or the Owner  Participant  pursuant to the Lease or
the Participation Agreement, (vi) any amount payable to the Owner Participant by
any transferee as the purchase price of the Owner Participant's  interest in the
Trust Estate,  (vii) any interest that pursuant to the Operative  Agreements may
from time to time accrue in respect of any of the amounts  described  in clauses
(i) through  (vi)  above,  (viii) any right to enforce the payment of any amount
described in clauses (i) through (vii) above (PROVIDED, that the rights referred
to in this  clause  (viii)  shall not be deemed to include  the  exercise of any
remedies  provided  for in the Lease  other  than the right to sue for  specific
performance  of any  covenant  to make such  payment  or to sue for  damages  in
respect of the breach of any such  covenant)  and (ix) any right to exercise any
election or option or make any decision or determination,  or to give or receive
any notice,  consent, waiver or approval, or to take any other action in respect
of, but in each case, only to the extent relating to, any Excluded Payments.




     "EXISTING SECURITY AGREEMENT" is defined in Schedule 3 to the Participation
Agreement.

     "EXISTING  SECURITY  AGREEMENT  RELEASE" means the release of the Aircraft,
the  Aircraft  Documents  and  certain  other  collateral  from  the Lien of the
Existing Security Agreement.

     "EXPENSES" means any and all  liabilities,  obligations,  losses,  damages,
settlements,   penalties,   claims,   actions,   suits,   costs,   expenses  and
disbursements (including, without limitation,  reasonable fees and disbursements
of legal counsel,  accountants,  appraisers,  inspectors or other professionals,
and costs of investigation).

     "EXPENSES OF SALE" is defined in Section 9.2.2(a) of the Lease.

     "FAA" means the Federal Aviation Administration of the United States or any
Government   Entity  succeeding  to  the  functions  of  such  Federal  Aviation
Administration.

     "FAA BILL OF SALE" means a bill of sale for the  Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner Trustee on
the Closing Date by Lessee.

     "FAA FILED  DOCUMENTS"  means the Lease,  Lease Supplement No. 1, the Trust
Indenture, the Trust Agreement, the initial Trust Indenture Supplement,  the FAA
Bill of Sale, an application  for  registration  of the Aircraft with the FAA in
the name of Owner Trustee and the Existing Security Agreement Release.

     "FAA  REGULATIONS"  means  the  Federal  Aviation   Regulations  issued  or
promulgated pursuant to the Act from time to time.

     "FAIR MARKET  RENTAL  VALUE" means the fair market  rental value in Dollars
for the  Aircraft  that would apply in an  arm's-length  transaction  between an
informed and willing  lessee under no compulsion  to lease,  and an informed and
willing  lessor under no compulsion to lease,  the Aircraft,  for the applicable
Renewal  Lease Term,  assuming  that (a) the  Aircraft  has been  maintained  in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made semiannually (or for any such applicable shorter period ended
on the first or last  Payment  Dates of any  Renewal  Lease  Term),  and (c) the
Aircraft  would be leased  during any such Renewal  Lease Term on the same terms
and  conditions  as are set forth in the Lease  with  respect  to the Base Lease
Term.

     "FAIR MARKET SALES VALUE" means,  except otherwise provided in Section 15.4
of the Lease, the fair market sales value in Dollars for the Aircraft that would



apply in an arm's-length transaction between an informed and willing buyer under
no compulsion to buy, and an informed and willing  seller under no compulsion to
sell, the Aircraft,  in a transaction  that would close on or about the relevant
time of  determination,  assuming  that (a) the Aircraft has been  maintained in
accordance  with,  and is in the  condition  required  by, the Lease and (b) the
Aircraft  would be  delivered to such  informed and willing  buyer in the return
condition required by the Lease.

     "FINANCING STATEMENTS" means, collectively,  (i) UCC-1 financing statements
(a) covering the Trust Indenture  Estate, by Owner Trustee,  as debtor,  showing
Mortgagee as secured party, for filing in Utah and each other jurisdiction that,
in the  opinion of  Mortgagee,  is  necessary  to perfect  its Lien on the Trust
Indenture Estate and (b) covering the Lease and the Aircraft, as a precautionary
matter, by Lessee,  as lessee,  showing Owner Trustee as lessor and Mortgagee as
assignee of Owner Trustee, for filing in Texas and each other jurisdiction that,
in the opinion of Owner Trustee and Mortgagee,  is reasonably desirable and (ii)
UCC-3  financing  statements  evidencing  the release of the Aircraft,  Aircraft
Documents and other collateral from the Lien of the Existing Security  Agreement
for filing in Texas and each other  jurisdiction  that,  in the opinion of Owner
Trustee and Mortgagee, is reasonably desirable.

     "FIRST  SECURITY"  means  First  Security  Bank,  National  Association,  a
national  banking  association,  not in its capacity as Owner  Trustee under the
Trust Agreement, but in its individual capacity.

     "GAAP" means generally accepted  accounting  principles as set forth in the
statements of financial  accounting standards issued by the Financial Accounting
Standards Board of the American  Institute of Certified Public  Accountants,  as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person,  shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.

     "GOVERNMENT  ENTITY"  means (a) any federal,  state,  provincial or similar
government,  and any  body,  board,  department,  commission,  court,  tribunal,
authority,  agency or other  instrumentality of any such government or otherwise
exercising any executive,  legislative,  judicial,  administrative or regulatory
functions  of  such  government  or  (b)  any  other  government  entity  having
jurisdiction  over  any  matter  contemplated  by the  Operative  Agreements  or



relating to the  observance  or  performance  of the  obligations  of any of the
parties to the Operative Agreements.

     "GTA"  means  the  General  Terms  Agreement  as  defined  in the  Purchase
Agreement Assignment.

     "INDEMNITEE"  means (i) First  Security  and  Owner  Trustee,  (ii) WTC and
Mortgagee,  (iii) each separate or additional  trustee appointed pursuant to the
Trust Agreement or the Trust  Indenture,  (iv) each  Participant,  (v) the Trust
Estate  and the Trust  Indenture  Estate,  (vi) each  Affiliate  of the  persons
described  in  clauses  (i)  through  (iv),  inclusive,   (vii)  the  respective
directors,  officers,  employees,  agents and  servants  of each of the  persons
described in clauses (i) through (iv)  inclusive and in clause (vi),  (viii) the
successors and permitted assigns of the persons described in clauses (i) through
(iv),  inclusive,  and in  clauses  (vi) and  (vii),  and (ix) the Pass  Through
Indemnitees; PROVIDED that the Pass Through Indemnitees are Indemnitees only for
purposes of Section 9.1 of the  Participation  Agreement.  If any  Indemnitee is
Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of
either thereof, such Person shall be an Indemnitee only in its capacity as Owner
Participant, Loan Participant or Note Holder.

     "INDENTURE  AGREEMENTS" means the Participation  Agreement,  the Lease, the
Bills of Sale and any other contract,  agreement or instrument from time to time
assigned or pledged under the Trust Indenture.

     "INDENTURE DEFAULT" means any condition,  circumstance,  act or event that,
with the  giving of  notice,  the  lapse of time or both,  would  constitute  an
Indenture Event of Default.

     "INDENTURE  EVENT  OF  DEFAULT"  means  any one or more of the  conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.

     "INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee,  (ii) each separate
or  additional  trustee  appointed  pursuant to the Trust  Indenture,  (iii) the
Subordination Agent, (iv) the Liquidity Provider, (v) each Pass Through Trustee,
and (vi) each of the  respective  directors,  officers,  employees,  agents  and
servants of each of the persons  described in clauses (i) through (v)  inclusive
above.

     "INTERCREDITOR  AGREEMENT" means that certain Intercreditor Agreement among
the Pass Through Trustees,  the Liquidity Provider and the Subordination  Agent,
dated as of the Issuance Date,  PROVIDED that, for purposes of any obligation of
Lessee,  no  amendment,  modification  or  supplement  to,  or  substitution  or



replacement of, such Intercreditor Agreement shall be effective unless consented
to by Lessee.

     "IRS"  means the  Internal  Revenue  Service  of the  United  States or any
Government Entity succeeding to the functions of such Internal Revenue Service.

     "ISSUANCE DATE" means April 21, 1998.

     "LAW" means (a) any constitution, treaty, statute, law, decree, regulation,
order,  rule or  directive  of any  Government  Entity,  and (b) any judicial or
administrative  interpretation  or application of, or decision under, any of the
foregoing.

     "LEASE" or "LEASE  AGREEMENT"  means the Lease Agreement ____,  dated as of
even date with the Participation Agreement, between Owner Trustee and Lessee.

     "LEASE DEFAULT" means any condition,  circumstance, act or event that, with
the giving of notice,  the lapse of time or both, would constitute a Lease Event
of Default.

     "LEASE  EVENT  OF  DEFAULT"  means  any  one or  more  of  the  conditions,
circumstances, acts or events set forth in Section 14 of the Lease.

     "LEASE  SUPPLEMENT" means a supplement to the Lease, in the form of Exhibit
A to the Lease.

     "LEASE  SUPPLEMENT  NO. 1" means the initial  Lease  Supplement,  dated the
Closing Date.

     "LESSEE" means Continental Airlines, Inc., a Delaware corporation.

     "LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the Lease,
Lease Supplement No. 1, the Tax Indemnity Agreement, the Bills of Sale, and each
other  agreement  between  Lessee  and  any  other  party  to the  Participation
Agreement, relating to the Transactions, delivered on the Closing Date.

     "LESSEE PERSON" means Lessee, any sublessee,  assignee,  successor or other
user or person in  possession  of the  Aircraft,  Airframe  or an Engine with or
without color of right, or any Affiliate of any of the foregoing  (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, Airframe or an Engine
directly  by or  through  any of the  persons  in  this  parenthetical,  but not
excluding  any  Person  claiming  directly  or  indirectly  through or under the
Lease).




     "LESSEE'S ADVISOR" is defined in Schedule 3 to the Participation Agreement.

     "LESSOR" means Owner Trustee in its capacity as lessor under the Lease.

     "LESSOR  LIEN"  means,  with  respect  to any  person and in respect of any
property (including,  without limitation,  the Trust Estate, the Trust Indenture
Estate, the Aircraft,  Airframe,  Engines,  Parts or Aircraft  Documents) or any
payments,  any Lien on such  property or  payments  which (a) arises from claims
against  such  person (if such  person is a trustee,  whether in its  individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements,  (b) results from acts or omissions of
such person (if such person is a trustee,  whether in its individual capacity or
in its capacity as a trustee) in violation of such  person's  obligations  under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated  by the Operative  Agreements,  (c) is imposed as a result of Taxes
against  such  person (if such  person is a trustee,  whether in its  individual
capacity or in its capacity as a trustee) or any of its  Affiliates not required
to be indemnified  by Lessee under the  Participation  Agreement,  or (d) claims
against  such person  arising out of any transfer by such person of its interest
in the  Aircraft,  the Trust Estate or the  Operative  Agreements,  other than a
Transfer  permitted by the terms of the Operative  Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.

     "LESSOR'S COST" means the aggregate of the amounts paid by Owner Trustee to
Lessee to purchase the Aircraft pursuant to the Participation  Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.

     "LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance,  lease
or security interest affecting the title to or any interest in property.

     "LIFE LIMITED PARTS" means any Part requiring replacement,  overhaul, bench
check or other action that  necessitates  removal of such Part from the Aircraft
on a time (flight hours,  cycle or calendar)  specified  basis as defined by the
type certificate,  the MPD, the Maintenance Program or the Maintenance Manual of
the Airframe Manufacturer or Engine Manufacturer.

     "LIMITED  LIABILITY COMPANY  AGREEMENT" means the Limited Liability Company
Agreement,  dated as of the  Issuance  Date,  relating to the  organization  and
operation of Owner Participant.




     "LIQUIDITY   FACILITIES"   means  the  three  Revolving  Credit  Agreements
(consisting of a separate Revolving Credit Agreement with the Liquidity Provider
with respect to each Pass Through Trust)  between the  Subordination  Agent,  as
borrower,  and the  Liquidity  Provider,  each  dated as of the  Issuance  Date,
PROVIDED  that,  for  purposes  of  any  obligation  of  Lessee,  no  amendment,
modification  or supplement  to, or  substitution  or  replacement  of, any such
Liquidity Facility shall be effective, unless consented to by Lessee.

     "LIQUIDITY  PROVIDER" means Westdeutsche  Landesbank  Girozentrale,  acting
through its New York branch, as a Class A Liquidity Provider,  Class B Liquidity
Provider,  and Class C  Liquidity  Provider  (as such  terms are  defined in the
Intercreditor  Agreement)  under the  respective  Liquidity  Facilities,  or any
successor thereto.

     "LOAN  PARTICIPANTS"  mean, until the Closing shall have been  consummated,
the Pass Through  Trustees,  and after the Closing shall have been  consummated,
each Note Holder.

     "LOSS  PAYMENT  DATE"  means the date on which  payment is due  pursuant to
Section 10.1.2(a)(i) of the Lease.

     "MAINTENANCE PROGRAM" is defined in Annex C to the Lease.

     "MAJORITY IN INTEREST OF NOTE  HOLDERS"  means as of a  particular  date of
determination,  the holders of a majority in aggregate unpaid Original Amount of
all Equipment  Notes  outstanding as of such date (excluding any Equipment Notes
held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such
party or any interests of Owner Trustee or Owner  Participant  therein by reason
of  subrogation  pursuant  to Section  4.03 of the Trust  Indenture  (unless all
Equipment Notes then outstanding shall be held by Owner Trustee,  Lessee,  Owner
Participant or any Affiliate of any thereof)); PROVIDED that for the purposes of
directing  any  action or  casting  any vote or giving  any  consent,  waiver or
instruction  hereunder any Note Holder of an Equipment  Note or Equipment  Notes
may allocate,  in such Note Holder's sole discretion,  any fractional portion of
the principal amount of such Equipment Note or Equipment Notes in favor of or in
opposition to any such action, vote, consent, waiver or instruction.

     "MAKE-WHOLE  AMOUNT" means,  with respect to any Equipment  Note, an amount
(as determined by an independent  investment bank of national standing) equal to
the excess, if any, of (a) the present value of the remaining scheduled payments
of  principal  and  interest  to  maturity of such  Equipment  Note  computed by
discounting such payments on a semiannual basis on each Payment Date (assuming a



360-day  year of  twelve  30-day  months)  using a  discount  rate  equal to the
Treasury Yield over (b) the outstanding  principal amount of such Equipment Note
plus accrued interest to the date of determination.  For purposes of determining
the Make-Whole Amount, "Treasury Yield" means, at the date of determination with
respect to any Equipment Note, the interest rate (expressed as a decimal and, in
the case of United States Treasury bills,  converted to a bond equivalent yield)
determined to be the per annum rate equal to the  semi-annual  yield to maturity
for United States Treasury  securities maturing on the Average Life Date of such
Equipment Note and trading in the public securities markets either as determined
by  interpolation  between the most recent weekly  average yield to maturity for
two  series  of  United  States  Treasury  securities,  trading  in  the  public
securities markets,  (A) one maturing as close as possible to, but earlier than,
the Average Life Date of such Equipment Note and (B) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as  published  in the most recent  H.15(519)  or, if a weekly  average
yield to maturity for United States Treasury  securities maturing on the Average
Life Date of such Equipment Note is reported on the most recent H.15(519),  such
weekly  average  yield to maturity as  published in such  H.15(519)  "H.15(519)"
means the  weekly  statistical  release  designated  as such,  or any  successor
publication,  published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Amount shall be the third Business Day
prior  to the  applicable  payment  or  redemption  date  and the  "most  recent
H.15(519)"  means the H.15(519)  published prior to the close of business on the
third Business Day prior to the applicable payment or redemption date.

     "MANAGER"  means  the  manager  of the  Owner  Participant,  determined  in
accordance with the Limited Liability Company Agreement.

     "MANUFACTURER SUBLESSEE" means the Airframe Manufacturer, Airbus Industrie,
United  Technologies  Corporation,  Pratt & Whitney Group,  Commercial  Products
Division, The General Electric Company and Rolls-Royce plc.

     "MATERIAL  ADVERSE  CHANGE" means,  with respect to any person,  any event,
condition or circumstance  that  materially and adversely  affects such person's
business  or  consolidated  financial  condition,  or its  ability to observe or
perform  its  obligations,   liabilities  and  agreements  under  the  Operative
Agreements.

     "MEMBER" means each member of Owner  Participant,  determined in accordance
with the Limited Liability Company Agreement.




     "MINIMUM LIABILITY INSURANCE AMOUNT" is defined in Schedule 1 to the Lease.

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

     "MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.

     "MORTGAGEE" means Wilmington Trust Company, a Delaware banking corporation,
not in its  individual  capacity  but  solely  as loan  trustee  under the Trust
Indenture.

     "MORTGAGEE AGREEMENTS" means,  collectively,  the Participation  Agreement,
the Trust  Indenture and each other  agreement  between  Mortgagee and any other
party to the Participation Agreement, relating to the Transactions, delivered on
the Closing Date.

     "MORTGAGEE  EVENT"  means (i) in the event of a  reorganization  proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such  proceeding  or  the  Lessee  not  assuming  or  agreeing  to  perform  its
obligations  under the Lease,  as  contemplated  under Section 1110,  during the
60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy  Code) or (B) at any
time after agreeing to perform or assuming such obligations, such trustee or the
Lessee ceasing to perform such  obligations  with the result that the Continuous
Stay Period comes to an end or (ii) either the Equipment Notes shall have become
due and payable  pursuant to Section 4.04(b) of the Trust Indenture or Mortgagee
has taken  action or notified  Owner  Trustee  that it intends to take action to
foreclose the Lien of the Trust Indenture or otherwise  commence the exercise of
any  significant  remedy  in  accordance  with  Section  4.04(a)  of  the  Trust
Indenture.

     "NET ECONOMIC  RETURN" means the Owner  Participant's  net after-tax  yield
utilizing the multiple  investment sinking fund method of analysis and aggregate
net  after-tax  cash flow,  computed  on the basis of the same  methodology  and
assumptions  as were utilized by the initial Owner  Participant  in  determining
Basic Rent, Stipulated Loss Value percentages and Termination Value percentages,
as of the Closing Date, as such assumptions may be adjusted for events that have
been the basis for adjustments to Basic Rent pursuant to Section 3.2.1(b) of the
Lease or events giving rise to indemnity payments pursuant to Section 5.1 of the
Tax Indemnity Agreement;  PROVIDED, that, if the initial Owner Participant shall
have transferred its interest, Net Economic Return shall be calculated as if the
initial Owner  Participant had retained its interest;  PROVIDED  FURTHER,  that,



notwithstanding the preceding proviso,  solely for purposes of Section 11 of the
Participation   Agreement  and   calculating  any  adjustments  to  Basic  Rent,
Stipulated  Loss Values and  Termination  Values in connection  with a refunding
pursuant to such  Section 11 at a time when Owner  Participant  is a  transferee
(other than an Affiliate of the initial Owner Participant),  the after-tax yield
(but not the  after-tax  cash flow)  component of Net  Economic  Return shall be
calculated  on the basis of the  methodology  and  assumptions  utilized  by the
transferee Owner Participant as of the date on which it acquired its interest.

     "NET  PRESENT  VALUE OF RENTS" means the present  value,  as of the date of
determination,  discounted at 10% per annum, compounded semiannually to the date
of  determination,  of all unpaid Basic Rent payments during the  then-remaining
portion of the Base Lease Term, expressed as a percentage of Lessor's Cost.

     "NET WORTH" means, for any person,  the excess of its total assets over its
total liabilities.

     "NEW DEBT" means debt securities in an aggregate principal amount specified
in the Refunding Information.

     "NON-U.S.  PERSON" means any Person other than a United States  person,  as
defined in Section 7701(a)(30) of the Code.

     "NOTE  HOLDER"  means at any time  each  registered  holder  of one or more
Equipment Notes.

     "OFFICER'S CERTIFICATE" means, in respect of any party to the Participation
Agreement,  a  certificate  signed  by the  Chairman,  the  President,  any Vice
President  (including  those  with  varying  ranks  such as  Executive,  Senior,
Assistant or Staff Vice President), the Treasurer or the Secretary of such party
or, in the case of Owner Participant, of the Manager of Owner Participant.

     "OPERATIVE AGREEMENTS" means,  collectively,  the Participation  Agreement,
the Trust Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the
initial  Trust  Indenture  Supplement,  the  Bills  of Sale,  the Tax  Indemnity
Agreement, and the Equipment Notes.

     "OPERATIVE  INDENTURES" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustees.

     "ORIGINAL  AMOUNT,"  with  respect to an Equipment  Note,  means the stated
original  principal  amount of such  Equipment  Note and,  with  respect  to all



Equipment Notes,  means the aggregate stated original  principal  amounts of all
Equipment Notes.

     "OWNER PARTICIPANT" means the person executing the Participation  Agreement
as "Owner  Participant"  or, if a second person  becomes an "Owner  Participant"
pursuant to Section 10.1.1 of the Participation Agreement, both of such persons;
PROVIDED  that if an  Owner  Participant  Transfers  100% of its  interest  to a
successor  Owner   Participant,   such  transferring   Owner  Participant  shall
thereafter no longer be considered an "Owner Participant".

     "OWNER  PARTICIPANT  AGREEMENTS"  means,  collectively,  the  Participation
Agreement,  the Tax  Indemnity  Agreement,  the Trust  Agreement  and each other
agreement  between Owner  Participant  and any other party to the  Participation
Agreement relating to the Transactions, delivered on the Closing Date.

     "OWNER  PARTICIPANT'S  PERCENTAGE"  means the  percentage  of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.

     "OWNER TRUSTEE" means First Security Bank, National Association, a national
banking  association,  not in  its  individual  capacity,  except  as  expressly
provided in any Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.

     "OWNER  TRUSTEE   AGREEMENTS"   means,   collectively,   the  Participation
Agreement,  the Lease,  Lease Supplement No. 1, the Trust  Agreement,  the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes, and each
other agreement  between Owner Trustee and any other party to the  Participation
Agreement, relating to the Transactions, delivered on the Closing Date.

     "PARTICIPANTS"  means,  collectively,   Owner  Participant  and  each  Loan
Participant and  "Participant"  means Owner  Participant or a Loan  Participant,
individually.

     "PARTICIPATION  AGREEMENT" means the Participation  Agreement ____ dated as
of April 21, 1998,  among Lessee,  Owner  Participant,  Owner Trustee,  the Pass
Through Trustees, Subordination Agent and Mortgagee.

     "PARTS"   means   all   appliances,    parts,   components,    instruments,
appurtenances,  accessories,  furnishings, seats and other equipment of whatever
nature  (other than (a) Engines or engines,  and (b) any items  leased by Lessee
from a third party other than Lessor)),  that may from time to time be installed
or incorporated in or attached or appurtenant to the Airframe or any Engine.




     "PASS  THROUGH  AGREEMENTS"  means the Pass Through Trust  Agreements,  the
Intercreditor  Agreement,  the Liquidity Facilities and the Fee Letters referred
to in  Section  2.03 of  each of the  Liquidity  Facilities,  PROVIDED,  that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be effective  for  purposes of any  obligation  of Lessee,
unless consented to by Lessee.

     "PASS THROUGH  CERTIFICATES" means the pass through  certificates issued by
the Pass Through Trusts (and any other pass through  certificates for which such
pass through certificates may be exchanged).

     "PASS THROUGH INDEMNITEES" means (i) the Subordination Agent, the Liquidity
Provider,  and the  Pass  Through  Trustees,  (ii)  each  Affiliate  of a person
described in the preceding clause (i), (iii) the respective directors, officers,
employees, agents and servants of each of the persons described in the preceding
clauses  (i) and (ii)  and (iv) the  successors  and  permitted  assigns  of the
persons described in the preceding clauses (i), (ii) and (iii).

     "PASS THROUGH  TRUST" means each of the three  separate pass through trusts
created under the Pass Through Trust Agreements.

     "PASS  THROUGH  TRUST  AGREEMENT"  means each of the three  separate  Trust
Supplements,  together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance  Date by and between the Lessee and a Pass Through
Trustee  PROVIDED,  that for purposes of any obligation of Lessee, no amendment,
modification  or supplement  to, or  substitution  or  replacement  of, any such
Agreement shall be effective unless consented to by Lessee.

     "PASS THROUGH TRUSTEE" means  Wilmington Trust Company,  a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.

     "PASS THROUGH TRUSTEE  AGREEMENTS" means the Participation  Agreement,  the
Pass Through Trust Agreements and the Intercreditor Agreement.

     "PAYMENT  DATE"  means (i) each  April 15 and  October  15 during the Term,
commencing  with the first such date to occur after the Closing  Date,  (ii) the
Scheduled Expiration Date and (iii) each Scheduled Renewal Term Expiration Date.

     "PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.




     "PAYMENT PERIOD" means each of the consecutive  semiannual periods (or such
applicable  shorter period ended on the Scheduled  Expiration Date and the first
and last  Payment  Dates of any Renewal  Lease Term) during the Term ending on a
Payment  Date,  the first such period  commencing  on and  including the Closing
Date.

     "PERMITTED  AIR  CARRIER"  means  (i) any  Manufacturer  Sublessee,  or any
Affiliate of a Manufacturer Sublessee, in each case, based in the United States,
(ii) any Permitted Foreign Air Carrier,  (iii) any person approved in writing by
Lessor  and Owner  Participant,  (iv) the U.S.  Government  or (v) any U.S.  Air
Carrier.

     "PERMITTED COUNTRY" means any country listed on Part A of Schedule 5 to the
Lease.

     "PERMITTED  FOREIGN  AIR  CARRIER"  means  (i) any  air  carrier  with  its
principal executive offices in any country listed in Part B of Schedule 5 to the
Lease and which is authorized to conduct  commercial  airline  operations and to
operate jet aircraft  similar to the Aircraft under the applicable  Laws of such
country or (ii) any  Manufacturer  Sublessee or any  Affiliate  of  Manufacturer
Sublessee,  in each case with its  principal  executive  offices in any  country
listed in Part B of Schedule 5 to the Lease.

     "PERMITTED  GOVERNMENT  ENTITY"  means (i) the U.S.  Government or (ii) any
Government  Entity  if the  Aircraft  is then  registered  under the laws of the
country of such Government Entity.

     "PERMITTED  INSTITUTION"  means  (a) any  bank,  trust  company,  insurance
company,  financial  institution or corporation  (other than,  without  Lessee's
consent,  an air carrier (as defined in Section 1.1 of the FAA  Regulations),  a
commercial  operator  (as  defined in  Section  1.1 of the FAA  Regulations)  or
Affiliate  of any of the  foregoing),  in each case with a combined  capital and
surplus or net worth of at least $50,000,000.

     "PERMITTED  LIEN" means any Lien  described  in clauses  (a)  through  (g),
inclusive, of Section 6 of the Lease.

     "PERMITTED  SUBLEASE" means a sublease permitted under Section 7.2.7 of the
Lease.

     "PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.

     "PERSONS"  or  "PERSONS"  means  individuals,  firms,  partnerships,  joint
ventures, trusts, trustees,  Government Entities,  organizations,  associations,



corporations,  government  agencies,  committees,  departments,  authorities and
other bodies, corporate or incorporate,  whether having distinct legal status or
not, or any member of any of the same.

     "PLAN" means any  employee  benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.

     "PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.

     "PREMIUM  TERMINATION DATE" means April 15, 2007, in the case of the Series
A Equipment Notes,  October 15, 2004 in the case of the Series B Equipment Notes
and October 15, 2002 in the case of the Series C Equipment Notes.

     "PTT  PERCENTAGE"  means,  with respect to each Pass Through  Trustee,  the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.

     "QIB" is defined in Section 2.08 of the Trust Indenture.

     "REFUNDING CERTIFICATE" means a certificate of an authorized representative
of Owner Participant  delivered  pursuant to Section 11.1.1 of the Participation
Agreement,   setting  forth  (a)  the  Refunding  Date  and  (b)  the  following
information,  subject  to  the  limitations  set  forth  in  Section  11 of  the
Participation  Agreement: (i) the principal amount of debt to be issued by Owner
Trustee on the Refunding Date, (ii) the proposed adjusted  debt/equity ratio and
(iii) the  proposed  revised  schedules  of Basic  Rent,  Stipulated  Loss Value
percentages and Termination  Value  percentages,  and the proposed  Amortization
Schedules, calculated in accordance with Section 3.2.1 of the Lease.

     "REFUNDING DATE" means the proposed date on which the outstanding Equipment
Notes  will  be  redeemed  and   refinanced   pursuant  to  Section  11  of  the
Participation Agreement.

     "REFUNDING  INFORMATION"  means the  information set forth in the Refunding
Certificate  (other than the Refunding  Date) as such  information may have been
revised by any  verification  procedures  demanded by Lessee pursuant to Section
3.2.1(d) of the Lease.

     "RENEWAL  LEASE  TERM"  means each term for which the Lease is  extended by
Lessee,  if any,  pursuant to the first and second such extensions in accordance
with Section 17 of the Lease.

     "RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.




     "RENEWAL RENT" for the Aircraft means the rent payable  therefor in respect
of a Renewal Lease Term determined pursuant to Section 17.2.2 of the Lease.

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

     "REPLACEMENT  AIRFRAME"  means any  airframe  substituted  for the Airframe
pursuant to Section 10 of the Lease.

     "REPLACEMENT  ENGINE" means an engine substituted for an Engine pursuant to
the Lease.

     "RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement,  dated
as of the date the  Aircraft is returned to Lessor  pursuant to Section 5 of the
Lease, by Lessor and Lessee substantially in the form of Exhibit B to the Lease.

     "SCHEDULED  CLOSING DATE" means the expected  Closing Date notified to each
Participant,  Owner Trustee and  Mortgagee by Lessee  pursuant to Section 4.1 of
the Participation Agreement, which expected Closing Date shall be a Business Day
not later than the Commitment Termination Date.

     "SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.

     "SCHEDULED  RENEWAL TERM  EXPIRATION  DATE" means, in the case of a Renewal
Lease Term,  the  Scheduled  Renewal Term  Expiration  Date as elected by Lessee
pursuant to Section 17.2 of the Lease.

     "SEC" means the Securities and Exchange Commission of the United States, or
any  Government  Entity  succeeding  to the  functions  of such  Securities  and
Exchange Commission.

     "SECTION  1110"  means 11 U.S.C.  ss.  1110 of the  Bankruptcy  Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.

     "SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust Indenture.

     "SECURITIES ACT" means the Securities Act of 1933, as amended.

     "SECURITY"  means a "security" as defined in Section 2(1) of the Securities
Act.

     "SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.




     "SERIES" means any of Series A, Series B or Series C.

     "SERIES A" or "SERIES A EQUIPMENT NOTES" means Equipment Notes issued under
the Trust  Indenture and  designated as "Series A"  thereunder,  in the Original
Amount and  maturities  and bearing  interest as  specified in Schedule I to the
Trust Indenture under the heading "Series A."

     "SERIES B" or "SERIES B EQUIPMENT NOTES" means Equipment Notes issued under
the Trust  Indenture and  designated as "Series B"  thereunder,  in the Original
Amount and  maturities  and bearing  interest as  specified in Schedule I to the
Trust Indenture under the heading "Series B."

     "SERIES C" or "SERIES C EQUIPMENT NOTES" means Equipment Notes issued under
the Trust  Indenture and  designated as "Series C"  thereunder,  in the Original
Amount and  maturities  and bearing  interest as  specified in Schedule I to the
Trust Indenture under the heading "Series C."

     "SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.

     "SLV RATE" is defined in Schedule 1 to the Lease.

     "SPECIAL  DEFAULT"  means (i) the  failure  by Lessee to pay any  amount of
Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due or
(ii) the  occurrence of any Lease Default or Lease Event of Default  referred to
in Section 14.5 of the Lease.

     "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.

     "STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during the
Base Lease Term,  the amount  determined by  multiplying  (i) the percentage set
forth in Schedule 3 to the Lease (as  adjusted  from time to time in  accordance
with Section 3.2.1 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's  Cost and (b) during any  Renewal  Lease  Term,  the amount  determined
pursuant  to  Section  17.2.3  of the  Lease.  Notwithstanding  anything  to the
contrary in any  Operative  Agreement,  Stipulated  Loss Value  shall  always be
sufficient to pay in full, as of the date of payment  thereof  (assuming  timely
payment  of the  Equipment  Notes  prior to such  date),  the  aggregate  unpaid
principal  amount of all Equipment Notes  outstanding as of such date,  together
with accrued and unpaid interest on all such Equipment Notes as of such date.

     "STIPULATED  LOSS VALUE DATE" means,  for any month,  the day in such month
specified in Schedule 3 to the Lease or, if such day is not a Business  Day, the
immediately succeeding Business Day.




     "SUBORDINATION  AGENT" means  Wilmington  Trust Company,  as  subordination
agent under the Intercreditor Agreement.

     "SUBORDINATION  AGENT AGREEMENTS" means the  Participation  Agreement,  the
Liquidity Facilities and the Intercreditor Agreement.

     "SUPPLEMENTAL   RENT"   means,   without   duplication   (a)  all  amounts,
liabilities,  indemnities and obligations (other than Basic Rent or Renewal Rent
but  including  Make-Whole  Amount,  if any)  that  Lessee  assumes  or  becomes
obligated  to or agrees to pay under any  Lessee  Operative  Agreement  to or on
behalf of Lessor or any other person, including, without limitation, payments of
Stipulated Loss Value,  Termination  Value, any amounts in respect of a purchase
price payable  pursuant to Section 17.3 of the Lease and payments of indemnities
under Section 9 of the Participation  Agreement,  but excluding any amount as to
which Lessee is obligated to pay a pro rata share pursuant to clause (e) of this
definition,  (b) (i) an  amount  or  amounts  equal to the fees  payable  to the
relevant  Liquidity  Provider under Section 2.03 of each Liquidity  Facility and
the related Fee Letter (as defined in the Intercreditor Agreement) multiplied by
a  fraction  the  numerator  of which  shall be the then  outstanding  aggregate
principal amount of the Series A Equipment  Notes,  Series B Equipment Notes and
Series  C  Equipment  Notes  and the  denominator  of  which  shall  be the then
outstanding  aggregate  principal  amount  of all  "Series A  Equipment  Notes",
"Series B Equipment  Notes" and "Series C Equipment  Notes"  (each as defined in
each of the Operative Indentures);  (ii) (x) the amount equal to interest on any
Downgrade  Advance  (other than any Applied  Downgrade  Advance)  payable  under
Section 3.07 of each  Liquidity  Facility  minus  Investment  Earnings from such
Downgrade  Advance  multiplied  by (y) the fraction  specified in the  foregoing
clause (i); (iii) (x) the amount equal to interest on any Non-Extension  Advance
(other than any Applied  Non-Extension  Advance)  payable  under Section 3.07 of
each  Liquidity  Facility  minus  Investment  Earnings  from such  Non-Extension
Advance  multiplied  by (y) the fraction  specified in the forgoing  clause (i);
(iv) if any payment  default shall have occurred and be continuing  with respect
to interest on any Series A Equipment Notes,  Series B Equipment Notes or Series
C Equipment Notes, (x) the excess, if any, of (1) an amount equal to interest on
any Unpaid Advance,  Applied Downgrade Advance or Applied  Non-Extension Advance
payable  under  Section  3.07 of each  Liquidity  Facility  OVER  (2) the sum of
Investment  Earnings  from any Final  Advance PLUS any amount of interest at the
Payment  Due Rate  actually  payable  (whether or not in fact paid) by Lessee in
respect of the overdue  scheduled  interest on the Equipment Notes in respect of



which such Unpaid Advance,  Applied Downgrade  Advance or Applied  Non-Extension
Advance was made  multiplied  by (y) a fraction the  numerator of which shall be
the then aggregate  overdue amounts of interest on the Series A Equipment Notes,
Series B Equipment  Notes and Series C  Equipment  Notes  (other  than  interest
becoming  due and  payable  solely  as a  result  of  acceleration  of any  such
Equipment  Notes)  and the  denominator  of which  shall  be the then  aggregate
overdue  amounts  of  interest  on all  "Series A  Equipment  Notes",  "Series B
Equipment  Notes" and "Series C Equipment Notes" (each as defined in each of the
Operative  Indentures) (other than interest becoming due and payable solely as a
result of acceleration of any such "Equipment Notes"); and (v) Lessee's pro rata
share of any other amounts owed to the Liquidity  Provider by the  Subordination
Agent as borrower  under each  Liquidity  Facility  (other  than  amounts due as
repayment of advances thereunder or as interest on such advances), except to the
extent payable  pursuant to clause (i), (ii),  (iii) or (iv) above, (c) Lessee's
pro rata share of all compensation and reimbursement of expenses,  disbursements
and  advances  payable by Lessee under the Pass Through  Trust  Agreements,  (d)
Lessee's pro rata share of all  compensation  and  reimbursement of expenses and
disbursements  payable  to  the  Subordination  Agent  under  the  Intercreditor
Agreement  except with respect to any income or franchise  taxes incurred by the
Subordination  Agent in connection  with the  transactions  contemplated  by the
Intercreditor  Agreement  and (e) Lessee's pro rata share of any amount  payable
under  Section  9.1  (and,  if  attributable   thereto,   Section  9.5)  of  the
Participation Agreement to any Pass Through Indemnitee to the extent such amount
relates to,  results  from or arises out of or in  connection  with (i) the Pass
Through  Agreements  or the  enforcement  of any of the terms of any of the Pass
Through  Agreements,  (ii) the offer,  sale,  or  delivery  or the Pass  Through
Certificates or any interest therein or represented  thereby or (iii) any breach
of or failure  to  perform or  observe,  or any other  noncompliance  with,  any
covenant or  agreement or other  obligation  to be performed by Lessee under any
Pass  Through  Agreement  or the  falsity of any  representation  or warranty of
Lessee in any Pass Through Agreement. As used herein,  "Lessee's pro rata share"
means as of any time a fraction, the numerator of which is the principal balance
then  outstanding  of  Equipment  Notes  and the  denominator  of  which  is the
aggregate  principal  balance then outstanding of all "Equipment Notes" (as such
term is defined  in each of the  Operative  Indentures).  For  purposes  of this
definition,  the  terms  "Applied  Downgrade  Advance",  "Applied  Non-Extension
Advance",  "Cash  Collateral  Account",  "Downgrade  Advance",  "Final Advance",
"Investment Earnings",  "Non-Extension  Advance" and "Unpaid Advance" shall have
the meanings specified in each Liquidity  Facility.  For the avoidance of doubt,



it is understood and agreed that Supplemental Rent includes, without limitation,
any  amounts  payable  under the third  paragraph  of Section  2.02 of the Trust
Indenture.

     "TAX  ATTRIBUTE  PERIOD" is defined  in Section  1(e) of the Tax  Indemnity
Agreement.

     "TAX  INDEMNITEE"  means (a) First Security and Owner Trustee,  (b) WTC and
Mortgagee,  (c) each separate or additional  trustee  appointed  pursuant to the
Trust  Agreement or the Trust  Indenture,  (d) each  Participant,  (e) the Trust
Estate  and the  Trust  Indenture  Estate  and (f)  the  respective  successors,
assigns, agents and servants of the foregoing.

     "TAX INDEMNITY  AGREEMENT" means the Tax Indemnity  Agreement,  dated as of
even  date  with  the   Participation   Agreement,   between  Lessee  and  Owner
Participant.

     "TAXES" means all license, recording,  documentary,  registration and other
similar fees and all taxes, levies,  imposts,  duties,  charges,  assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority,  together
with any  penalties,  additions to tax,  fines or interest  thereon or additions
thereto.

     "TAXING  AUTHORITY"  means any federal,  state or local government or other
taxing authority in the United States,  any foreign  government or any political
subdivision or taxing authority thereof,  any international  taxing authority or
any  territory  or  possession  of the  United  States or any  taxing  authority
thereof.

     "TERM"  means the  term,  commencing  on the  Closing  Date,  for which the
Aircraft is leased  pursuant to Section 3 of the Lease,  and shall include,  the
Base Lease Term and, if applicable,  any Renewal Lease Term; PROVIDED that if at
the  scheduled  end of the Term the  Aircraft or Airframe is being used,  or was
within six (6) months prior thereto being used, by the U.S.  Government pursuant
to  CRAF,  the  Term  shall be  deemed  extended  for the  period  necessary  to
accommodate  usage of the Aircraft or Airframe  pursuant to CRAF plus six months
thereafter,  and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a semiannual rate equal to the higher of (x) average
of the Basic Rent paid  during the Base  Lease  Term or the  applicable  Renewal
Lease Term,  whichever shall have ended  immediately  prior to such extension or
(y) Fair Market Rental Value.




     "TERMINATION  DATE" means any Payment Date  occurring  after the Authorized
Termination Date on which the Lease shall terminate in accordance with Section 9
of the Lease.

     "TERMINATION  VALUE"  means,  with  respect  to the  Aircraft,  the  amount
determined  by  multiplying  (a) the  percentage  set forth in Schedule 4 to the
Lease (as adjusted  from time to time in  accordance  with Section  3.2.1 of the
Lease) opposite the Termination Value Date by (b) Lessor's Cost. Notwithstanding
anything to the contrary in any  Operative  Agreement,  Termination  Value shall
always be sufficient to pay in full, as of the date of payment thereof (assuming
timely payment of the Equipment Notes prior to such date),  the aggregate unpaid
principal  amount of all Equipment Notes  outstanding as of such date,  together
with accrued and unpaid interest on all such Equipment Notes as of such date.

     "TERMINATION  VALUE  DATE"  means,  for any  month,  the day in such  month
specified in Schedule 4 to the Lease or, if such day is not a Business  Day, the
immediately succeeding Business Day.

     "THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.

     "TRANSACTIONS"  means the  transactions  contemplated by the  Participation
Agreement and the other Operative Agreements to occur on the Closing Date.

     "TRANSACTION  EXPENSES" means: (i) the reasonable and actual fees, expenses
and  disbursements  incurred in connection with the  preparation,  execution and
delivery of the  Operative  Agreements  and the  Transactions  of (1)  Richards,
Layton & Finger,  special counsel for Mortgagee and the Loan Participants,  such
information to be furnished by Mortgagee and the  Subordination  Agent, (2) Ray,
Quinney  &  Nebeker,  special  counsel  for the  Owner  Trustee  under the Trust
Agreement,  such  information to be furnished by Owner  Trustee,  and (3) Lytle,
Soule & Curlee, special counsel in Oklahoma City, Oklahoma,  such information to
be  furnished  by  Lessee,  (ii) all fees,  taxes and other  charges  payable in
connection with the recording or filing of instruments and financing statements,
such information to be furnished by Lessee, (iii) the initial fee and reasonable
and  actual  disbursements  of Owner  Trustee  under the Trust  Agreement,  such
information  to be  furnished  by the Owner  Trustee,  (iv) the  initial fee and
reasonable and actual disbursements of Mortgagee under the Trust Indenture, such
information  to be furnished by  Mortgagee,  and (v) Lessee's pro rata share (as
defined in the definition of  Supplemental  Rent) of the  underwriting  fees and
expenses attributable to the offering and sale of the Pass Through Certificates.




     "TRANSFER" means the transfer,  sale, assignment or other conveyance of all
or any interest in any property, right or interest.

     "TRANSFEREE" means a person to which any Owner  Participant,  Owner Trustee
or any Loan  Participant  or Note Holder  purports or intends to Transfer any or
all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.

     "TRUST" means the trust created by the Trust Agreement.

     "TRUST  AGREEMENT"  means the Trust Agreement  ____,  dated as of even date
with the Participation Agreement, between Owner Participant and Owner Trustee.

     "TRUST ESTATE" means all estate, right, title and interest of Owner Trustee
in and to the  Aircraft,  the  Lease,  any  Lease  Supplement  and the  Purchase
Agreement  including,   without  limitation,  all  amounts  of  Basic  Rent  and
Supplemental  Rent  including,   without  limitation,   insurance  proceeds  and
requisition,  indemnity or other payments of any kind for of with respect to the
Aircraft.  Notwithstanding  the foregoing,  "Trust Estate" shall not include any
Excluded Payment.

     "TRUST  INDENTURE" means the Trust Indenture and Mortgage ____, dated as of
even date with the Participation Agreement, between Owner Trustee and Mortgagee.

     "TRUST INDENTURE  ESTATE" is defined in the "Granting  Clause" of the Trust
Indenture.

     "TRUST  INDENTURE  SUPPLEMENT"  means a Trust  Indenture  and Mortgage ____
Supplement,  substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.

     "TRUST  SUPPLEMENT"  means an  agreement  supplemental  to the  Basic  Pass
Through Trust  Agreement  pursuant to which (i) a separate  trust is created for
the benefit of the holders of the Pass Through Certificates of a class, (ii) the
issuance of the Pass Through Certificates of such class representing  fractional
undivided  interests in such trust is authorized and (iii) the terms of the Pass
Through Certificates of such class are established.




     "UCC"  means the  Uniform  Commercial  Code as in effect in any  applicable
jurisdiction.

     "UNITED  STATES" or "U.S."  means the United  States of America;  PROVIDED,
that for geographic purposes, "United States" means, in aggregate, the 50 states
and the District of Columbia of the United States of America.

     "U.S. AIR CARRIER" means any United States air carrier that is a Citizen of
the United States  holding an air carrier  operating  certificate  issued by the
Secretary  of  Transportation  pursuant to chapter 447 of title 49 of the United
States Code for  aircraft  capable of carrying  10 or more  individuals  or 6000
pounds  or more of  cargo,  and as to which  there  is in  force an air  carrier
operating  certificate  issued pursuant to Part 121 of the FAA  Regulations,  or
which may  operate as an air carrier by  certification  or  otherwise  under any
successor or substitute provisions therefor or in the absence thereof.

     "U.S.  PERSON"  means any Person  described in Section  7701(a)(30)  of the
Code.

     "U.S. GOVERNMENT" means the federal government of the United States, or any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the federal government of the United States.

     "WEIGHTED  AVERAGE LIFE TO MATURITY"  means,  with respect to any specified
Debt, at the time of the  determination  thereof the number of years obtained by
dividing the then Remaining  Dollar-years  of such Debt by the then  outstanding
principal amount of such Debt. The term "Remaining  Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each  then-remaining  principal
payment  on  such  Debt  by the  number  of  years  (calculated  at the  nearest
one-twelfth)  that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of that required  payment and
(2) totaling all the products obtained in clause (1) above.

     "WET LEASE" means any arrangement  whereby Lessee or a Permitted  Sublessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to  which  the  Aircraft,  Airframe  or  Engine  shall  at all  times  be in the
operational control of Lessee or a Permitted  Sublessee,  provided that Lessee's
obligations   under  this  Lease  shall   continue  in  full  force  and  effect
notwithstanding any such arrangement.

     "WTC" means Wilmington Trust Company, a Delaware banking  corporation,  not
in its capacity as Mortgagee  under the Trust  Indenture,  but in its individual
capacity.






                                                --------------------------------
                                                |        SCHEDULE 1            |
                                                |            TO                |
                                                | PARTICIPATION AGREEMENT ____ |
                                                --------------------------------


ACCOUNTS; ADDRESSES ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES -------------------- ------------------- CONTINENTAL AIRLINES, INC. The Chase Manhattan Bank Continental Airlines, Inc. New York, New York 10081 2929 Allen Parkway Account No.: 910-2-499291 Suite 2010 ABA#: 021-000021 Houston, Texas 77019 Attention: Paul Trupia Attention: Executive Vice Voice: 212-552-2829 President and Chief Facsimile: 212-552-0107 Financial Officer Reference: Continental Lease Facsimile: (713) 520-6329 ____ OWNER Nationsbank c/o GATX/Caljet Corp. PARTICIPANT Dallas, Texas 75202 Four Embarcadero Center, Account No.: 3751038797 Suite 2200 ABA #: 111000012 San Francisco, California 94111 Credit: Caljet LLC Attention: Air Portfolio Reference: Continental Lease Management ____ Facsimile: 415-955-3415 FIRST SECURITY BANK, First Security Bank, National Association First Security Bank, National Association NATIONAL ASSOCIATION 79 South Main Street 79 South Main Street Salt Lake City, Utah 84111 Salt Lake City, Utah 84111 Account No.: 051-0922115 Attention: Corporate Trust Department Corporate Trust Department Facsimile: (801) 246-5053 ABA#: 124-0000-12 Reference: Continental Lease ____ WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company MORTGAGEE New York, New York 10081 One Rodney Square Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Reference: Facsimile: (302) 651-8882 Continental Lease ____ WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank New York, Wilmington Trust Company SUBORDINATION AGENT New York, New York 10081 One Rodney Square Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Attention: Corporate Trust Administration Administration Facsimile: (302) 651-8882 Reference: Continental Lease ____ WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company PASS THROUGH TRUSTEE FOR THE New York, New York 10081 One Rodney Square 1998-2A PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Administration Attention: Corporate Trust Administration Reference: Continental Lease Facsimile: (302) 651-8882 ____ WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company PASS THROUGH TRUSTEE FOR THE New York, New York 10081 One Rodney Square 1998-2B PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Administration Attention: Corporate Trust Administration Reference: Continental Lease Facsimile: (302) 651-8882 ____ WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company PASS THROUGH TRUSTEE FOR THE New York, New York 10081 One Rodney Square 1100 1998-2C PASS THROUGH TRUST Account No.: 920-1-014363 North Market Street ABA#: 021-000021 Wilmington, Delaware 19890 Attention: Corporate Trust Administration Attention: Corporate Trust Administration Reference: Continental Lease Facsimile: (302) 651-8882 ____
----------------------------------- | SCHEDULE 2 | | TO | | PARTICIPATION AGREEMENT ____ | ----------------------------------- COMMITMENTS PARTICIPANT PERCENTAGE OF DOLLAR AMOUNT ----------- ------------- ------------- LESSOR'S COST ------------- OWNER PARTICIPANT OWNER PARTICIPANT'S PERCENTAGE Caljet LLC PASS THROUGH TRUSTEE LOAN PARTICIPANT'S PTT PERCENTAGE 1998-2A 1998-2B 1998-2C TOTAL 100% ----------------------------------- | SCHEDULE 3 | | TO | | PARTICIPATION AGREEMENT ____ | ----------------------------------- CERTAIN TERMS DEFINED TERM DEFINITION Commitment Termination Date Lessor's Cost Lessee's Advisor Existing Security Agreement EXHIBIT F AIRCRAFT DELIVERY RECEIPT ____ Pursuant to Participation Agreement ____, dated as of April 21, 1998, among Continental Airlines, Inc. (the "Lessee"), Caljet LLC, as Owner Participant, First Security Bank, National Association, as Owner Trustee (the "Owner Trustee"), and Wilmington Trust Company, as Mortgagee and Loan Participant, and Lease Agreement ____ dated as of April 21, 1998, between the Owner Trustee and the Lessee, the undersigned hereby acknowledge delivery to Owner Trustee pursuant to such Participation Agreement and to Lessee pursuant to such Lease of one [McDonnell Douglas Model MD-80][Boeing 737-3T0] aircraft registered with the Federal Aviation Administration with U.S. Registration No. N_____ bearing manufacturer's serial no. _____, which includes the items described on Annex A hereto. Date: ____________, 1998 Location: _____________ FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Owner Trustee By:____________________________ Title: Delivery of the aforesaid Aircraft under the Lease is hereby acknowledged. CONTINENTAL AIRLINES, INC. By:____________________________ Title:

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

      ----------------------------------------------------------------
     | CONFIDENTIAL: ANNEXES B, C AND D AND SCHEDULES 1, 2, 3 AND 4   |
     |     OF THIS LEASE AGREEMENT ARE SUBJECT TO RESTRICTIONS ON     |
     |          DISSEMINATION SET FORTH IN SECTION 8 OF THE           |
     |          PARTICIPATION AGREEMENT (AS DEFINED HEREIN)           |
      ----------------------------------------------------------------
  ========================================================================

                              LEASE AGREEMENT ____

                           Dated as of April 21, 1998

                                     Between

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

                                     Lessor

                                       and

                           CONTINENTAL AIRLINES, INC.,

                                     Lessee
  ------------------------------------------------------------------------

           One [McDonnell Douglas Model DC-9-82][Boeing Model 737-3T0]
                                Aircraft Bearing
                     United States Registration No. N _____
                   and Bearing Manufacturer's Serial No. _____
                      with two ____ Model ________ Engines
           Bearing Engine Manufacturer's Serial Nos. ______ and ______

  ========================================================================

     The right, title and interest of Lessor in and to, among other things, this
Lease  Agreement has been  assigned to and is subject to a security  interest in
favor of Wilmington Trust Company, a Delaware banking corporation, as Mortgagee,
under the Trust Indenture and Mortgage ____,  dated as of April 21, 1998 for the
benefit  of the  holders  of the  Equipment  Notes  referred  to in  such  Trust
Indenture,  all to the  extent  provided  in such  Trust  Indenture.  This Lease
Agreement has been  executed in multiple  counterparts;  to the extent,  if any,
that this Lease Agreement  constitutes  chattel paper (as defined in the Uniform
Commercial  Code as in  effect  in any  applicable  jurisdiction),  no  security
interest in Lessor's  right,  title and interest in and to this Lease  Agreement
may be perfected  through the delivery or possession of any  counterpart of this
Lease Agreement other than the counterpart of this Lease Agreement that contains
the original receipt executed by Wilmington Trust Company, as Mortgagee.





                                    CONTENTS



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

SECTION 2.     DELIVERY AND ACCEPTANCE......................................   1

     2.1       Delivery and Lease of Aircraft...............................   1
     2.2       Acceptance by Lessee.........................................   2

SECTION 3.     TERM AND RENT................................................   2

     3.1       Term.........................................................   2
     3.2       Rent.........................................................   2
     3.3       Payments.....................................................   5

SECTION 4.     DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
               SECTION 1110 MATTERS. .......................................   6

     4.1       Disclaimer...................................................   6
     4.2       Certain Agreements of Lessor.................................   6
     4.3       Quiet Enjoyment..............................................   7
     4.4       Investment of Funds Held as Security.........................   7
     4.5       Title Transfers by Lessor....................................   8
     4.6       Lessor's Interest in Certain Engines.........................   8
     4.7       Lease For U.S. Federal Income Tax Law
               Purposes; Section 1110 of Bankruptcy Code....................   9

SECTION 5.     RETURN OF AIRCRAFT...........................................   9

     5.1       Compliance with Annex B......................................   9
     5.2       Storage and Related Matters..................................   9
     5.3       Return of Other Engines......................................  10
     5.4       Failure to Return............................................  10

SECTION 6.     LIENS........................................................  10


SECTION 7.     REGISTRATION, OPERATION, POSSESSION,
               SUBLEASING AND RECORDS.. ....................................  11

     7.1       Registration and Operation...................................  11
     7.2       Possession...................................................  13
     7.3       Certain Limitations on Subleasing or Other
               Relinquishment of Possession.................................  18




SECTION 8.     MAINTENANCE; REPLACEMENT AND POOLING OF
               PARTS; ALTERATIONS, MODIFICATIONS AND
               ADDITIONS; OTHER LESSEE COVENANTS............................  19

     8.1       Maintenance; Replacement and Pooling of
               Parts; Alterations, Modifications and
               Additions....................................................  19
     8.2       Information, Certificates, Notices and
               Reports......................................................  19
     8.3       Aircraft Documents...........................................  21

SECTION 9.     VOLUNTARY TERMINATION UPON OBSOLESCENCE......................  21

     9.1       Right of Termination.........................................  21
     9.2       Election by Lessor to Sell...................................  22
     9.3       Retention of Aircraft by Lessor..............................  24

SECTION 10.    LOSS, DESTRUCTION, REQUISITION, ETC..........................  26

     10.1      Event of Loss With Respect to Aircraft.......................  26
     10.2      Event of Loss With Respect to an Engine......................  29
     10.3      Conditions to any Replacement................................  29
     10.4      Conveyance to Lessee.........................................  31
     10.5      Application of Payments......................................  32
     10.6      Requisition of Aircraft for Use..............................  32
     10.7      Requisition of an Engine for Use.............................  33
     10.8      Application of Payments......................................  33
     10.9      Application of Payments During Existence of
               a Lease Event of Default.....................................  34

SECTION 11.    INSURANCE....................................................  34

     11.1      Lessee's Obligation to Insure................................  34
     11.2      Insurance for Own Account....................................  34
     11.3      Indemnification by Government in Lieu of
               Insurance....................................................  35
     11.4      Application of Insurance Proceeds............................  35
     11.5      Application of Payments During Existence of
               Default......................................................  35

SECTION 12.    INSPECTION...................................................  36


SECTION 13.    ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE..................  37

     13.1      In General...................................................  37
     13.2      Merger of Lessee.............................................  37
     13.3      Assignment Security for Lessor's Obligations.................  38
     13.4      Successor Owner Trustee......................................  38

SECTION 14.    LEASE EVENTS OF DEFAULT......................................  39

     14.1      Payments.....................................................  39




     14.2      Insurance....................................................  39
     14.3      Other Covenants..............................................  39
     14.4      Representations and Warranties...............................  40
     14.5      Bankruptcy and Insolvency....................................  40

SECTION 15.    REMEDIES AND WAIVERS.........................................  41

     15.1      Remedies.....................................................  41
     15.2      Limitations Under CRAF.......................................  44
     15.3      Right to Perform for Lessee..................................  45
     15.4      Determination of Fair Market Rental Value
               and Fair Market Sales Value..................................  45
     15.5      Remedies Cumulative..........................................  46

SECTION 16.    LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC...........  46


SECTION 17.    RENEWAL OPTIONS..............................................  47

     17.1      Notices Generally............................................  47
     17.2      Renewal Options..............................................  47
     17.3      [Intentionally omitted.].....................................  49
     17.4      Appraisals...................................................  49

SECTION 18.    MISCELLANEOUS................................................  50

     18.1      Amendments...................................................  50
     18.2      Severability.................................................  50
     18.3      Third-Party Beneficiary......................................  50
     18.4      Reproduction of Documents....................................  51
     18.5      Counterparts.................................................  51
     18.6      Notices......................................................  51
     18.7      GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.............  52
     18.8      Application of Article 2A of the UCC.........................  53
     18.9      Entire Agreement.............................................  53
     18.10     No Waiver....................................................  53



    ANNEXES, EXHIBITS AND SCHEDULES
    -------------------------------

    ANNEX A      Definitions
    ANNEX B      Return Conditions
    ANNEX C      Maintenance
    ANNEX D      Insurance

    EXHIBIT A    Form of Lease Supplement
    EXHIBIT B    Form of Return Acceptance Supplement

    SCHEDULE 1   Certain Terms
    SCHEDULE 2   Basic Rent



    SCHEDULE 3   Stipulated Loss Value Schedule
    SCHEDULE 4   Termination Value Schedule
    SCHEDULE 5   Permitted Countries and Domiciles for Permitted Sublessees
    SCHEDULE 6   Placards






                              LEASE AGREEMENT ____


     LEASE  AGREEMENT  ____,  dated as of April 21,  1998 (this  "Agreement"  or
"Lease"),  between (a) FIRST SECURITY  BANK,  NATIONAL  ASSOCIATION,  a national
banking  association,  not in  its  individual  capacity,  except  as  expressly
provided  herein,  but solely as Owner Trustee  (this and all other  capitalized
terms used but not defined  herein shall have the respective  meanings  ascribed
thereto in Section 1 below) ("Lessor" or "Owner  Trustee"),  and (b) CONTINENTAL
AIRLINES, INC., a Delaware corporation ("Lessee").

                                    RECITALS

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

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

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

SECTION 1.     DEFINITIONS AND CONSTRUCTION

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

SECTION 2.     DELIVERY AND ACCEPTANCE

     2.1       DELIVERY AND LEASE OF AIRCRAFT

     Lessor  hereby  agrees  (subject  to  the  satisfaction  or  waiver  of the
conditions  set forth in Section 5 of the  Participation  Agreement) to lease to
Lessee for the Term and Lessee hereby  agrees  (subject to the  satisfaction  or
waiver of the conditions set forth in Section 5 of the Participation  Agreement)
to lease from Lessor for the Term,  the  Aircraft  and the  Aircraft  Documents,
commencing  immediately  upon  acquisition  of the  Aircraft  and  the  Aircraft
Documents by Lessor pursuant to the Participation Agreement.




     2.2       ACCEPTANCE BY LESSEE

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

SECTION 3.     TERM AND RENT

     3.1       TERM

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

     3.2       RENT

               3.2.1     BASIC  RENT;  ADJUSTMENTS  TO BASIC RENT AND
                         CERTAIN OTHER AMOUNTS

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

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

          (i) In the event of a refinancing as contemplated by Section 11 of the
     Participation  Agreement,  then the  Basic  Rent  percentages  set forth in
     Schedule 2, Stipulated  Loss Value  percentages set forth in Schedule 3 and
     the  Termination  Value  percentages  set  forth  in  Schedule  4 shall  be
     recalculated   (upwards  and   downwards)  by  the  Owner   Participant  as
     contemplated  by such Section to (1) maintain the Owner  Participant's  Net
     Economic Return and (2) to the extent  possible  consistent with clause (1)
     hereof, minimize the Net Present Value of Rents to Lessee.

          (ii) In the event  that  Lessee is  required  to  indemnify  the Owner
     Participant  under the Tax Indemnity  Agreement,  then the Stipulated  Loss
     Value  percentages  set  forth  in  Schedule  3 and the  Termination  Value



     percentages  set forth in  Schedule  4 shall be  recalculated  (upwards  or
     downwards)  by Owner  Participant,  using the same methods and  assumptions
     (except to the extent such assumptions shall be varied to take into account
     the Tax Loss or Foreign  Tax  Credit  Loss (as each such term is defined in
     the Tax Indemnity  Agreement)  that is the subject of such  indemnification
     and any prior or contemporaneous  Tax Loss or Foreign Tax Credit Loss) used
     to  calculate  the  Basic  Rent  percentages,  the  Stipulated  Loss  Value
     percentages and the Termination  Value  percentages on the Closing Date, in
     order to (1) maintain the Owner  Participant's  Net Economic Return and (2)
     to the extent possible consistent with clause (1) hereof,  minimize the Net
     Present Value of Rents to Lessee.

     (c) All adjustments  pursuant to Section 3.2.1(b) shall be made as promptly
as  practicable  after  either Owner  Participant  or Lessee gives notice to the
other that an event has occurred that requires an adjustment.  Owner Participant
and  Lessee  shall give  prompt  notice to the other of any event  requiring  an
adjustment.  Any recalculation of the percentages of Basic Rent, Stipulated Loss
Value and Termination Value shall be prepared by Owner  Participant,  subject to
consultation  with the Lessee at the request of Lessee in  accordance  with this
Section 3.2.1(c) and Section 3.2.1(d),  on the basis of the same methodology and
assumptions  used by Owner  Participant in determining  the percentages of Basic
Rent, Stipulated Loss Value and Termination Value as of the Closing Date, except
as such  assumptions  have been  modified to reflect  the events  giving rise to
adjustments  hereunder.  Promptly after an adjustment is made  hereunder,  Owner
Participant  shall deliver to Lessee a description of such  adjustment,  setting
forth in reasonable detail the calculation thereof. All adjustments shall (i) be
made so as to avoid  characterization of the Lease as a "disqualified  leaseback
or  long-term  agreement"  within the  meaning of Section 467 of the Code unless
such adjustments are made in a manner that holds the Owner Participant  harmless
from the  effect of such  characterization  and (ii) be in  compliance  with the
requirements of Sections 4.02(5),  4.07(1) and, on a prospective basis,  4.08(1)
of Revenue  Procedure  75-28,  except to the extent that on the Closing Date the
Lease constituted a "disqualified  leaseback or long-term  agreement" or was not
in compliance with the  regulations  referred to in clause (ii). All adjustments
required  pursuant to Section  3.2.1(b) shall be set forth in a Lease Supplement
or in an amendment  to this Lease,  and,  promptly  after  execution  thereof by
Lessor and Lessee,  Lessee shall give a copy thereof to Mortgagee.  Lessee shall
pay all out-of-pocket  costs and expenses  (including  reasonable legal fees and
expenses) of the Owner Participant in connection with any adjustment pursuant to
this Section.




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

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

               3.2.2     SUPPLEMENTAL RENT

     Lessee shall,  in the manner and in the funds specified in Section 3.3, pay
to Lessor, or to whosoever shall be entitled  thereto,  any and all Supplemental
Rent when and as the same shall  become due and owing.  Lessee  will also pay to
Lessor,  or to whosoever shall be entitled thereto as Supplemental  Rent, to the
extent permitted by applicable Law, interest at the Payment Due Rate on any part
of any amount of Rent (including,  without  limitation,  Supplemental  Rent) not



paid by 12:30 p.m., New York time, on the date when due (so long as, in the case
of any person not a party to the  Participation  Agreement,  Lessee had received
timely notice of the account to which such payment was required to be made), for
the  period  from  and  including  the date on  which  the same was due to,  but
excluding, the date of payment in full.

     3.3       PAYMENTS

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

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

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

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




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

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

     4.1       DISCLAIMER

     LESSOR  LEASES AND LESSEE  TAKES THE  AIRCRAFT  "AS-IS,  WHERE-IS."  LESSEE
ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE AND
ANY  PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND  MANUFACTURER  THEREOF
AND (ii) NONE OF LESSOR,  MORTGAGEE AND ANY PARTICIPANT MAKES, HAS MADE OR SHALL
BE DEEMED TO HAVE MADE,  AND EACH WILL BE DEEMED TO HAVE  EXPRESSLY  DISCLAIMED,
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:

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

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

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

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

     (z)  THE ABSENCE OF OBLIGATIONS  BASED ON STRICT  LIABILITY IN TORT, OR ANY
          OTHER REPRESENTATION OR WARRANTY WHATSOEVER,  EXPRESS OR IMPLIED, WITH
          RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.

LESSEE FURTHER WAIVES, DISCLAIMS,  RELEASES AND RENOUNCES ANY LIABILITY,  RIGHT,
CLAIM,  REMEDY OR OBLIGATION WHETHER OR NOT ARISING FROM THE NEGLIGENCE (WHETHER
ACTIVE, PASSIVE OR IMPUTED) OF LESSOR, MORTGAGEE OR ANY PARTICIPANT, ARISING OUT
OF OR  ATTRIBUTABLE  TO THE USE,  OPERATION OR PERFORMANCE OF THE AIRFRAME,  ANY
ENGINE OR ANY PART.

     4.2       CERTAIN AGREEMENTS OF LESSOR

     Unless a Lease  Event of Default  shall have  occurred  and be  continuing,
Lessor  agrees to make  available to Lessee such rights as Lessor may have under



any warranty with respect to the Aircraft made, or made  available,  by Airframe
Manufacturer or Engine Manufacturer or any of their respective subcontractors or
suppliers,  as the case may be, to the extent  that the same may be  assigned or
otherwise  made  available  to Lessee,  and Lessor  agrees to exert its diligent
efforts to enforce such rights as Lessor may have with  respect  thereto for the
benefit of Lessee. Lessee shall pay Lessor's reasonable  out-of-pocket costs and
expenses  in  connection  with making  available  to Lessee the rights of Lessor
under the warranties referred to in the preceding sentence.

     4.3       QUIET ENJOYMENT

     So long as no Lease Event of Default shall have occurred and be continuing,
Lessor  shall  not  interfere  with  Lessee's  rights   hereunder  to  continued
possession,  use and operation of, and quiet  enjoyment of, the Aircraft  during
the Term.

     4.4       INVESTMENT OF FUNDS HELD AS SECURITY

               4.4.1     INVESTMENT

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

               4.4.2     PAYMENT OF GAIN OR LOSS

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




               4.4.3     LIMITATION OF LIABILITY

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

     4.5       TITLE TRANSFERS BY LESSOR

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

     4.6       LESSOR'S INTEREST IN CERTAIN ENGINES

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



engine is subject to such lease,  conditional  sale,  trust  indenture  or other
security  agreement and owned by such lessor or conditional seller or subject to
a trust  indenture or security  interest in favor of such  indenture  trustee or
secured party.

     4.7       LEASE  FOR U.S.  FEDERAL  INCOME  TAX LAW  PURPOSES;
               SECTION  1110 OF BANKRUPTCY CODE

     (a) Lessee and Lessor  agree that this Lease is, and shall be treated as, a
lease for U.S.  federal income tax purposes of the Aircraft,  Airframe,  Engines
and Parts.

     (b) It is the  intention  of each of Lessee and  Lessor  that  Lessor  (and
Mortgagee as assignee of Lessor under the Trust  Indenture) shall be entitled to
the benefits of Section 1110 with respect to the right to take possession of the
Aircraft, Airframe, Engines and Parts as provided in this Lease.

SECTION 5.     RETURN OF AIRCRAFT

     5.1       COMPLIANCE WITH ANNEX B

     Lessee shall comply with each of the  provisions  of Annex B hereto,  which
provisions  are hereby  incorporated  by this  reference as if set forth in full
herein.

     5.2       STORAGE AND RELATED MATTERS

     If Lessor  gives  written  notice to Lessee  not less than 60 days nor more
than 180 days prior to the end of the Term  requesting  storage of the  Aircraft
upon its return  hereunder,  Lessee will provide  Lessor,  or cause Lessor to be
provided, with outdoor parking facilities for the Aircraft for a period up to 30
days,  commencing on the date of such return, at such storage facility in the 48
contiguous  states of the United States as Lessee may select.  Lessee shall,  at
Lessor's  written  request,  maintain  insurance (if available) for the Aircraft
during such storage  period,  PROVIDED  that Lessor shall  reimburse  Lessee for
Lessee's  out-of-pocket cost of providing such insurance.  Such storage shall be
at Lessor's risk, and Lessor shall pay all applicable  storage fees, except that
Lessee  shall  pay the  parking  fees for the  initial  30 day  storage  period;
PROVIDED that Lessee's  obligation to provide parking shall be subject to Lessee
and Lessor entering into an agreement  prior to the  commencement of the storage
period with the storage  facility  providing,  among other  things,  that Lessee
shall pay only the parking fees for the initial  storage period of up to 30 days
and that Lessor  shall bear all  maintenance  charges  and other costs  incurred
relating to such storage.




     5.3       RETURN OF OTHER ENGINES

     In the event that any Engine  owned by Lessor shall not be installed on the
Airframe at the time of return hereunder, Lessee shall be required to return the
Airframe hereunder with a Replacement Engine meeting the requirements of, and in
accordance with,  Section 10 hereof and Annex B hereto.  Thereupon,  Lessor will
transfer  to  Lessee  the  Engine  constituting  part of such  Aircraft  but not
installed on such Airframe at the time of the return of the Airframe.

     5.4       FAILURE TO RETURN

     If Lessee shall, for any reason whatsoever, fail to return the Aircraft and
the  Aircraft   Documents  at  the  time  specified  herein  (including  without
limitation  as a result of an Event of Loss, or any event which with the passage
of time may result in an Event of Loss),  all  obligations  of Lessee under this
Lease shall  continue in effect with respect to the Aircraft  until the Aircraft
is  returned  to Lessor  and Lessee  shall pay to Lessor an amount  equal to the
average  daily Basic Rent  payable by Lessee  during the Term for each day after
the end of the Term to but excluding the day of such return; PROVIDED,  HOWEVER,
that this  Section 5.4 shall not be construed  as  permitting  Lessee to fail to
meet its  obligation  to  return  the  Aircraft  or the  Aircraft  Documents  in
accordance  with  the  requirements  hereof  or  constitute,  or  be  deemed  to
constitute,  a waiver of any Lease  Event of  Default  resulting  from  Lessee's
failure to return the  Aircraft or the  Aircraft  Documents  or  otherwise;  and
PROVIDED,  FURTHER, that Lessee shall not be responsible for Lessor's failure to
accept  return of the Aircraft and Aircraft  Documents in  accordance  with this
Section 5 in a timely  manner  or for any rent with  respect  to  periods  after
Lessee has tendered the Aircraft and Aircraft Documents for return in accordance
with this Lease.  Any rent owed to Lessor  pursuant to this Section 5.4 shall be
payable  upon  acceptance  of the  Aircraft by Lessor or on the last day of each
calendar  week  following  the last day of the Term if the Aircraft has not been
accepted earlier.

SECTION 6.     LIENS

     Lessee shall not, directly or indirectly,  create,  incur, assume or suffer
to exist any Lien on or with respect to the Aircraft,  the Airframe,  any Engine
or any Part, title to any of the foregoing or any interest of Lessee therein, or
the Lessee's rights in and to this Lease or any Permitted  Sublease,  except (a)
the respective rights of Lessor, Mortgagee, the Participants or Lessee under the
Operative  Agreements,  or  of  any  Permitted  Sublessee  under  any  Permitted
Sublease;  (b)  Lessor  Liens;  (c) the  rights of others  under  agreements  or
arrangements to the extent expressly  permitted by the terms of Sections 7.2 and



7.3 or Section C of Annex C; (d) Liens for Taxes of Lessee (and its U.S. federal
tax law consolidated  group),  or Liens for Taxes of any Tax Indemnitee (and its
U.S.  federal  tax law  consolidated  group) for which  Lessee is  obligated  to
indemnify such Tax Indemnitee under any of the Lessee Operative  Agreements,  in
any such case either not yet due or being contested in good faith by appropriate
proceedings  so long as such  Liens  and such  proceedings  do not  involve  any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any
Engine or the  interest  of any  Participant  therein  or impair the lien of the
Trust Indenture; (e) materialmen's, mechanics', workers', repairers', employees'
or other like Liens  arising in the ordinary  course of business for amounts the
payment of which is either not yet  delinquent for more than 60 days or is being
contested in good faith by  appropriate  proceedings,  so long as such Liens and
any such proceedings do not involve any material risk of the sale, forfeiture or
loss  of  the  Aircraft,  the  Airframe,  any  Engine  or  the  interest  of any
Participant therein or impair the lien of the Trust Indenture; (f) Liens arising
out  of  any  judgment  or  award  against  Lessee  (or  against  any  Permitted
Sublessee),  so long as such  judgment  shall,  within  60 days  after the entry
thereof,  have been discharged or vacated,  or execution  thereof stayed pending
appeal or shall have been  discharged,  vacated or reversed within 60 days after
the  expiration of such stay, and so long as during any such 60-day period there
is not, or any such judgment or award does not involve, any material risk of the
sale,  forfeiture  or loss of the  Aircraft,  the  Airframe,  any  Engine or the
interest of any Participant  therein or impair the lien of the Trust  Indenture,
or involve a  discernible  risk of  criminal  liability  or a  material  risk of
material civil liability  against Lessor or Owner  Participant and (g) any other
Lien with  respect  to which  Lessee  (or any  Permitted  Sublessee)  shall have
provided a bond,  cash  collateral or other security  adequate in the reasonable
opinion of Lessor. Lessee shall promptly take (or cause to be taken) such action
as may be necessary  duly to discharge  (by bonding or  otherwise)  any Lien not
excepted  above if the same shall at any time arise in respect of the  Aircraft,
the Airframe, any Engine or any Part during the Term.

SECTION 7.     REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS

     7.1       REGISTRATION AND OPERATION

               7.1.1     REGISTRATION AND RECORDATION

     Subject  to the  compliance  by Lessor  and Owner  Participant  with  their
respective obligations under Section 13 of the Participation  Agreement,  Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly



registered  with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor  (except to the  extent  that such  registration  under the Act cannot be
effected  with the FAA  because of Lessor's  or Owner  Participant's  failure to
comply with the citizenship  requirements for registration of the Aircraft under
the Act).  Lessor shall execute and deliver all such documents as Lessee (or any
Permitted  Sublessee)  may  reasonably  request for the purpose of effecting and
continuing such registration.  Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times  maintained  of record as a  first-priority
perfected  mortgage  (subject to Permitted Liens) on the Aircraft,  the Airframe
and each of the Engines (except to the extent such perfection or priority cannot
be  maintained  solely as a result of the  failure  by  Lessor or  Mortgagee  to
execute and deliver any necessary documents).

               7.1.2     REREGISTRATION

     So long as no Lease Event of Default or Special Default shall have occurred
and be continuing,  Lessee may, by written  notice to Lessor,  request to change
the country of  registration  of the Aircraft.  Any such change in  registration
shall be effected only in compliance  with, and subject to all of the conditions
set forth in, Section 7.6.11 of the Participation Agreement.

               7.1.3     MARKINGS

     If not  prohibited by applicable  Law, on or reasonably  promptly after the
Closing Date (but, in any event, within 90 days thereafter),  Lessee will remove
any placards or markings (other than the placards referred to below) stating any
other person's  ownership or security interest in the Aircraft and will cause to
be  affixed  to, and  maintained  in, the  cockpit of the  Airframe  and on each
Engine,  in each case, in a clearly visible  location (it being  understood that
the location of such placards,  as identified to the Owner  Participant prior to
the Closing Date, shall be deemed to be in compliance with this requirement),  a
placard of a reasonable size and shape bearing the legend, in English, set forth
in Schedule 6. Such placards may be removed  temporarily,  if necessary,  in the
course of maintenance of the Airframe or Engines. If any such placard is damaged
or becomes illegible,  Lessee shall promptly replace it with a placard complying
with the requirements of this Section 7.1.3.




               7.1.4     COMPLIANCE WITH LAWS

     Lessee shall not, and shall not allow any other  person to,  operate,  use,
maintain,  service,  repair or overhaul the Aircraft (a) in violation of any Law
binding on or applicable to the Aircraft,  the Airframe or any Engine, or (b) in
violation  of any  airworthiness  certificate,  license or  registration  of any
Government Entity relating to the Aircraft, Lessee (or any Permitted Sublessee),
the Airframe or any Engine,  except (1) immaterial or  non-recurring  violations
with  respect to which  corrective  measures  are taken  promptly by Lessee or a
Permitted Sublessee,  as the case may be, upon discovery thereof, and (2) to the
extent  Lessee  or  any  Permitted  Sublessee  is  contesting  the  validity  or
application  of any such Law or  requirement  relating to any such  certificate,
license or  registration  in good faith in any reasonable  manner which does not
involve any material risk of the sale,  forfeiture or loss of the Aircraft,  the
Airframe, any Engine or the interest of any Participant therein, any discernible
risk of criminal  liability or material risk of material  civil penalty  against
Lessor, Mortgagee or any Participant or impair the Lien of the Trust Indenture.

               7.1.5     OPERATION

     Lessee agrees not to operate,  use or locate the Aircraft,  the Airframe or
any Engine,  or allow the  Aircraft,  the Airframe or any Engine to be operated,
used or located (a) in any area excluded from coverage by any insurance required
by the terms of  Section  11,  except in the case of a  requisition  by the U.S.
Government  where Lessee obtains an indemnity in lieu of such insurance from the
U.S. Government,  or insurance from the U.S. Government,  covering such area, in
accordance with Section 11.3 or (b) in any recognized area of hostilities unless
fully  covered in accordance  with Annex D by war-risk  insurance as required by
the terms of Section 11 (including, without limitation, Section 11.3), unless in
any case  referred to in this  Section  7.1.5 the  Aircraft is only  temporarily
operated,  used or located in such area as a result of an  emergency,  equipment
malfunction,  navigational error, hijacking,  weather condition or other similar
unforeseen  circumstances,  so  long as  Lessee  diligently  and in  good  faith
proceeds to remove the Aircraft from such area.

     7.2       POSSESSION

     Lessee will not,  without the prior written consent of Lessor,  sublease or
otherwise  in any manner  deliver,  transfer  or  relinquish  possession  of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine
to be installed,  on any airframe  other than the Airframe;  PROVIDED,  HOWEVER,
subject to the  provisions  of Section 7.3,  that if and for so long as no Lease



Event of Default shall have occurred and be continuing, then Lessee may, without
such prior written consent:

               7.2.1     INTERCHANGE AND POOLING

     Subject or permit any Permitted Sublessee to subject the Airframe to normal
interchange agreements or any Engine to normal interchange agreements or pooling
agreements or  arrangements,  in each case customary in the  commercial  airline
industry and entered into by Lessee or such Permitted Sublessee, as the case may
be, in the ordinary  course of  business;  PROVIDED,  HOWEVER,  that if Lessor's
title to any such Engine is divested  under any such  agreement or  arrangement,
then such  Engine  shall be deemed to have  suffered  an Event of Loss as of the
date of such  divestiture,  with the effect  that  Lessee  shall be  required to
replace such Engine with a Replacement  Engine meeting the  requirements of, and
in accordance with, Section 10.

               7.2.2     TESTING AND SERVICE

     Deliver or permit any  Permitted  Sublessee  to deliver  possession  of the
Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof or to
any third-party maintenance provider, for testing, service, repair,  maintenance
or overhaul work on the Aircraft,  Airframe,  any Engine or any Part, or, to the
extent  required  or  permitted  by the  terms of Annex  C, for  alterations  or
modifications in or additions to the Aircraft, Airframe or any Engine or (ii) to
any Person for the purpose of transport to a Person referred to in the preceding
clause (i).

               7.2.3     TRANSFER TO U.S. GOVERNMENT

     Transfer or permit any  Permitted  Sublessee to transfer  possession of the
Aircraft,  Airframe  or any Engine to the U.S.  Government  pursuant  to CRAF or
other similar program or otherwise as required by Law for a period that does not
extend beyond the end of the Term, in which event Lessee shall  promptly  notify
Lessor and Mortgagee in writing of any such  transfer of possession  and, in the
case of any transfer  pursuant to CRAF, in such  notification  shall identify by
name,  address and telephone  numbers the Contracting  Office  Representative or
Representatives  for the Military Airlift Command of the United States Air Force
to whom notices must be given and to whom requests or claims must be made to the
extent applicable under CRAF.

               7.2.4     INSTALLATION OF ENGINES ON OWNED AIRCRAFT

     Install  or permit  any  Permitted  Sublessee  to  install  an Engine on an
airframe owned by Lessee or such Permitted  Sublessee,  as the case may be, free
and clear of all Liens,  except (a) Permitted  Liens and those that do not apply



to the Engines and (b) the rights of third parties under normal  interchange  or
pooling  agreements and  arrangements  of the type that would be permitted under
Section 7.2.1.

               7.2.5     INSTALLATION OF ENGINES ON OTHER AIRFRAMES

     Install  or permit  any  Permitted  Sublessee  to  install  an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or
such Permitted Sublessee subject to a mortgage, security agreement,  conditional
sale or other secured  financing  arrangement,  but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,
or any such secured financing arrangement, covering such airframe and (ii) Liens
of the type  permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee or
Permitted  Sublessee,  as the case may be, shall have  received from the lessor,
mortgagee,  secured party or conditional seller, in respect of such airframe,  a
written  agreement  (which  may  be a  copy  of the  lease,  mortgage,  security
agreement,  conditional sale or other agreement covering such airframe), whereby
such  Person  agrees  that it will not  acquire  or claim  any  right,  title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this Lease or is owned
by Lessor.

               7.2.6     INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT

     Install  or permit  any  Permitted  Sublessee  to  install  an Engine on an
airframe owned by Lessee or such Permitted  Sublessee,  leased to Lessee or such
Permitted Sublessee,  or purchased by Lessee or such Permitted Sublessee subject
to a conditional  sale or other security  agreement  under  circumstances  where
neither Section 7.2.4 or 7.2.5 is applicable;  PROVIDED,  HOWEVER, that any such
installation  shall be deemed an Event of Loss with respect to such Engine,  and
Lessee shall comply with Section 10.2 hereof in respect thereof.

               7.2.7     SUBLEASING

     With respect to the Aircraft,  Airframe or any Engine,  so long as no Lease
Event of Default or Special Default shall have occurred and be continuing, enter
into a sublease with any Permitted Air Carrier, but only if:

     (a) Lessee  shall  provide  written  notice to Lessor and  Mortgagee  (such
notice in the event of a sublease  to a U.S.  Air  Carrier to be given  promptly



after entering into any such sublease or, in the case of a sublease to any other
Permitted Air Carrier, 15 days in advance of entering into such sublease);

     (b) At the time that Lessee enters into such  sublease,  such Permitted Air
Carrier  shall  not be  subject  to  any  bankruptcy,  insolvency,  liquidation,
reorganization,   dissolution  or  similar   proceeding,   and  shall  not  have
substantially all of its property in the possession of any liquidator,  trustee,
receiver or similar person;

     (c) Any such  sublease (i) shall not extend  beyond the  expiration  of the
Base Lease Term or any Renewal  Lease Term then in effect  unless  Lessee  shall
have  irrevocably  committed  to  purchase  the  Aircraft,  (ii)  shall  include
provisions for the maintenance,  operation, possession, inspection and insurance
of the  Aircraft  that are the same in all material  respects as the  applicable
provisions of this Lease,  (iii) shall be expressly  subject and  subordinate to
all the terms of this Agreement and to the rights, powers and remedies of Lessor
hereunder,  including,  without limitation,  Lessor's rights under Section 15 to
repossess the Aircraft, Airframe and Engines and to terminate such sublease upon
the occurrence of a Lease Event of Default,  (iv) shall, except in the case of a
Permitted Sublease to a Manufacturer Sublessee or an Affiliate thereof, prohib